. United 8t*tǤ
'"- EnvfranniMittl Protection
Agency
Report of Audit
\f REPORT ON AUDIT OF THE
LEAD-IN-SOIL DEMONSTRATION PROJECT
; COOPERATIVE AGREEMENT WITH THE TRUSTEES OF
HEALTH AND HOSPITALS OF THE CITY OF
';-. BOSTON, INCORPORATED
* AUDIT REPORT NO. E5bG8-01-0110-81968
September 30, 1988
U.S. Environmental Protection
Llb^rv. Room 2404 PU-211~A
401 M Street, S.W.
aahlngton. DO 80460
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TABLE OF CONTENTS
Page
SCOPE AND OBJECTIVES 1
SUMMARY OF FINDINGS 3
ACTION REQUIRED 7
BACKGROUND 7
FINDINGS AND RECOMMENDATIONS
1. The Trustees Has Not Implemented The Lead-in-Soil
Demonstration Project In A Timely Manner 11
2. Need to Strengthen Administrative Controls 23
a. Weak Procurement Practices for Consultant Services
b. Poor Contract Management
c. Unsupported Consultant Services
d. Lack of Control Over Payroll Recordkeeping
e. Property Management Records Not Maintained
f. Non-Compliance With Reporting Requirements
SCHEDULES
1. SCHEDULE OF COSTS 60
APPENDIX
1. AUDITEE'S RESPONSE TO DRAFT AUDIT REPORT 62
2. DISTRIBUTION 79
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Our examination was made in accordance with generally accepted .
governmental auditing standards (the Standards forAudit of
Governmental Organizations, Programs, Activities, and Functions
issued by the Comptroller General of the United States).
The audit included interviews with EPA, Trustees and LFK . :
Program personnel; reviey of EPA project files; tests of the :
Trustees' accounting records and such other auditing procedures
as we considered necessary in .the circumstances.
We interviewed staff and reviewed files at EPA's Region I Waste
Management Division and the Environmental Services Division in
Lexington to obtain information on how the grant was awarded
and any other information pertinent to our review. At the
Trustees we interviewed staff from the following departments:
Accounting, Compliance, Internal Auditing, Purchasing, Program
Development, Personnel and Special Projects. We tested Letter
of Credit, payroll, and expenditure documents at the Accounting
Department. Such documents included time sheets, payroll
summaries, the payroll register, employee notices, monthly
printouts of expenditures and account balances.
Available budget information was reviewed at the Compliance
Department. Purchase Order Requests, invoices, and available bid
documentation were reviewed at the Purchasing Department. At
the LFK Program offices, we interviewed staff and reviewed such
documentation as sign-in sheets, the "blue book" of employee
leave balances, etc., resumes, available position descriptions,
census data, consultant proposals, and other related documents.
We reviewed the Scope of Work per the Cooperative Agreement to
determine what activities were required of the Trustees' staff.
We reviewed correspondence, staffing plans, and draft design
proposals prepared by the LFK staff. Census data was reviewed
at the LFK office.
We identified and reviewed internal administrative and accounting
control systems applicable to the LFK Program. Except for the
findings reported, there were no other material weaknesses noted.
We also reviewed the Trustees' compliance with pertinent Federal
Regulations and the provisions of the Cooperative Agreement on
a test basis. For the items tested, except as noted in the
Findings in this report, the Trustees generally complied with
the applicable regulations and provisions of the Cooperative
Agreement. Nothing came, to our attention which would indicate
that the Trustees were not in compliance for the items not tested.
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SUMMARY OF FINDINGS
Based upon our examination, it is our opinion that the costs
the Trustees charged to the program are eligible except as
noted in the Findings and. Recommenda-t ions section of this
report. The Trustees'have riot> however, .administered the
program in as an effective and efficient manner as we believe
could be reasonably expected in the circumstances. A program
to determine the effect of lead contaminated soil abatement
on the blood levels of children/ the objective of the Cooperative
Agreement, has yet to be implemented.
We recognize the factors contributing to the delays in assigning
and implementing such a program are complex and varied. The
major problem identified during the course of the audit was
the lack of an acceptable program design, without which,
obviously, the program could not proceed.
At the time our audit was conducted an acceptable program design
had not been submitted to EPA. The Regional Administrator has
advised that with the appointment of a new principal investigator
and the assembling of a team with the appropriate epidemeological,
scientific and medical qualifications, the Trustees have produced
the necessary program design.
We believe the Trustees had the initial responsibility for
development of the program design. It is a position with which
they strongly disagree; however, it is the position taken by
your staff as well. We bring this up not necessarily for the
purpose of assessing blame but rather to identify what we
believe is a major cause for the initial delays in obtaining
an acceptable program design so that we may offer meaningful
recommendations to prevent a re-occurrence of these problems.
The fact that both EPA and the Trustees are so adamant that
the other had lead responsibility for development of a program
design illustrates a significant lack of communication and
illustrates the need for clear delineation of duties and
responsibilities under the Cooperative Agreement.
In addition, the Trustees did not fully utilize their administra-
tive control system to assure that all costs and activities met
Federal regulations. We are setting aside $107,054 in consultant
fees pending justification and supporting documentation regarding
the method of procurement used along with the reasonableness of
costs. The areas of procurement, contract management, contract
monitoring, payroll support, property management, and reporting
need improvement.
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The conditions cited in this report were discussed with the
Trustees and LFK Program staff during the course of the audit.
They were also afforded the opportunity to provide written
responses to written statements of condition prior to issuance
of a draft report. We issued a draft report to the Trustees
for comment on August 15, 1988, Their response was received on
September 26, 1988. An exit conference was held on September
27, 1988, We have revised the final report based on the Trustees'
response. We have incorporated their response in the Findings
and Recommendations section of the report. We have also included
the Trustees * response as Appendix 1 to the report. We did not
include the two enclosures nor the various attachments referenced
in their response as they were too voluminous. They are, however,
available for review in our office. The report has been revised
based upon their comments and two conditions relative to training
and mapping costs have been deleted from the final report. We
do not agree with all the conclusions reached and statements
made by the Trustees in their response to the draft report. We
have decided not to address all these comments but to focus
instead on what we believe are those issues that will impact on
the future success of this project.
1. THE TRUSTEES HAS NOT IMPLEMENTED THE LEAD-IN-SOIL
DEMONSTRATION PROGRAM IN A TIMELY MANNER
A project to determine the effect of lead contaminated soil
abatement on the blood levels of children has yet to be
implemented due to the Trustees slow progress in developing
a scientifically sound program design. The delay had been
caused by conflicting expectations regarding the roles EPA
and the Trustees were to play in designing the project,
unsettled scientific issues, a change in program direction,
and compliance with the Massachusetts Lead Law. As of
September 1988, the Region 1 Adminstrator approved a design
proposed by the Trustees.
We believe both EPA and the Trustees need to improve the manage-
ment of this project through better communication and understand-
ing of their responsibilities. EPA needs to be aggressive
in assuring that the Trustees fulfill their responsibilities
rather than taking on the duties itself. The Trustees need
to be more aggressive in accepting and carrying out their
responsibilities. The Trustees also need to be flexible in
adjusting to the changes of a demonstration project.
We recommend that you: (1) clarify the roles and responsibilities
EPA and the Trustees will assume; (2) set deadlines, for tasks;
(3) impose sanctions when warranted; and (4) approve key program
personnel who have been committed to specific tasks by the
Trustees.
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The recommendations in Finding 2 provide further
for control in specific areas. :
2... NEED TO STRENGTHEN ADMINISTRATIVE CONTROLS
The Trustees need to exert greater administrative control
over program activities. The Trustees have established
procedures regarding procurement, payroll, inventory, and
reporting requirements; however, we have determined that
compliance has been limited in these areas. .Without strong
administrative controls, EPA has limited assurance that
grant funds are efficiently expended. We have set-aside
$107, ,054 in consultant fees as a result of poor procurement
practices and the need for further documentation of services
provided. The following paragraphs will provide details in
the areas of non-compliance.
a. Weak Procurement Practices
The Trustees has not assured that the LFK staff adhered
to the principles of open and free competition when
obtaining consultant services. As a result, EPA has
limited assurance that the best qualified firm was
selected at the most reasonable cost.
Accordingly, we set-aside $107,054 in consultant
fees. In addition, we recommend that the Regional
staff determine the eligibility of costs incurred under
these two contracts and review the appropriateness of
procurement actions during future site visits.
b. Poor Contract Management
The Trustees did not execute contracts with two
consultants, both of which received the two largest
consultant fees. For a third consultant, a contract
was executed with the City of Boston's Office of
Environmental Affairs rather than with the recipient,
the Trustees. Without an executed agreement EPA has
limited assurance that the consultants will provide
all the services agreed upon in accordance with
: Federal cost principles.
We are recommending that you instruct the Trustees that
contracts should be executed and those contracts over
$10,000 should be sent to your staff for review and
approval .
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c. Unsupported Consultant Services
'. Satisfactory evidence for justification of the work
performed by one consultant lias not been provided by
the Trustees. The consultant was hired to provide
recruitment services. However, there is little evidence
available that the Consultant provided all the recruitment
; duties per its bid proposal.
Accordingly, we are setting-aside the recruitment
costs of $19,250.
In addition, the consultant provided community relations
work and charged' the LFK program $16,625 for sending
pamphlets and telephoning various community organiza-
tions. We have contacted some of these organizations
and found that the organization staff has either not
heard of the LFK program or received minimal informa-
tion either by phone or pamphlet. In our opinion, the
documentation provided to date does not support $16,625
in community relations costs.
Accordingly, we are setting-aside $16,625 in Community
Relations costs.
We recommend that appropriate documentation supporting
these costs be provided to your staff for review and
determination of eligibility.
d. Lack of Control Over Payroll Record Keeping
The leave and attendance records maintained by the
LFK staff could not be reconciled to the Trustees'
payroll records. The Program staff did not follow the
Trustees Personnel policies, nor did they obtain
an exemption from these policies. As a result, some
employees were overpaid.
t
We are recommending that you instruct the Trustees
staff to review the payroll' records for compliance
with all Trustees' Personnel policies and to provide
evidence that corrective action has been taken.
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e. Property Management Records Not Maintained
The Trustees did not maintain property management
records for equipment purchased with grant funds.
Without proper controls, EPA has limited assurance
that assets are properly safeguarded and that equip-
ment purchased for the program is not used for
other activities.
We recommend that the Trustees provide your :staff with
evidence that all equipment purchased with grant
funds is properly recorded for inventory. We also
recommend that the Trustees provide evidence that
mileage logs are utilized and vehicle keys are
properly safeguarded.
f. Non-Comgliance With Reporting Requirements
The Trustees did not provide timely reports in
accordance with various special conditions of the
Cooperative Agreement. EPA cannot properly monitor
the project's financial and operational activities
without the agreed upon reports.
We are recommending that the Compliance Department
be given the responsibility of assuring that all
reports are submitted on a timely basis.
ACTION REQUIRED
In accordance with EPA Order 2750, the Action Official is
requested to provide this office with a final determination
on the findings within 150 days of the report date.
BACKGROUND
The "Superfund" program was established by the Comprehensive
Environmental Response, Compensation and Liability Act of 1980
(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
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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 some general revenues. CERCLA
requires that response, or payment for response, be sought from
those responsible for the problem, including property owners,
generators and transporters. :
CERCLA was revised and expanded by the Superfund Amendments and
Reauthorization Act of 1986 (SARA), Public Law 99-499, enacted
on October. 17, 1986. SARA reinstituted the environmental tax
and expanded the taxing mechanisms available for a five-year
period. The Trust Fund was renamed the Hazardous Substance
Superfund.
Section 111 of CERCLA was amended by SARA to authorize the Fund
to pay up to $15 million for the costs of a pilot program to
remove, decontaminate, or take other action relating to lead
contaminated soil in one to three metropolitan areas. Boston,
Massachusetts was the first metropolitan area to be chosen for
this pilot program.
The project was to prove that removing lead contaminated soil
reduced blood lead levels in children. The scope of the work
was divided into two phases: (1) planning and preparation
activities and some preliminary field work necessary to conduct
Phase Two, and (2) sampling and monitoring of the blood lead
levels of the children in the study population, monitoring and
controlling for selected environmental lead sources, and the
removal and disposal of lead contaminated soil from properties
in the study area.
On September 18, 1987, EPA Region I awarded a Cooperative
Agreement to the Trustees of Health and Hospitals of the City of
Boston, Incorporated to establish a pilot program for removal of
lead soil in the City of Boston. Although $6.2 million had been
allocated for the City of Boston, only $2 million was obligated
at the time of the grant award.
The basic study design for the Lead-in-Soil Demonstration
project was established at an EPA meeting held at North Carolina
during March 1987, Because lead blood levels are highest in
children during the late summer/early fall, EPA and the City
were anxious to start testing children's blood by September.
1987. A Cooperative Agreement could not be awarded in so short
a time. In May 1987, EPA asked the City of Boston to advance
$500,000 to start the project.
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During June 1987, EPA held a symposium at the Lexington,
Massachusetts lab to further refine the project design. The LFK
Project Manager participated in presentations at this symposium.
Beginning in late May 1987, the Trustees and the LFK Project
Manager obtained office space, equipment and personnel in
anticipation of beginning blood testing by September-1987.
However; the scientific and medical community criticized the
program as it was then planned. Their criticism was determined
to be valid. The Region I Regional Administrator instructed the
City not to begin blood testing.
The Cooperative Agreement provided for the establishment of a
Scientific Project Advisory Committee to work on a project design.
The LFK Project Manager along with EPA personnel and other prominent
professionals in the field of lead poisoning were members. On
November 23, 1987, the Committee offered three strategies for a
study in Boston. The LFK Project Manager advised the EPA Regional
Administrator that the LFK staff needed at least six weeks to
thoroughly review the proposals and requested a chance to work on
a design. The Regional Administrator replied that if the design
did not meet all of EPA's criteria the Cooperative Agreement
would be terminated.
The program design submitted by the LFK Project Manager on
January 22, 1988, was not acceptable to EPA. Since a design was
not finalized, EPA determined that it would not be prudent to
continue to operate the program as established. EPA instructed
the Trustees that it would not recognize personnel costs for the
LFK staff after February 19, 1988, and to begin closing down the
LFK office.
A plan was submitted to EPA on April 8, 1988, which outlined how
a research team would develop an acceptable program design over
a ten month period. EPA agreed to continue to fund their efforts
until June 30, 1988. The Regional Administrator wrote to the
newly appointed Program Manager that if an acceptable design is
not submitted by June 30, 1988, EPA will suspend all funding of
the Boston demonstration project effective July 1, 1988.
In a letter dated September 21, 1988 to the new Principal
Investigator, the Regional Administrator wrote that he was pleased
with the progress that the staff has made in resolving the
scientific issues. In a memo dated September 23, 1988, the
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Regional Administrator advised the OIG that the scientific
deficiencies present during the time of the audit, namely,
the lack of an acceptable design, have been corrected.
The Trustees of Health and Hospitals of the City of Boston,
Incorporated is a non-profit Corporation that manages grants and
contracts in the areas of community health projects, medical
research, as;well as other forms of support for the Department
of Health and Hospitals. The Trustees provides the following
services: financial, managerial, payroll, personnel administra-
tion, property control, purchasing, proposal preparation assist-
ance and maintain a funding research library. Services are paid
by a general and administrative (G&A) fee negotiated with the
Federal Government on an annual basis. John L. Christian, Vice
President and General Manager manages the Trustees. Mr. Christian
reports to a nine member Board of Trustees of which Lewis W. Pollack,
Commissioner of the Department of Health and Hospitals for the
City of Boston is President. The Trustees offices are located
at 725 Massachusetts Avenue, Boston, Massachusetts. The official
accounting, purchasing, and personnel records are located at the
Trustees.
At the time of our audit, Ronald P. Jones, a City of Boston
employee was identified as the Project Manager according to the
Cooperative Agreement. Mr. Jones is not an employee of the
Trustees. He was also identified by the Trustees' title of
Principle Investigator of the Lead Free Kids (LFK} Program.
Since our audit, Dr. Michael Weitzman has been appointed as the
Principal Investigator with Mr. Jones as a Co-Investigator.
The LFK offices were located at 560 Harrison Avenue, Boston,
Massachusetts. Records relating to program activities as well
as certain support documents for the official Trustees' records
are maintained at the LFK offices. Equipment and supplies purchased
for LFK activities in accordance with the Cooperative Agreement
are located at the LFK offices^. The only exception is 8 vans
which are parked at a City par'king lot on Albany Street, Boston,
Massachusetts.
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FINDINGS AND RECOMMENDATIONS - " '
1.; THE TRUSTEES HAS NOT IMPLEMENTED THE LEAD-IN-SOIL
DEMONSTRATION PROGRAM IN A TIMELY MANNER
- A project to determine the effect of lead contaminated soil
. abatement on the blood levels of children has yet to be
implemented due to the Trustees slow progress in developing
the basic program design and protocols. The Trustees has
: recently submitted a program design which the Regional
Administrator has approved. The delay was caused in part
by the Trustees' belief that EPA was responsible for develop-
ing the project design and protocols in the early stages
of the project. Because of this belief, the Trustees did
not hire staff with the appropriate qualifications to carry
out these duties. : In addition, unsettled scientific issues
and compliance with the Massachusetts State Lead Law
contributed to the delay. Funding for this demonstration
project is limited. At the time of our audit, approximately
$900,000 had been expended to start-up a program which had
no definite direction. EPA and the Trustees need to improve
communications between one another to assure successful
completion of this project.
Both EPA and the Trustees were anxious to begin blood testing
of children by the late summer of 1987 but a Cooperative
Agreement could not be executed so quickly. The Trustees
advanced $500,000 in May of 1987 to begin work on the project.
EPA obtained a waiver to allow these pre-award costs.
However, no documentation has been provided defining the
Trustees or EPA's responsibilities for the period prior to
the execution of the Cooperative Agreement.
Interviews with the Trustees and EPA staffs indicate that
there is disagreement regarding which agency held primary
responsibility for developing and refining a program design
and protocols. The Deputy Director of EPA's Waste manage-
ment Division advised us that EPA did not have the medical
and epidemiological expertise to develop a scientific
public health project'using human subjects. EPA was
relying on the City of Boston to provide this expertise
because the City had an established lead program and it
was assumed that the Trustees would provide access to the
necessary medical/scientific staff through the City's
Department of Health and Hospitals. It was intended that
EPA would provide oversight of project activities. EPA
was to be responsible for:reviewing and accepting plans
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from the Trustees. In summary, the Region did not have
the resources or the expertise to manage the complex
scientific and implementation issues involved in this
project and has never indicated to the City that it could
or would assume these responsibilities according to the
Deputy Director.
A memo from EPA Headquarters providing the basis for how
Boston meets site selection criteria provides: :
Boston's Childhood Lead Poisoning Prevention
Program has identified the needs for medical
expertise and has met those needs for its
program. The Office of Environmental Affairs
has also identified much of the scientific and
medical expertise which has contributed to an
understanding of the problem.
The Region I EPA has agreed to accept general
Agency oversight for this project, including
disbursement of funds.
The Deputy Director of EPA's Waste Management Division
advised us that EPA expected the Trustees to flesh out the
basic program design that EPA had provided. A very general
outline of a study design was developed in an EPA sponsored
meeting in North Carolina in April 1987. This outline was
applicable to all the demonstration projects and was to be
modified by local researchers in response to local conditions.
A meeting was held in Lexington, Massachusetts in June 1987,
to modify the design for Boston. EPA and City staff {and a
range of other local medical and environmental professionals)
participated in that meeting. The meeting discussed blood
sampling and analysis methods and the potential sample size
for the demonstration project.
There was a proposal to work with the U.S. Center for
Disease Control (CDC) on protocols. However, the development
of study protocols was and remains the responsibility of the
Trustees according to EPA's Deputy Director who further stated
that it had always been indefinite as to what CDC was actually
going to contribute. In the summer of 1987, EPA staff
prepared a summary of the June 1987, Lexington meeting.
This paper has been referred to as a protocol. It was not
a research protocol. In October 1987, EPA staff prepared a
"dummy", "strawman" protocol to stimulate discussion of
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issues. In both cases, the EPA Deputy Director advised us
she directed EPA staff to undertake these efforts because
of the apparent inability of the Trustees to produce written
materials in a timely fashion.
A review of the Cooperative Agreement between the Trustees
and EPA shows that EPA would work in "conjunction with the
Trustees." Special Condition No. 4 of the Agreement provides
that, "details of the phase 2 design shall be determined by
the Scientific Project Advisory Committee." Members on the
Committee included three individuals from EPA, the LFK
Project Manager, along with five other prominent professionals
working in the field of:lead poisoning. The Committee was
Chaired by EPA.
In addition, the Cooperative Agreement clearly states that,
"The Trustees will develop and distribute for review compre-
hensive research protocols" per the Scope of Work, page 2.
This section also goes on to provide that EPA will provide
assistance to the Trustees in preparing the protocols.
Within EPA's area of expertise; i.e., environmental sampling
and analysis, and not in medical or epidemiological areas.
The Trustees held another view of the project's responsi-
bilities. According to the LFK Project Manager, "From the
beginning of the joint effort, EPA staff made it clear that
they would continue the leadership they had already taken,
through their North Carolina Lead-in-Soils Project Design
Workshop (to which the City of Boston was asked not to send
representatives), in ensuring resolution of Project design.,
issues and in the development of scientific protocols." The
LFK Project Manager continues, "The EPA assured the City
that it would take primary responsibility for completing,
with significant input from the City, the Project design
and Project protocols. It would do this, in significant
part, by securing the very active support and involvement
of the U.S. CDC, ..."
The Trustees believe £hat the Cooperative Agreement executed
on September 18, 1987, provides evidence that EPA took
leadership of the project especially for the program design.
According to the LFK Project Manager, "The agreement with
the EPA is a Cooperative Agreement specifically because the
EPA decided to retain primary responsibility for certain
key aspects of the Project, for example, the Project design."
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Regarding the September signing date, the LFK Project
Manager statedr "It, fortunately or unfortunately, also
provided the opportunity to structure the agreement in a
way that reflected the reality of the preceding months,
i.e., that the planned involvement of the CDC could, at
that time, only be established on a very minimal level, if
at all, and that the EPA was unceremoniously, i.e., without
any recognition of the fact, shifting those responsibilities
to the Project staff." The LFK Project Manager believed
the Project staff were neither hired for, nor prepared to
fulfill these responsibilities.
A Cooperative Agreement provides for greater Federal involve-
ment in projects but does not relieve the recipient of its
responsibilities. According to EPA Headquarters Grants
Policy and Procedures Branch personnel, recipients retain
primary responsibility of accomplishing Agreement objectives.
As previously noted, the Cooperative Agreement between the
Trustees and EPA provided that EPA would provide assistance
not leadership in this project.
In our opinion, if the Trustees staff did not believe they
were capable of certain responsibilities, they either should
not have agreed to accept the duties or made staff adjustments
(e.g. hire the needed personnel).
EPA acknowledges that from September until November 1987,
the Trustees were not required to submit a program design
developed on their own. The LFK Project manager was active
on the Scientific Project Advisory Committee and it was
expected that the committee would come up with a design.
The Deputy Director for EPA's Waste Management Division
indicated that because the Trustees had not supplied a plan
up to this point, it was necessary for EPA to become more
involved. EPA became more involved because the Trustees
were not providing anything in writing. It was necessary
for EPA to write documents to have something with which to
generate ideas, opinions, and arguments. It was not EPA's
intention to produce a final product.
The Scientific Project Advisory Committee was unable to
agree to a plan which provided scientific results within
the limited budget available.
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The Trustees then requested that they be given an opportunity
to design their own plan. On December 23, 1987, the Regional
Administrator agreed with the stipulation that the plan
contain six criteria. If the plan did not include these
six items, then the Cooperative Agreement would be terminated.
The Trustees submitted their plan on January 22, 1988.
Because the plan did not include all six criteria, EPA did
not approve this plan. ;
Rather than terminate the Cooperative Agreement as proposed
in the Regional Administrator's letter of December 23, 1987,
on February 5, 1988, EPA negotiated with various officials
of the City of Boston's Department of Health and Hospitals
regarding the future of the program it was agreed that most
of the current staff would be terminated and arrangements
would be made to sell some of the property.
The Trustees were given another opportunity to submit a plan
on how they would develop a program design over a ten month
period. The plan was submitted on April 8, 1988. In a
letter dated April 25, 1988, the Regional Administrator
wrote to the newly appointed Project Manager that if an
acceptable design is not submitted by June 30, 1988, EPA
will suspend all funding of the Boston Demonstration Project
effective July 1, 1988.
One of the major problems in developing an acceptable
design concerns de-leading the interior of homes. CDC
advised EPA that in order to assure that the project
provides scientific results, all sources of lead should be
identified. However, in Massachusetts, once an agency
identifies lead paint in a house, the lead paint must be
removed. By removing the lead paint, the results of the
study are no longer based solely on the removal of ~oil.
Removal of lead paint is expensive. It is EPA's policy
that project funds will not be used to remove lead paint.
The Trustees are in the process of obtaining outside funding
for this activity. However, they advise us that it may be
difficult to obtain this funding without assurance from EPA
that EPA will continue to fund the Demonstration project.
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The Trustees did not have staff qualified to prepare
protocols. The Trustees did not hire such an individual
because they did not believe they were responsible for
protocol .development. As previously reported EPA expected
the Trustees to assume this responsibility. The Scope of
Work included in the Cooperative Agreement clearly states
that the Trustees will develop and distribute for review
comprehensive research protocol.
According to the Position Description for the LFK's Research
Coordinator, this individual is responsible for protocol
development. However, the individual hired as the Research
Coordinator did not have the background necessary to fully
execute the position duties. The LFK Project Manager advised
us that at the time the individual was hired, the individual
was not expected to develop protocols. The LFK Project
manager continued, that the Position Description was prepared
after the individual was hired.
We have reviewed the selection process for the Research
Coordinator and have determined that it is not clearly
evident that this position was never intended to handle
protocol development. In our opinion, all the applicants
or at the least the top qualified applicants were not
adequately considered. This may have resulted in the Trustees
missing an opportunity to consider other individuals better
suited to the position.
The position of Research Coordinator was advertised in the
Boston Globe on June 5, 1987. The advertisement provides
that "Strong background in statistics, epidemiology,
survey research a plus. Doctoral candidate or degree.
$37.5 - $44K." The Project Manager advised us that the
above were preferred not required qualifications. He said
that ideally you want applicants with the strongest background.
The Project Manager could not remember if he had interviewed
or contacted any of the applicants to the Globe advertisement.
He said that one or more of the applicants had a strong
epidemiology background but it was "our understanding at
the time that the person would not be involved in research
design at all."
We determined that 5 of the 11 applicants we reviewed were
qualified to meet not only the basic requirements but also
some of the "preferred" qualifications. We contacted 2 of
these 5 people, and were advised by both that no one ever
contacted them regarding an interview or that they were
considered and not selected.
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We agree with the Project manager that the best qualified
applicants should be sought. However, we do not have
evidence why applicants who met "preferred" qualifications
were not contacted.
In addition, the Project Manager believed it was important
to hire a minority individual because the program was
directed at the minority community, and a minority staffed
program may become more acceptable to the community.- The
LFK Project manager advised us that he can tell from reviewing
a resume if there is a chance the applicant is a minority.
He claims schools, references, etc., may indicate the
applicant's minority status.
We do not believe the best interests of the minority community
are served unless the best qualified individuals are hired
for key positions. In our opinion, utilizing the candidates'
minority status or experience in dealing with the minority
community when such are not identified in the advertisement
as necessary attributes is not appropriate selection criteria,
especially when the ad identifies the program as an Equal
Oppor tuni ty Employer.
The individual selected holds a Doctorate in Economics.
The Project manager advised us that this individual was
not comfortable working on medical protocols. The LFK
Project Manager claims that because EPA failed to obtain
participation from CDC the LFK staff was forced to take on
responsibilities such as protocol development for which
they were neither hired nor prepared. Because EPA has
advised us that they expected the Trustees to develop
protocol, we cannot accept without question the Trustees
argument that the position was never intended to handle
protocol responsibilities. In addition, even if we were
to accept the Trustees argument that protocol development
did not become a responsibility until September 1987, we
question why they would have a staff member work on duties
he was not qualified tq perform. We believe the Trustees
should either have accommodated for these changes or refused
to accept responsibility for a task they could not perform.
The Trustees advised us that at the time the Cooperative
Agreement was negotiated EPA was not willing to fund other
positions. The Deputy Director of the Waste Management ;
Division stated that additional funds could have been made
available for another position' such as a protocol specialist.
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We noted that the Trustees were aggressive in hiring an
Office Manager in the fall of 1987. We believe that the
Trustees should have shown the same aggressiveness in
hiring someone to handle protocols if they did not believe
the current staff could perform this responsibility.
* * *
: Both EPA and the Trustees can improve their management of
this project. EPA needs to clearly identify the role each
agency is playing in this project and assure that the
Trustees understand its role.: EPA needs to exert stronger
oversight controls, not to assume the recipients' duties.
Taking on recipient activities causes confusion.
The Trustees must understand they will be held primarily
responsible for accomplishing project goals. Greater EPA
participation does not relieve the Trustees of their
responsibilities. The Trustees need to be more aggressive
in accepting their responsibilities as well as more flexible
in adjusting to changing conditions of a demonstration project,
Auditee Response
(Note: The Trustees' response referenced specific paragraph
numbers assigned to the draft report by the Trustees. Due to
revisions in the final report those numbers do not correspond
to the final report. We have therefore deleted references to
paragraph numbers from the quoted response to avoid confusion).
Trustees, Inc. has developed a Program Design. The Program
Design was acknowledged and accepted by letter to Trustees, Inc.
from the EPA Regional Administrator dated July 14, 1988. We
accomplished this when EPA gave us the authority and latitude to
do it. We also believe that this achievement lends credence to
our position previously stated, and which we still maintain,
that the responsibility to develop a program design did not rest
with us until around December when at our request EPA gave
Trustees, Inc. approval to develop the program design....
We emphatically deny that we misunderstood our responsibilities.
We also contend that we fully accepted them as set forth in the
cooperative agreement, and as developed through project
implementation. Additional background and amplification of
responsibilities is provided as previously stated.
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The matter of who was responsible for what would seem to be
simple to determine from the cooperative agreement. However, it
isn't really that simple or straight forward. To elaborate on
this and provide evidence as to why we feel as we do about .who
was.responsible for Program Design and Protocols we wish to
include the following.
We believe it is correct and appropriate to say that EPA has the
authority to define responsibilities. This is inherent in the
award process which EPA controls, and seems supported by EPA
directives. If responsibilities are not clearly defined, as is
the case in this project or even if they are then one must
look to procedures and the process that occurred as the program
was implemented. We have provided background information,
minutes of meetings, and memoranda pertinent to what actually
occurred. We think that this data supports the Trustees, Inc.
position on this matter....
EPA never notified Trustees, Inc. in writing or in any other way
that we were delinquent in developing the Program Design. No
such notification was given to us because the Project Officer
knew that the EPA had assumed the responsibility for program
design. Also Special Condition 32 states that the EPA Project
Manager will conduct frequent reviews to evaluate project
activities to ensure compliance with applicable EPA requirements
and regulations.
While we agree that greater EPA participation does not relieve
the Trustees, Inc. of their responsibilities, it must first be
determined what those responsibilities are before criticising
Trustees, Inc. for failure to meet them. We do not understand,
and disagree where it is stated that recipients retain primary
responsibility to accomplish agreement objectives, and, that EPA
would provide assistance not leadership in the project.
Trustees Inc. does not know where in the agreement you find that
EPA will provide assistance not leadership in the project. We
believe that such a blanket statement is not contained in the
agreement. At any rate, the statement would have to be
interpreted in the context of the agreement. Responsibilities
are as defined in the agreement'. The work "conjunction" in
paragraph 6 seems to support our position that the responsi-
bilities cannot be determined other than by studying the
progress of the project. Conjunction, means, of course, to work
conjointly or together.
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We agree that the person hired for the position was not suitable
to develop and write protocols. The operative question,
however, is was this his responsibility. We maintain that EPA
assumed the primary responsibility for developing protocols.
The agreement does very clearly state, as contained in the
report, that Trustees, Inc. will develop and distribute for
review comprehensive research protocols. Page 1 of the SOW also
states...Trustees, Inc. conjunction with EPA...and that prepara-
tion shall include devleoping study protocols in cooperation
with EPA.
We think the SOW does not specifically and solely charges
Trustees, Inc. with the responsibility for protocols. Since EPA
has the inherent authority to control the project within the
nature of the agreement, it is without question to us that EPA
agreed to develop protocols, and we believe that the implementa-
tion process and certain matters that we've documented and
provided to you support us in this.
It is apparently the Inspector General's conclusion that
failures of protocol development are attributable to the
selection of an unqualified person for the Reseach Coordinator
Position.
The following selected comments were provided by the LFK Project
Manager.
In summary, given the "extremely abbreviated timeframe" in which
we were required to work, the Trustees and Project staff managed
the Project and met Project objectives in a timely, efficient,
and effective manner. In doing so, we met our responsibilities
for those objectives whose accomplishment was not dependent upon
EPA actions and decisions. We have also made the extra efforts,
involving, at times, considerable and difficult change and
sacrifice, that have been necessary to ensure that the Project
will be effectively implemented despite its initial difficulties
in developing an acceptable design. The Trustees/Project staff
can not, in fact, and, given th§ available evidence, be
reasonably held responsible for these failures, despite the
considerable effort apparently being made to do just that.
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^lfliS?9aBa^;*'~t'*:^^w't'Mi^'KJ;ii<'"--"^^^^^^
PIG Response ;
The Trustees stated that they have provided documentation to
support the position that the Trustees.were not responsible for
the program design until December 1987. We have reviewed this
documentation and have determined that it does ,not support the
Trustees. A memorandum from the EPA Regional staff to the EPA
Headquarters staff simply requests a budget increase for the
grant and does not define responsibilities. Further, the
memorandum notes that the cost of the first project design will
be higher than subsequent designs. Since the request is for an
increase in grant funds which are awarded to the recipient, the
Trustees, and the funds are for a project design, we believe
this memorandum is evidence that the Trustees were responsible
for the project design. Without documentation clearly stating
that the Trustees were not responsible for developing a project
design, we accept the award official's (EPA staff) statement
that the Trustees were responsible for the project design.
In addition, an EPA memorandum dated June 5, 1987 requesting a
waiver of costs prior to the award of the Cooperative Agreement
provides: "...the Trustees believe they must proceed with the
project before all the details can be worked out and the
cooperative agreement awarded." In our opinion, if the Trustees
are requesting the start of a project before an agreement can be
executed, they must have been taking a leadership role. In
addition, it appears that the Trustees participated in imposing the
tight time constraints they note when justifying deviations from
standard procedures.
The Trustees claim that because a project plan has been recently
accepted by the Regional Administrator, that this is evidence
that the Trustees were not given the responsibility until
December 1987. The Trustees also claim that EPA never informed
them that they were not meeting their agreement objectives.
The Regional Administrator advised the Trustees in writing in
December 1987 and April 1988 that if the Trustees could not
produce an acceptable design, the grant would be terminated. It
is our opinion that if the Regional Administrator advises a
recipient that the grant will be terminated, that it indicates
that there are serious problems in meeting grant objectives.
Since the Regional Administrator advised the Trustees in
December of possible grant termination, we believe this indicates
that the Region viewed the Trustees as respsonsible for the design.
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Subsequent meetings between EPA and Trustees staff have
restructured the project. The Regional Administrator provided
the following comments in response to our draft report:
This draft audit report reveals serious problems
which;must be corrected. However, I am pleased
to report that most of the scientific deficiencies
present during the time of this audit, namely, the
lack of an acceptable design, have been corrected.
Dr. Michael Weitzman has become the project's new
principal investigator. He assembled a team of
individuals with appropriate epidemiological,
scientific and medical qualifications, and produced
the necessary design. I fully expect that the
remaining administration problems encountered in
the early stages of this project will be resolved
and the project brought to a successful conclusion.
We have dropped our recommendation that another recipient be
considered to prepare the project design based upon the Regional
Administrators comments. However, we continue to recommend
improvements for better communication between the Trustees and
EPA for future activities.
It is not the OIG's conclusion that failures of protocol
development are attributable to the selection of an unqualified
person for the Research Coordinator's position. We were
concerned that an individual was assigned a task the individual
was not qualified to perform. In addition, we concluded from
our review that the selection process for this position needed
improvements. We continue to recommend that EPA approve key
program personnel.
RECOMMENDATION
We recommend that you:
(1) clarify the roles and responsibilities EPA
and the Trustees will assume,
(2) set deadlines for tasks,
(3) impose sanctions when warranted,
(4) approve key program personnel who have been
committed to specific tasks by the Trustees.
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2. NEED TO STRENGTHEN ADMINISTRATIVE CONTROLS
The Trustees need to exert greater administrative control
over program activities. The Trustees has established
procedures regarding procurement, payroll, inventory, and
reporting requirements, and budgetary controls, .but compliance
has been limited in these areas. Without strong administrative
controls, EPA has limited assurance that grant funds are
efficiently expended. We have set-aside $107,054 in consultant
fees because of non-compliance with Federal regulations as
well as unsupported work.
We have determined that:
full compliance with the principles of open
and free competition have not been adhered to
when obtaining consultant services,
contracts have not been executed assuring that
all services are provided in accordance with
Federal cost principles,
services provided by one consultant have not
been properly documented to support the amounts
billed..
time and attendance records maintained by the
LFK staff do not agree with the Trustees
payroll records,
property management records have not been
maintained for equipment purchased with grant
funds, reporting requirements have not been
followed,
budgetary controls have not been implemented.
a. Weak Procurement Practices for Consultant Services
The Trustees has not assured that the LFK Program Staff
adhered to the principles of open and free competition
when obtaining consultant services. As a result, EPA
has limited assurance that the most qualified firms or
individuals were selected at a competitive cost.
Section (c) of this finding provides further evidence
that the best selection of consultants may not have
been made. Accordingly, we are setting-aside $107,054
in consultant fees until the Trustees can provide
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further evidence that their selection of two consultants
was in compliance with Federal procurement practices.
The Trustees believed that the exigencies of the situa-
tion justified the procedures that were followed. We
believe poor procurement practices were the cause.
Approximately $130,000 has been expended for consultant
services which makes it the third highest expenditure
classification for this grant. Two consultants have
received over $50,000 each or approximately 80 percent of
the consultant fees paid. The selection of both consult-
ants was not made in accordance with Federal procurement
regulations requiring open and free competition. in late
May and early June of 1987, the Trustees contacted five
firms experienced in community and government relations
to determine what services were available. The lead-in-
soil pilot project was discussed at length with each of
these firms. All five firms requested one to two weeks,
following the initial 1 1/2 hour meeting, to prepare
and submit detailed proposals.
On June 8, 1987, a "Request for Proposals" (RFP) was
placed in New England Adweek. This RFP was very general,
requesting services to ensure community knowledge of toxic
waste clean up issues and public participation in plan-
ning remedial action. The response due date was June 16,
1987. This allowed offerers a maximum of six business
days to respond with a detailed proposal without the
benefit of a 1 1/2 hour familiarization of the lead-in-
soil pilot project.
The Request for Proposal did not contain all the
information necessary to enable a prospective offerer
to prepare a proposal, nor did it contain all evaluation
criteria with the relative importance attached to each
criteria as is required by 40 CFR, Section 33,510(c).
The RFP did not indicate that experience in minority
community relations was required. Nor did the RFP
indicate that personnel services were also being sought.
In addition, we d,o not feel that the six business days
allowed was adequate time between the date of the public
notice and the due date of the submittal. Such restric-
tion violates 40 CFR, Section 33.415. The" Trustees had
submitted a letter dated July 10, 1987, to the EPA
Regional Administrator requesting a waiver of the 30
day Public Notification requirement. Since the waiver
had not been requested by the Project Director until
July, we do not believe the waiver adequately justifies
the short response time given.
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Twelve additional firms responded to the ad for Request
for Proposals. Review of the respondents* proposals
showed evidence that some of the firms were qualified
to provide services which met the Trustees' criteria
for selection per the RPP and at least two of the ;
firms' proposals showed evidence that they could supply,
individually, the services which it took both selected
consultants to supply.
There is no evidence that any of the firms which had
requested details of the program, so that they could
supply a detailed proposal, were ever furnished with
any information or that they were ever contacted at all.
Also, there is no evidence that any of the respondent's
were notified that their proposal was rejected which
is in violation of 40 CFR, Section 33.520(c) requiring
that the "recipient promptly notify unsuccessful
offerers that their proposals were rejected."
In the aforementioned letter to the EPA Regional
Administrator dated July 10, 1987, the Lead Free Kids
Project Director advised EPA that none of the firms
which responded to the RFP were qualified in the areas
of minority community relations/organizing and environ-
mental public health education. The Project Director
further stated that the two firms which were selected
had considerable experience in both areas. Review of
the proposals of these two firms did not show any
considerable difference in qualifications in these
areas from those presented by the non-selected firms.
This letter requested only a 30 day Public Notification
requirement for acquisition of essential start-up
services and equipment. The letter did not request
waivers from any of the other Federal regulations
which were not followed. The Project Director wrote
that a delay in starting work would result in the post-
ponement of the project for a year. This could result
in a public health tragedy of the needless poisoning
of dozens of children. The EPA Regional Administrator
notified the Project Director' of the 30 day waiver on
July 13, 1987. The letter authorized only a waiver of
the 30 day requirement limited to the items contained
in the July 10, 1987 request. The letter further
provides that if any of the cited items can be purchased
in full compliance with the procurement regulations,
it should be done so. The Trustees have referred to
this correspondence as support for their actions.
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As reported, the Regional Administrator's letter granted
only the 30 day waiver. Based on our review, we do
not believe that all proposals submitted in response
to the Request For Proposals were uniformly and objec-
tively evaluated as required by 40 CFR, Section 33.515 (a3.
The determination of qualified offerers and acceptable
proposals was not based solely on the evaluation
criteria stated in the Request for Proposal, as required
in 40 CFR 33.515(b). Furthermore, sufficient evidence
has not been provided which supports the decision that
the two selected firms were so qualified, according to
the selection criteria. We note that one of the two
selected firms invoices for services rendered referenced
a contract that became effective June 11, 1987 or five
days prior to the final day for submissions under the RFP.
In our opinion, the Trustees failed to provide sound,
documented business reasons, in the best interest of
the Program, for the rejection of the submitted bids
as stipulated in 40 CFR, Section 33.430 (c).
Auditee's Response
The Trustees comment in part that:",..the purpose and effect of
the waiver granted was to exempt the cited procurements from EPA
procurement regulations because there was not time available to
consider the other firms and still have any possibility of meeting
important program and EPA goals."
"...It is our opinion that the firms selected could best provide the
services the project needed. We also believe that requirements
were sufficiently outlined in the RFP for a proposal to be made.
We believe the review and selection was proper and served the
best interest of the project.
We disagree that contract costs for consultants should be set-
aside due to noncompliance with Federal procurement regulations.
As is stated in the audit report, a letter of waiver was approved
by the EPA Regional Administrator and included the particular
purchase of service. Background and what Trustees, Inc. had
done concerning this transaction was detailed in the waiver
request which the EPA Administrator approved. We believe no
violation was commited and that additional information is
unnecessary and without justification."
The LFK Project Manager also stated in part:
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"In terms of the relative qualifications of the various consultants
considered: it was the opinion of the program staff, based on the
limited review time and material that was available that together^
the selected firms on the basis of their experience in two areas
judged to be exceptionally important to the potential success of
the pfoprosed Lead-in-Soils project - minority community/relations
organizing, and environmental and public health education....
As clearly stated in the waiver request and approval letters the
other firms were not fully considered, including not receiving
presentations at meetings to^ give them full understanding of the
needs of the project, impossible to present clearly in an
advertisement...."
QIC Comments ;
The OIG does not agree that the Request for Proposal provided
sufficient information to allow offerors the opportunity to
adequately respond to the program demands. The RFP does not
indicate that experience in the areas of minority community
relations/organizing and environmental public health education
are necessary for meeting the qualifications. Yet, these are
the criteria on which the Trustees based its determination
that the offerer lacked the qualifications.
Based on our review, it is not clearly evident that the
offerors lack the necessary qualifications and that the selected
firms were distinctive in their experience. In our opinion, the
EPA approval of this Waiver request was based on information
that was not entirely accurate.
It is the belief of the OIG that if the Trustees had time to
place an advertisement for the RFP, then they had time to place
a more clearly defined advertisement.
The waiver letter was very limited in scope and considering the
timing of the Waiver Request, 24 days after the receipt of the
offerer's proposals, we are still of the opinion that the Trustees
failed to provide sound, documented business reasons, in the best
interest of the program, for the rejection of the submitted proposals.
r
Finally, the fact that the Trustees entered into an agreement with
one of the two selected contractors on June 11, 1987, five days
prior to the proposal submission deadline, raises a question as to
how objective the Trustees evaluations were of the proposal
submissions.
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RECOMMENDATION
We recommend that the set-aside costs of $52,754 and $54,300 for
two consultants be sustained due to non-compliance with Federal
procurement regulations regarding open and free competition. To
assist in making your determination, we recommend that you instruct
the Trustees to:
(1) explain why the RFP was not more specific
regarding selection criteria,
(2) justify why none of the twelve offerers
were considered qualified, and
(3) justify how the two selected consultants had
considerable experience as opposed to the other
offerers.
(4) explain why a contract was awarded prior to the
deadline for proposal submissions.
We also recommend that your staff review the Trustees procurement
actions during future monitoring visits.
b. Poor Contract Management
The Trustees did not assure that contracts were executed
with two selected consultants. Without an executed
agreement, EPA has limited assurance that consultants
will provide all the services agreed upon [see finding
2(c)] in accordance with Federal cost principles. In
addition, an executed contract with another consultant
was so flexible in terms that it allowed the consultant
to receive four times the base amount. This contract
was executed with the City of Boston's Office of Environ-
mental Affairs rather that the Trustees. Such practices
do not evidence that the Trustees are controlling
grant activities or the limited grant funds.
As stated in 40 CFR,' Subpart B, Section 33.210 (a), the
recipient of an assistance agreement is responsible
for the settlement and satisfactory completion in
accordance with sound business judgement and good
administrative practice of all contractual and admini-
strativ,e issues arising our. of subagreements entered
into under the assistance agreement.
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:,.(
it
The two consultants selected for community relations
work each submitted proposals with estimated budgets
-over $50,000. Both eventually billed for services
over $50,000. Neither consultant had executed a contract
with the Trustees. By not executing a contract, there
is no clear definition of services and costs agreed to
if disputes arise.
The LFK Project manager claimed that contracts were
negotiated with both firms. However, what was provided
for our review were two Proposals for Services signed
only by the offerers. We do -not accept a Proposal for
Services to be a legal contract. These documents were
not signed by the Trustees.
The Trustees argue that it seemed imprudent to commit
the project fully to these rather large contracts due
to the uncertainty of the project. OMB Circular A-
102, Attachment O, Paragraph 14(b) provides that all
contracts in excess of $10,000 shall contain suitable
provisions for termination by the grantee. The Trustees
could also have considered a short term contract with
options to extend services. We believe either method
would have been a more prudent course to take than not
to execute a contract.
A contract was executed with a third consultant;
however, in our opinion, the terms of the contract
were too flexible and the contract was not executed
with the Trustees, the official grant recipient.
The contract was executed for space planning services
with a base ceiling of $2,000. However, the contract
provided that additional services could be obtained at
additional costs but no limit was provided. The
consultant was paid a total of $8,062. Most of the
additional services provided related to obtaining maps
of the LFK study area.
r
In addition, the contract was executed between the
consultant and the Office of Environmental Affairs, not
the Trustees. The Office of Environmental Affairs is
another City Department headed by the same individual who
was designated the LFK Project Manager. To assure control
of funds and-services, we believe that only the Trustees,
the legally responsible grantee should sign contracts.
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According to 40 CFR, section 33.1010:
"Each subagreement must include provisions defining
a sound and complete agreement, including the:
(a) Nature, scope, and extent of work to be
performed;
(b) Timeframe for performance;
(c) Total cost of the subagreement;
and
(d) Payment provisions."
We do not believe that the contract which was
executed for space planning: adequately defined the
scope of work to be performed. Neither was the total
cost of services adequately identified. We believe
that the significant change in the base cost for
additional services would be better documented
by use of an amendment.
In our opinion, the Trustees have not exercised
the controls over contracting that assure that all
services are provided within an agreed cost.
Auditee'sComments
The Trustees advised that:
"We agree that contracts were not properly drawn and signed. We
do not think that this necessarily reduces the assurance that
services were provided within agreed costs. Services were
identified and monitored by LFK staff and payments were made
only after the Project Manager had ensured that the consultants
had provided the services invoiced.
Audit report findings have been discussed with LFK Project
Officer and we will take actions to see that this kind of
situation does not reoccur. This has also been discussed with
our Purchasing Manager and other staff to ensure proper
procedures are followed, and that payments are made only for
services rendered in accordance with our procedures...."
The Trustees further advised:
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"We accept the recommendations except for item 5, We believe
this to be uncecessary and that it would be an impediment to
project administration and implementation. It also seems to
violate paragraph 6, Attachment O, of OMB Circular A-102."
In addition, the LFK Project manager responded in-part:
"The 'signed1 third contract was flexible in its terms in order to
provide for the .immediate and long term office space needs of the
project, and to be prepared for staff occupancy in approximately
one month's time. This involved making provisions for a minimal
estimated base costs, plus any additional services that might
have been required at additional cost, since it was impossible
at that early stage to develop a more realistic estimate of the
extent of :the project's needs for these services. It was important
for the consultant to be able to plan a schedule that would allow
him to provide additional time, if required, to the project.
With not enough personnel resources to divert time and energy to
office planning activities, {there were only one full time and
one part time person on board at. the time) , this was a cost-
effective strategy for the Project."
QIC Response
We wish to emphasize that properly executed contracts will
provide greater assurance that all services agreed upon will be
provided. As evidence, we refer to our finding on Unsupported
Consultant Services, 2(c). In responding to our Finding 2{c), the,
LFK Project Manager advises us that the consultant was asked to
provide a different, less intensive, level of training service
than proposed. Without a properly defined scope of work or an
amendment to recognize changes, EPA has limited assurance that
contractors are fulfilling their obligations.
We continue to recommend that your staff review contracts over
$10,000 for assurance of compliance with all Federal regulations.
OMB Cicular A-102, Paragraph 6{c) provides that the Federal grantor
may conduct such a review if the grantee's procurement procedures or
operations fail to comply with one or more significant aspects of
the Attachment. Based upon our review of the Trustees procurement
and contractive consultants [see finding 2(a) and 2(b)], we believe
this recommendation is appropriate and reasonable.
RECOMMENDATION
We recommend that you instruct the Trustees to:
(1) Insure that contracts are executed in
accordance with all federal regulations,
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(2) Assure your staff that the Trustees will
sign all contracts,
(3) Ensure that services and costs are
specifically defined in all contracts,
(4) Ensure that amendments or change orders
are issued for contract changes,
(5) Submit contracts over $10,000 for your
staff's review to assure that the
Trustees are complying with all
: recommendations and Federal regulations.
c. Unsupported Consultant Services
Satisfactory evidence for justification of the work
performed by one consultant has not been provided by
the Trustees. EPA has limited assurance that the
services were provided. In addition, it is questionable
whether it was necessary to hire a consultant for
certain services. Accordingly, we are setting-aside
$19,250 in recruiting fees, $16,625 in community relation
fees, The Trustees have not provided adequate monitoring
of contract activities to assure that grant funds were
expended for necessary services.
The consultant submitted a revised proposal for assist-
ance in the Lead Poisoning Cleanup Program dated July
10, 1987. The revised proposal specified the following
services to be performed:
Organizational Development
Recruitment
Training
General Administration
Community Relations
Public Relations
(i) Recruitment
According to the revised proposal, the program area of
Recruiting set forth objectives of developing a diverse
pool of candidates who met the creativity and competency
requirements of the project. This was to be accomplished
through the tasks of;
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(1) Developing position descriptions, statements of
qualifications, and establishing reporting
relationships,
(2) Finalizing salary ranges,
(3) Resolving administrative issues, i.e. benefits,
(4) Placing ads and job postings as appropriate,
(5) Identifying and contacting most likely sources
for candidates,
(6) Reviewing resumes from advertising and networking,
(7) Identifying finalists through an interviewing
process, and
(8) Referring finalists to Project Director or his
designee.
Included in the services provided by the Trustees which
EPA pays for by the G&A rate, are personnel administration
services. The Trustees Personnel Department provides:
central file administration, personnel policy guidance,
wage and salary administration, fringe benefit administra-
tion, affirmative action program guidance, along with
recruiting and staffing. Both the Trustees' Personnel
Director as well as the LFK Project manager advised us
the Trustees Personnel Department was not utilized
it could not hire the LFK staff as quickly as needed.
Before the consultant was instructed to begin recruiting
efforts, three key staff positions had already been
hired. These included the Project Manager, the Nurse
Manager, and the Field Operations Manager. Interviews
with 11 current staff members resulted in six employees
stating they were hired by the Project staff (usually
by one of key Managers already hired) and five employees
stating they were hired by the consultant. At least
nine of the 22 staff members if not more were not
recruited by the consultant. Neither the Project
Director nor the Trustees provided any documentation
which could support that the balance of the staff was
recruited by the consultant.
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Neither the Trustees nor the Project Director have
provided supportive evidence to show that the consultant
developed any of the position descriptions for Project
personnel. Our review disclosed that the position
descriptions Secretary, the Research Assistant's position
was written by the Office Manager, the Inspector's
position description was copied from an Office of
Environmental Affairs' Investigator's position description,
and there is evidence that two position descriptions
were never written at all (Nurse Manager and Field
Operations Manager). The Project Director stated that
these position descriptions were discussed verbally
with the employees at the time they were hired.
Other personnel recruiting services to be provided by
the consultant were the resolving of benefits and
salary ranges. The Trustees has an existing employee
benefit package. The Program policies for benefits
and salaries should be commensurate with those of the
Trustees. There is no evidence that authorization was
given to vary Program policies from those that are set
by the Trustees.
In our opinion, not only is there little evidence to
support the consultant recruitment efforts but there
is little support to show the need for these services.
The Trustees had the capability of recruiting staff.
The Trustees prepared recruitment advertisements.
Support shows almost half the staff was recruited
through newspaper advertisements and interviews with
Program staff. (This figure could be higher depending
upon final support for consultant activities). This
method did not unduly burden the Trustees recruitment
staff. In addition, the Trustees already had prepared
fringe benefit packages.
The Trustees claim that the consultant was not hired to
recruit all the positions and write all the position
descriptions. The consultant's proposal does note
that three key management positions were already filled
however there is no indication that the consultant was
recruiting for less than the remaining staff needed.
It also points to the fact that without a contract
specifying the exact scope of work, the scope can be
questionable [see finding:2(b)].
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Auditee's Response
The Trustees replied that they could not provide the recruiting
within the short and critical timeframes.
The LFK'Project Manager provided the following selected comments. ,
"(The consultant) provided extensive personnel recruiting services.
However, (the consultant) was not requested to recruit for all
project positions, nor to develop position descriptions for all
project positions. _For example, they were not asked to recruit
for or develop position descriptions for the positions of Project
Director, Field Coordinator* or Nurse Manager because these
positions were filled by the time (the consultant) began their
recruitment efforts. Appropriate Trustees salary ranges and
benefit levels for various staffing needs were discussed at
length between program staff and (the consultants) personnel
based on job responsibilities and requirements, and 'market
conditions' relative to recruiting the needed personnel, especially
given the difficulty, noted above by the EPA, of doing so in the
very short time period available."
QIC Response
We agree that total staff recruitment for the program could have
been a burden for the Trustees. However, since the Trustees offer
recruitment services as a grant recipient and our review indicated
that the LFK staff was active in recruitment, we beleive that
the two working together may have been able to recruit without
the services of a consultant. The Trustees also have experience
in medical/scientific recruitment.
Our finding already notes that the consultant was not expected to hire
for three positions. However, the proposal does not indicate any
further limitations. Documentation has not been provided to support
that work on all the activities proposed were indeed accomplished.
We noted that approximately 80% of the consultant's recruitment
budget was expended indicating that most of the proposed activities
were charged. However, we do not know what services were provided as
proposed. Since the proposal does not indicate any other limitations
than the aforementioned positions, we continue to recommend a Regional
review of documentation to support hour^ charged for specific
recruitment activities.
(ii) Community Relations
The objective of the services to be provided for Community
Relations by the consultant consisted of working closely
with local community leadership to brief them on the
project.
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This objective was to be met through the tasks of:
(1) Identifying and contacting heads of
community based organizations,
(2) Contacting members of clergy,
(3) Identifying and contacting opinion leaders,
(4) Contacting political leadership,
:(5) Contacting minority urban media officials,
i{6) Setting up mechanisms to receive feedback
on project aims and implementation,
(7) Setting up and coordinating community forum
in selected areas to present the project
and its personnel to members of the
community and allow them to respond directly
to any questions or concerns.
The Lead-in-Soil Demonstration Project had a position
for an Education Coordinator. Some of the responsi-
bilities of this position-consisted of? serving as
liaison between the project, community leaders and
governmental agencies to implement campaigns designed
to inform, and educate, and to increase public awareness
and participation; writing and editing news releases,
newsletters, advocacy and policy statements for the
project; creating opportunities and presentations to
the public, and targeted communities as an advocate
and proponent of public policy initiatives; organizing
and staffing an Advisory Committee of community leaders
reflecting the diversity of the participant families.
Based on our review, the services provided by the
consultant for Community Relations duplicate the effort
of the Education Coordinator (Community Relations
Director} on the Lead Free Kids staff.
The Project Manager provided no documentation that the
consultant held individual meetings with community leaders
as planned.
The consultant's efforts were to make contact with
community leaders and organizations and have one-on-
one briefings with them in order to educate them on
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3>
'$
the Lead-in-Soil Demonstration Project. We contacted
21 community leaders from schools, churches and day
care centers which were listed on the consultant's
Community Relations Campaign Update, Of the 21, 10
were listed as having been contacted and 11 were on
mailing lists of organizations which were either contacted
or in the process of being contacted at the time of
the Community Relations Campaign Update.
Of the 10 who were named as having been contacted by the
consultant; two had not heard of the program, three had
heard about it but only through word-of-mouth, pamphlets
in the mail or maybe a phone call but didn't know from
whom, and five had known of it from the program people
or from Ronald Jones directly.
Of the other 11, six of the organizations contacted
had not heard of the Lead-in-Soil Demonstration Project,
The other five had heard of the program but only through
either word of mouth, pamphlets in the mail, or a
phone call. None of the five could remember much
about how they were contacted or by whom.
The Project Director of the Lead Free Kids Project informed
the auditors that "the consultant's community relations
activity preceded the recruitment of the Community Relatio
Director by several weeks, and complemented and expanded
on the level of activity that this one individual
could assume during a compressed start-up for a project
with considerable planned and potential impact on the
targeted community."
The authorization to hire the consultant was given on
July 13, 1987 by EPA, in the form of the approval of
the requestfor-waiver letter submitted to EPA by the
Lead Free Kids Project Director on July 10, 1987. The
Lead Free Kids Community Relations Director was hired
on July 17, 1987; oust four days after the consultant
was authorized to be hired.
We believe further evidence needs to be obtained to
support the $16,625 paid for community relations activi-
ties. Only short informal phone calls as well as
mailings of pamphlets were" the services provided.1
Half the people we contacted were not even aware that
such a program had existed'. We cannot conclude that
the services provided were effective.
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^
Auditee Response .
The Trustees replied through the LFK Project Manager that the
auditor's statement that the consultant charged the LFK program
$16,625 for sending pamphlets and telephoning various organizations
was clearly misleading. The LFK project manager continued, "...it
is not a fair measure to expect that 'all1 of the people contacted
by (the consultants) would either remember the phone conversation
or the contents of the written materials, especially when those
contacted were the heads of organizations, or political leaders
who receive dozens of pieces of mail a week. Therefore, the
plan to follow-up with phone calls or letters, which was in its
early stages when the (consultant's) contract was discontinued. But
in any event, how reasonable is it to expect everyone contacted to
remember the contents of a pamphlet, flyer or letter, especially
if their contents were not related to their professional
expertise or interest?"
PIG Comments
Based on further documentation which was provided by the
Trustees, Inc., the DIG acknowledges that community outreach was
performed in the form of mailings, phone calls, and planning and
scheduling of events.
The DIG is concerned, however, that the initial contact work
performed, cost $16,625. The consultant's revised budget for
Community Relations activities as of July 10, 1987 was $13,000.
The consultant's efforts which had still not been carried out at that
time consisted of making contacts with community leaders and organi-
zations to have one-on-one briefings with them in order to educate
them on the Lead-in-Soil demonstration project. Also, the consultant
proposed to continue with on-going briefings of the progress and
findings as well as serving as a contact for the community.
The LFK Project also had available the services of their own staff
Community Relations Director, and an EPA Public Relations staff
member who contributed 50% of her time to these outreach efforts.
The fact that the Community Relations effort was already over budget
when other services were still to be provided and the fact that
contact made with community organizations during the course of the
audit failed to show any significant awareness of the Lead Project,
the OIG maintains its position that satisfactory evidence has not
been provided as justification for the $16,625 in Community Relations
costs and costs will remain set-aside until such evidence is provided.
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I
* * *
We are setting aside a total of $35,875
Recruiting: $19,250
Community Relations: $16,625
until satisfactory evidence is provided by the Trustees
which justifies the expenditures for the above stated
services.
The Trustees of Health and Hospitals did not ensure
that the Project goals were being met and that the
services which were procured were in the best interest
of the program. As a result, these costs were expended
and the program has still not achieved its objective.
RECOMMENDATION
We are recommending that you determine ineligible the recruitment
costs of $19,250 billed by the consultant unless the Trustees
provide documentary evidence which identifies:
(1)
(2)
(3)
(4)
(5)
(6)
the positions the consultant recruited,
the employees hired by the consultant,
the position descriptions written by the consultant,
the salaries and benefits developed by the consultant,
the recruiting ads placed by the consultant,
the consultant charges as they relate to the
individual tasks which comprise recruitment.
f
We also suggest that you consider what services were provided
and determine if they duplicated efforts by the Trustees and
Program staff and whether it is reasonable to pay for such
consultant services.
We recommend that you determine ineligible the Community Relations
costs of $16,625 billed by the consultant unless the Trustees
provide documentary evidence as to:
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(1) why it was necessary to have a consultant
provide services an LFK staff person could
handle,
(2) explaining the different responsibilities
of the consultant's staff and the LFK Community
Relations individual,
(3) identifying the consultant's charges as they relate
to the individual tasks which comprise the
Community Relations efforts.
We also suggest that you consider whether ;it was necessary to
have a consultant provide the services rendered and whether the
charges are reasonable for the services provided.
In the future, we strongly recommend that the Trustees provide
evidence why consultants services are necessary and obtain your
approval before executing a consultant contract.
d. Lack of Control Over Payroll Record Keeping
The Trustees did not provide adequate control over
the LFK payroll system. Time and attendance records
maintained by the LFK Program staff could not be
reconciled with the official payroll records of the
Trustees. The Trustees did not have an internal
control system to assure that source documents received
from the LFK Program staff were accurate. In addition,
the LFK Program staff did not adhere to the Trustees'
Personnel Policies which affected payroll.
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The time and attendance records maintained by the LFK
Program staff could not be reconciled with the official
,payroll records of the Trustees. Twenty-four instances
were noted for the period 09/07/87 - 12/25/87 in which
the Trustees and LFK records did not agree. The
Project Director states that a preliminary review by
his staff showed no significant level of discrepancy
between the records of the Trustees and the LFK records.
Discrepancies found during our review are as noted.
The LFK daily sign-in sheets, employee time sheets,
and comp time sheets did not agree with the bi-weekly
time sheets submitted to the Trustees. The Trustees
rely on the bi-weekly time sheets to prepare the
payroll.
Per the Trustees records, 55 percent of the LFK employees
had used more than 50 percent of their sick leave.
However, per the LFK records, 41 percent had used more
than 75 percent of their sick leave. The LFK records
showed three employees had used^ more sick leave than
earned. However, the Trustees records showed only one
employee had used more sick leave than earned.
The Trustees did not monitor the balance of leave which
an employee is entitled. Therefore, they had no way
of insuring that leave policies were adhered to or
that employees only took the amount of leave to which
they were entitled.
The Trustees did not have a system in place to ensure
that the source documents they received were accurate.
Also, adding to the problem was poor record keeping by
the LFK Office Manager. As a result, the Trustees
payroll records are inaccurate. Therefore, EPA cannot
be assured that the Trustees Personnel costs are accurate.
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The Trustees has advised us that they will further
review the payroll records and take corrective action
as necessary. However, they argue that the payroll
records are not maintained by the program staff; that
all payroll records are maintained by the Trustees and
are located in the Trustees offices. They assert that
employees are paid based on individual time sheets which
show specific days worked, and that records maintained
by the program people were only used as means of control
as to the whereabouts of the personnel.
The official payroll records, which are those maintained
by the Trustees, must be able to be traced back to the
source documents in order to ensure accuracy with set
policies and procedures. This is possible by maintaining
the payroll records by the Project management.
Contributing to inaccurate payroll costs was the LFK
Program staff's non-compliance with the Trustees'
Personnel Policies. LFK Program employees were allowed
a shorter probationary period as well as more generous
vacation leave. The LFK Program Director believed the
Trustees' Personnel Policies were flexible. The Trustees
did not assure that their policies were being followed.
As a result, employees were allowed more leave time
which not only increases payroll costs but decreases
productivity.
The LFK staff was allowed a three month probationary
period instead of a six month probationary period as
stipulated by the Trustees Personnel Manual. Providing
a shorter probationary period allows employees to use
sick leave sooner. This cost EPA approximately $6,500
and lost productivity.
The Trustees Personnel Policy Manual provides the
following:
Probationary Period
All employees shall serve a probationary period of
six months, and may be extended an additional two
months if the Director/Administrator feels that the
additional time is necessary to objectively evaluate
an employee's worth and contribution to the success
of the program.
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*:
-tit
Sick Leave - General
(1) Sick leave should be used for illnesses incurred
by an employee. , "
(2) Sick leave shall not be;used for personal business
unless such use is approved in advance by the
Program Director/Administrator.
Sick Leave - Accrual
(1) Full-time employees shall earn sick leave at a
rate of one and one quarter days for each month
worked.
(2) Employees shall begin to earn sick leave credit
on the first calendar day of the month following
the date of employment.
(3) Probationary employees may not use their accrued
sick leave until the end of the six-month proba-
tionary period, except at the discretion of the
Program Director/Administrator.
We reviewed the LFK staff payroll records in accordance
with the Trustees Personnel Policy and noted 68 instances
in which all but two (who didn't use any sick leave)
of the 22 LFK employees were allowed to use accrued
sick leave before the end of their probationary period.
No formal exemptions from the Trustees sick leave
policy were provided.
Although the Trustees policy states that employees could
only use sick leave before the end of their probationary
period at the discretion of the Program Director.
The Project Director advised that "a significant number
of staff were effected by a flu-type illness which
lingered for many, quickly using up much of what should
be understood to be the very little sick time available
to them after only a few months on the job even given
the more liberal OEA policy regarding sick time availa-
bility."
Our review indicates a random leave usage as opposed
to an extended use for a lengthy or lingering
illness. The Project Director cites the liberal OEA
-------
leave policy, when OEA's policies are not applicable
to this grant. The Trustees" policies are the onep
which are to be adhered to.
It should also be noted that one LFK employee was out
from work for a long period of time. Auditors asked
the Project Director why this employee ;used more sick
leave than was earned and he said that "he did not
know. The Office Manager from OEA was also asked and
she told the auditor that she would look into it and
get back to the auditor, however, she never did. The
Project Director stated that he believed that OEA had
the flexibility to vary from some of Trustee's stated
:policies. As previously noted, OEA is not the grantee,
;and therefore their policies are not applicable to
this grant.
The Project Director asserts that the staff's sick time
use, as well as other indicators of project staff
performance, reflect very positively on the commitment
and responsibility of the Program staff. We fail to
see how excessive use of sick leave by the LFK staff
reflects positively on their commitment and responsibility
to the grant project.
As a result of not following the Trustees policies, LFK
employees were able to take sick leave earlier than
allowed by Trustees policy. Therefore, LFK employees
were paid through sick leave when they should not have
been paid for the days they did not work. This allowed
LFK personnel to be overpaid by approximately $6,500.
This is 545 hours, or over two months, of productivity
lost.
The LFK Project Director allowed the LFK staff to accrue
more vacation leave than allowed by the Trustees Personnel
Manual. As a result, LFK employees who are paid for
the balance of their vacation leave upon termination
have been overpaid.
Trustees Personnel Policy Manual sets the following
policy:
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.Vacation Allowance
(!) Salaried Administrators, Directors, Managers,
Physicians and Dentists shall receive four weeks
of vacation annually, accrued at a rate of 1.67
days per month.
(2) Salaried employees other than those listed above
shall receive three weeks vacation annually,
accrued at a rate of 1.25 per month.
(3) Hourly employees shall receive two weeks of
vacation annually, accrued.at a rate of .83 of a
day per month. Vacation for permanent part-time
employees shall be on a pro-rated basis in
accordance with the number of hours worked.
(4) Hourly employees, after five years of continuous
service with Trustees, Inc., shall be entitled to
three weeks vacation annually, accrued at a rate
of 1.25 days per month for a full-time employee,
and at an appropriate rate determined on a pro-
rated basis for employees working less than 35
hours per week.
The Trustees Personnel Director agreed that nursing
assistants, the executive secretary, and the admini-
strative assistant are considered hourly employees
eligible to receive two weeks of vacation annually.
However, our review showed that the nursing assistants
were allowed 3 weeks of vacation while both the admini-
strative assistant and the executive secretary were
allowed 4 weeks of vacation. The Trustees Personnel
Director advised us that a review of position descriptions
would need to be done before a determination of vacation
leave eligibility could be done for other employees.
The Trustees Personnel Department did not maintain LFK
position descriptions at the time of our audit.
The Trustees did not have internal controls in place to
assure that their policies were being adhered to.
This allowed LFK employees to be given more vacation
leave; by the Project Director!who was under the impres-
sion that the Trustees personnel policies were ^guidelines
only."
The Project Director gave staff members more vacation as
an incentive to join the Lead Free Kids Program. There
is no evidence that the Project Director received a
-45-
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formal exemption from the Trustees which allowed him
to give staff members more vacation leave than allowed
by Trustees policy. . ' .
The Trustees advised us that the vacation benefits were
being looked into. The LFK Project Director believes
it was justifiable to designate the administrative ;
assistant and executive secretary as managerial and
considered it "not to be much of a stretch of Trustee
and OEA guidelines to make the requisite offer of four
weeks vacation in order to recruit the required staff
in the required time period."
We do not feel this is an acceptable explanation since
there is no evidence that the Trustees approved such a
decision; and, it should be noted that the Office of
Environmental Affairs policies are not applicable to
the grant. This still does not explain why the nursing
assistants were allowed more vacation leave than the
Trustees policy permits, nor does it explain why
authorization was never requested from the Trustees to
alter their policies. EPA signed a Cooperative Agreement
with the Trustees. The Trustees provided EPA with
policies on how the program would be administered. We
believe the Trustees should adhere to their policies.
In addition, LFK employees were allowed to accrue
negative compensatory time. If an employee did not
come to work but had no leave available, the employee
was given negative compensatory time. As a result,
three LFK employees were overpaid. It also points to
a lack of control over payroll costs. We noted
three instances of LFK employees being allowed to accrue
a negative compensatory time balance. The Program staff
is required to get written authorization from their
supervisor for any compensatory time worked. We saw
no evidence that this was done.
*
At the time of our audit, the Office Manager at the
Office of Environmental Affairs (OEA) had temporarily
taken over the duties of the Administrative Assistant
at the LFK Office and was taking some corrective action
for overpaid employees. The OEA Office Manager reduced
the pay of one employee overpaid for negative compensatory
time, leaving two overpaid.
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Auditee Response
The Trustees disagree that it does not have an internal control
system to assure that source documents received from the LFK
Program staff were accurate! "...Trustees Inc. internal control
systems, including payroll, are reviewed yearly by an .
international public accounting firm. Systems reviews also are
made by various firms and/or agencies. Payroll internal control
procedures have never been found to be inadequate."
"The only supporting documents required or received by Trustees,
Inc. is the BIWEEKLY TIME SHEET. We have already stated that as
far as we know the auditors found no discrepancies with these
time reports as related to the individual payroll records. (The
DIG) states that official payroll records must be traceable to
source documents. The sentence that states "This is possible by
maintaining the payroll records by the project Management" does
not make sense to us. I would say, however, that we believe,
and auditors have not reported otherwise, that the BIWEEKLY TIME
SHEETS are in agreement with official payroll records."
In addition, the LFK Project manager provided the following comments.
"In terms of payroll documentation, the auditors insist on
incorrectly identifying sign-in/out sheets and other employee
schedule and payroll monitoring tools employed by project staff
that are reviewed and reconciled bi-weekly to produce the
official timesheets turned in to Trustees, and to control
payroll costs, as official payroll records. Trustees maintain
all official records at the Trustees including necessary support
documents. The LFK offices contain the Project staff work
sheets and necessary copies of Trustees official documents. Our
review showed no significant level of discrepancy inconsistent
with their uses among these records. The errors that have been
noted have been corrected as the have emerged."
QIC Response
The OIG concluded that the Trustees' internal control system did
not adequately assure that source documentation from the LFK
staff was accurate. The OIG's conclusion did not pertain to the
Trustees' internal control system in general. Yearly financial
reviews performed by CPA firms are limited in scope and cannot
possibly review all activities. In addition, as the Trustees
point out, other agencies such as the OIG perform additional
audits;which can result in further recommendations for
improvement. Our report:is doing so.
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The Trustees and the LFK Project Manager claim that because the bi-
weekly time sheets are the official source documents, source
documentation is accurate. The LFK Project Manager further states
that the informal LFK documents are monitoring tools which are
reviewed and reconciled bi-weekly to produce the ^official timesheets.
Our review disclosed that errors had not been reconciled on a bi-
weekly basis. When certain discrepancies were brought to the
attention of the Office Manager, the Office Manager agreed that
corrections needed to be made. At the time of our audit, only
one correction had been made. Since the bi-weekly time sheets
were based on the LFK documents as advised by the| LFK Project
Manager, we continue to recommend that LFK documents should be
reconciled to Trustee documents.
Auditee Response - Probationary Period
The Trustees advised that:
"...The finding relative to Probationary period seems to violate our
personnel policies. However, page 19, paragraph 11.c, does
allow probationary employees to use accrued sick leave at the
discretion of the Program Director. We will ensure that the
Program Manager is aware of Trustees, Inc. probationary period
requirements."
The LFK Project Manager provided the following comments.
"As "Program Director" I made a decision to use the discretionary
authority clearly stated in this policy to reduce the time
before project staff could begin using their accrued sick time
and formally extended this provision to all Project staff
members. As the auditor's have indicated, this decision was
consistently applied. I signed the majority of the payroll
sheets myself and formally delegated the authority to the
Assistant Project Administrator in my absence.
Given the very difficult circumstances under which project staff
were asked to work:
-changing schedules of primarily field activity
: - schedules periodically re-determined based, on the needs of
the project in meeting its limited time frame objectives, but
regularly including evening and weekend hours in the City's
highest crime neighborhoods, and
- required to work under a variety of weather conditions.
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I
;*
It was determined that a decision to use the clearly stated
discretionary authority to allow project employees to have
access to their accrued sick time after three months, which was.
made in response to similar conditions among Environmental
Affairs'staff .was, perhaps, particularly appropriately applied
to the LFK Project employees. While the overall burden applied
most strongly to the line field staff, most, if not all of the
rest shared to some degree these burdens and it was decided that
it would be disruptive and divisive to assign this .privilege
inconsistently. I
As the Project's difficulties unfolded, particularly with the
commitment of 2.5 years employment withdrawn after ;iess than 6
weeks on the job and replaced by over 5 months of complete
uncertainty regarding whether each day would be the last before
receiving a termination notice, implementation of the decision
to apply this stated discretionary authority seemed emphatically
appropriate.
Given the above conditions, I believe sick time use as well as
other indicators of projuect staff performance reflected very
positively on their responsibility and commitment to the
project. I might point out that I was concerned to see that the
auditors report inappropriately took part of these comments,
provided earlier, out of context, completely obscuring their
meaning for the purposes of their report."
PIG Response
EPA staff advised us that they expected program administration
to follow the Trustees policies, so we have reported on any
exceptions. We acknowledge that the Program Manager has the
discretion to allow sick leave use before the probationary
period when an individual needs such consideration. However, we
question whether it is a prudent business practice to allow all
employees this benefit without a determination of need. In our
opinion, the dicretion allowed a Program Manager is for
individual need and not to change a policy. Because the project
is of short duration and limited funding, we are also concerned
with productivity. We continue to recommend a review of payroll
costs.
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Auditee Response :
The Trustees stated:
"Leave records should be maintained by the Program Office.
Allowances for sick and vacation time must be in accordance with
Trustees, Inc. policies. Records maintained by the Program
Office must be in agreement with our policies and time taken and
paid per the payroll register of our Accounting Department^
Inconsistencies will be, and have been, reviewed and adjustments
made where there were violations. The report acknowledges that
adjustments were made. We will continue to pursue this." :
RECOMMENDATION
We recommend that you instruct the Trustees to provide documentary
evidence that the LFK payroll records have been reconciled to
the Trustees payroll records with proper adjustments made. We
suggest that the Trustees:
determine what sick leave and vacation leave is
eligible per the Trustees Personnel Manual and
make adjustments to the LFK payroll costs accordingly,
review the LFK position descriptions and determine
the vacation leave eligible for each position,
assure that any negative compensatory time is not
charged to the LFK payroll.
You should instruct the Trustees to develop an internal control
system to assure that source documentation for payroll costs is
accurate. This plan should be submitted for your staff's review.
In addition, we suggest that the Trustees assure you that all
Program staff are trained in the Trustees' Personnel Policies.
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e- Property Management Records Not Maintained
The Trustees did not maintain property management
records for equipment purchased with grant funds. The
Trustees have a property management system but did npt
utilize it for this grant. Without proper controls
EPA has limited assurance that assets are properly
safeguarded and that equipment purchased for the Lead
Free Kids program is not used for other activities.
It is the Trustees' responsibility to maintain accurate
property records which reflect a description of the
property; the manufacturers serial number, model number,
or other identification number; the source of the :
property, including assistance identification number;
whether the title is rested with the recipient or the
Federal Government; the unit acquisition date and
cost; the location, use and condition of property and
the date the information was recorded as required in
40 CFR Section 30.531 (a).
Also, as required in 40 CFR Section 30.531(c) and (f),
the Trustees must maintain a control system to prevent
loss, damage, or theft of property and must maintain
identification of Federally owned property.
The Trustees informed us that prior to the audit, the
Project Manager had the equipment inventoried and
identified to the project. We found no evidence of an
accurate, identifiable inventory. The Trustees also
reasoned that they had not conducted an inventory
because the program had not been in existence for a
year and only an annual inventory is required. Our
finding is not that the Trustees failed to take an
inventory, it is that the Trustees are not maintaining
an accurate record of property. Future inventories
will be compared to these records.
The LFK Assistant Project Administrator provided auditors
with a list of office equipment which was the only
record other than purchase orders for program equipment.
The purchase orders and the staff equipment listing
were too general to be of use in accounting for all
program equipment. Some of the Lead Free Kids office
chairs and tables had numbered stick-on labels affixed; ;
however, the numbers did not relate to anything.
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The equipment listing provided by the Assistant Project
Administrator was inaccurate; in that three of the
computer listings did not exist; the orders had been
cancelled prior to receipt.
The Trustees and the program staff.have not ensured
that internal controls are in place for the security
and the use of the LFK vans. There is a driver sign-
in log and a vehicle usage/mileage log to ensure account-
ability, however neither of the logs were utilized.
Also, the keys to the vehicles were kept in a brown
paper bag in an unlocked desk drawer so that all staff
members would have access to them at any time, providing
no accountability or security over the usage of the
vehicles.
The Trustees did not ensure that their responsibility
for a property management system was followed. Without
this control there is limited assurance that the property
and equipment purchased with grant funds are accounted
for and that they are used solely for the purpose of
fulfilling the obligations of the grant agreement.
Auditee Response
The Trustees advised:
"We concur that property equipment records were not maintained in
accordance with the CFR. The equipment had, however, been
inventoried and identified and was under proper control, albeit
items ordered had been included on the inventory sheets that had
not been received at that time. Trustees, Inc. has now properly
inventoried and tagged all project equipment. We are in the
process of searching for a software package that will enable us
to computerize our property management, and that allows for the
data required by Federal regulations. If we cannot purchase
such a package, we will develop the software. LFK equipment
will be included in this process, of course.
Vehicle keys will be safeguarded. We see no need for mileage
logs at this time. If they are required we will maintain them."
PIG Response
The Trustees proposed action should resolve the issue of
maintenance of equipment records.
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The mileage logs were established by the. LFK staff to ensure
accountability for vehicle use. The Trustees have not provided
any explanation as to how circumstances may have changed which
would eliminate the need for such accountability.
RECOMMENDATION
We recommend that the Trustees provide your staff with evidence
that all equipment purchased with grant funds is properly recorded
for inventory. We also recommend that the Trustees provide
evidence that mileage logs are utilized and vehicle keys are
properly safeguarded.
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Non-Compliance With Reporting Requirements
The Trustees have failed to provide timely and proper
reports in accordance with various special conditions
of the grant agreement. The Trustees did not insure
compliance with the contract terms which were esta-
blished by EPA. EPA cannot properly monitor the Trustees'
financial and operational project activities without
the agreed upon reports.
As part of the terms of the grant, the Trustees agreed
to submit various financial, progress and technical
reports as specified under Special Conditions of the
grant. The Trustees failed to submit the following
required reports in accordance with several special
conditions of the Grant Agreement. The following
reports were found to be delinquent:
A quarterly financial report of expenditures
by task per Special Condition No. 24 (a) was
not submitted.
A quarterly technical report per Special
Condition No. 24(b) was not submitted.
The Quarterly Federal Cash Transaction Report
(SF-272) per Special Condition No. 13 was not
submitted timely.
A Quality Assurance plan for Blood Sampling
and Analysis per Special Condition No. 19 was
not submitted.
(1) Quarterly Financial Report - The Trustees did not
submit the report of expenditures by task because
they believed the report was not required by EPA
even though it was stipulated in the Special
Condition section of the agreement, and that the
object classes to report expenditures were not
provided by EPA.
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The Cooperative Agreement sets forth Special Conditions
to be carried out by the Trustees. The Trustees accepte
and was responsible for meeting these Special Conditions
upon entering into the. Cooperative Agreement with the
Grantor. Upon entering into the Cooperative Agreement,
the Trustees should have ensured that they understood
and had the information required to comply with the
terms of the Special Conditions of agreement.
The Project Director of the Lead Free Kids staff asserts
that EPA had only requested the complicated budget
breakout by tasks in the original budget; and for that
reason it was provided as part of the original budget,
but was neither requested nor prepared as part of any
of the subsequent budget submittals.
The Special Conditions of the Cooperative Agreement
stipulate in Section 24 that:
The Trustees agree to submit financial and
progress reports to EPA Project Manager with
30 days of the end of each Federal fiscal
quarter {i.d., within 30 days of December 31,
March 31, June 30, and September 30)
Also stipulated in section 24 (a):
The financial reports shall include itemiza-
tion of expenditures by object class for
each task in the Statement of Work (SOW)
(expenditures to date and expenditures
since the previous report).
There is nothing in this Special Condition which would
indicate that only the first budget report be detailed
by task breakdown or that EPA was going to provide the
object class for each task. It clearly states that
the report is due on a quarterly basis.
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Audltee Response
"Re the quarterly financial report of expenditures, ....
We concur that this was required"per the agreement we signed.
However, our reason for not submitting it was not because we
failed to get the information from the Program staff as stated
in the audit report. Rather, as we previously answered, we
understood that EPA did not require the report even though
(sic) it was stipulated in the Special Condition section of the
agreement. EPA did not ask us for it and they did not provide
object classes necessary for us to report the expenditures.
PIG Response
We have revised the Trustees explanation for not submitting this
report. We continue to recommend that the Trustees assure that
all reports are submitted on a timely basis.
(2) Quarterly Technical Report - The quarterly technical
report per Special Condition No. 24(b) was not submitted
due to an oversight by the Trustees.
The quarterly technical report has since been submitted
by the Trustees. However, it should be noted that the
report was submitted in an untimely manner.
Auditee Response
The Trustees agreed that it was responsible to ensure the
submission of the technical report.
(3) Quarterly, Federal Cash Transaction Report - The
Quarterly Federal Cash Transaction Report (SF-272)
was submitted to EPA after the Trustees were advised
by the auditors that they had failed to submit the
report in accordance with the-terms'of the Grant.
Without this report, EPA cannot monitor cash drawdowns.
Our review showed that the Trustees were making drawdowns
in accordance with Federal regulations and were not
maintaining excess cash balances.
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Auditee Response ' ;
The Trustees stated:
"The pnly comment I would make regarding-the Quarterly Federal
Cash Transaction Report (SF-272) is that we were aware that the
report was required. We were remiss in not submitting it
because we had neither received nor asked for fund reimbursement
from the Federal Government for the costs we incurred in this
project at the time of audit."
OIG Response
At the time of our audit, both EPA and Trustee records showed
that four drawdowns had been made from October to December 1987.
(4) Quarterly Assurance Plan - The Quality Assurance Plan
for Blood Sampling and Analysis was not submitted to
EPA. The LFK Program staff incorrectly submitted
blood sampling protocols instead.
The Grantee stated that the Project staff responsible
for the Quality Assurance (QA) Plan misunderstood the
project's responsibility.
Auditee Response
The Trustees stated that:
"Blood sampling protocols were inappropriately submitted for the
Quality Assurance Plan discussed in (the draft report) because
the requirements of the report were misunderstood. At the time
of the prior draft of audit findings further work was required
to submit this report and staff people had been terminated.
This report will be appropriately submitted in the future.
The Trustees also advised:
"Our Compliance Department has full responsibility for ensuring
that all reports are submitted timely. Compliance, no doubt,
failed because of the close relationship and cooperation"of EPA
and LFK program people- Because of this close working relation-
ship we assumed, apparently incorrectly, that EPA was receiving
all reports they required. I would again reiterate that
Trustees, Inc. was not advised by EPA of deficiencies."
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OIG Response '
We continue to present our recommendation. Even though the
Trustees', staff believes it is in .compliance with the recommenda-
tion, at the time of our audit evidence showed a need for
corrective action by the Trustees.. We also emphasize that the
Trustees as a grant recipient are responsible for assuring that
all special conditions are met. .
RECOMMENDATION
We recommend that you instruct the Trustees to provide assurance
they will meet reporting deadlines. We suggest that the Trustees
fully utilize the Compliance Department by giving them the
responsibility of assuring that all reports, both technical and
financial, are submitted on a timely basis.
We suggest that you instruct the Trustees that submitting required
reports are their responsibility in accordance with the grant
agreement.
g. Budgetary Controls Not Implemented
Even though the Trustees have a system to monitor budgets it was
not being utilized. Our review did not disclose any unauthorized
expenditures; however, by not adhering to a system of controls,
EPA has limited assurance that future expenditures will be controlled.
Even though the LFK Project Manager had submitted a required
budget to EPA, the Trustees' Compliance Department did not maintain
a budget. The Compliance Department is responsible for maintaining
budgets and assuring that these budgets are not exceeded. The
Compliance Manager advised us attempts to obtain a budget from
the Project Manager were futile. In addition, the Compliance
Manager did not believe it was a significant problem because the
program had just started and it was unlikely that the budget
would be exceeded.
Due to limited funding available for this project, it is
important that costs are controlled. EPA authorized only
$1 million for drawdown.' We are concerned that the Trustees1
Compliance Manager apparently was not aware of the limitations.
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.';N;
; ''<
M
'I
Auditee Response '
The Trustees advised:
"It is true that the Compliance Department had not incorporated
the project budget in Trustees, inc. financial system. The
Compliance Manager, however, was fully aware of budget limita-
tions and constraints. Budget matters were discussed at staff
meetings and other meetings. We also: agree that we are
responsible to ensure that program people understand their
responsibilities. This was emphasized to program people. This
is developed during the negotiation process and further stressed
during orientation. We think the fact that no unauthorized
expenditures were disclosed supports that the Compliance Manager
and others were aware of budget constraints-
Trustees, Inc. agrees with the goal of the recommendations.... We
also believe that we are in compliance with the recommendations."
OIG Response
We do not agree that the fact there were no unauthorized expenditures
supports the contention that the Compliance Manager and others
were necessarily aware of the budget constraints. It would be
possible to have remained within the budget without having any
knowledge of the budget amounts.
Recommendation
We recommend you assure that the Trustees take appropriate actions
to implement proper budgetary controls for this project.
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-VUW.T - - - H.H.H. »«*«-.- .»»«.
Schedule of Costs
Cost
Category
Personnel
Fringe Benefits
Travel
Equipment
Supplies
Contractual _!/
Construction
Other {Rent, Maint,
Tel, etc.)
'§,
f Ttl. Direct Costs
Indirect Cost at
9.5% base 2/
Total Grant Funds
Expended as of
02/29/88
W% W-J*.;
LEAD FREE KIDS
Boston,
Claimed
of
Claimed
$289,119
42,842
676
245,666
37,823
128,654
-0-
104,008
$848,788
71, 049
$919,837
*"*"? I.*>s<«*?*f "9MV"1'?*'''?'"*'8""
£
(LFK)
SCHEDULE 1
MA - #E5bG8-01-0110
, Accepted,
February 29,
Accepted
$289,119
42,842
676
245,666
37,823
21,600
-o-
104,008
$741,734
29,764
$771,498*
Questioned and
1988
Questioned**
-0-
-0-
-0-
-0-
-0-
-0-
-0-
-0-
-0-
$41,285
$41,285
Set Aside as
Set Aside***
-0-
-0-
-0-
-0-
-0-
$107,054 3./
-0-
-0-
$107,054
$107,054
_!/ According to the Trustees' Encumberance Report for the period
ending 02/29/88, total consultant costs were $102,290 (account
#70022 and 70024). Auditors found other consultant costs
charged to account #70041 {Rental of Space), which were included
in the "other" category as shown in the above schedule. Auditors
adjusted this schedule by reclassifying the $26,364 for Consultant
fees from the "Other" category to the "contractual" category in
order to consistently classify the consultant fees which are
being set aside.
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SCHEDDLE 1
Lead Ftee Kids (LFK)
Boston, MA - ttE5bG8-01-0110
Schedule of Costs Claimed, Accepted, Questioned and Set Aside as
of February 29, 1988 (Cont'd.)
A provisional Rate of 9..5 percent was used as of 2/29/88. The
Grant Agreement stipulated that the G&A rate would be limited to
the rate negotiated with the U.S. Department of Health and Human
Services (DHHS). DHHS issued; a Rate Agreement dated February:
18, 1988, which provided that a provisional rate of 6 percent;
should be used from July 1, 1:986, until amended. ;
We have adjusted the G&A rate as it was shown on the Trustees
books at the time of our audit. To determine the base we have
subtracted equipment and the two major subcontracts in accordance
with the Rate Agreement. The Trustees did make an adjustment to
the G&A Rate on their books as of 4/30/88, however they failed
to subtract the major sub-contractor costs.
3/ Costs Set Aside consist of:
Consultant
Consultant
$ 52,754 Finding 2(a)
54,300 Finding 2(a)&2(c)
$107,054
***
This amount should not be construed as being the final determina-
tion of the Federal share of accepted costs. The amount may vary
depending upon the resolution by EPA of the questioned and set-
aside costs of $148,339.
Questioned - A proposed or claimed amount which should not be
reimbursed by the Government because it is not allowable under
the provisions of applicable laws, regulations, policies, cost
principles, or terms of the grant.
Set-Aside - A proposed or claimed amount that cannot be accepted
without additional documentary evidence or evaluations and
approvals by responsible agency program officials.
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«*( it?' '
. APPENDIX 1
Trustees of Health and Hospitals
of the City of Boston, Inc.!
725 MASSACHUSETTS AVENUE BOSTON. MASSACHUSETTS OZ118 - TEl_ (6IT1 42-*--
September 23 ., 1988
Mr. Stephen E. Burbank
Acting Divisional
Inspector General
J.F. Kennedy Federal Building, Room 1911
Boston, MA 02203-2211
Dear Mr. Burbank:
This is in response to your letter dated August 15, 1988,
forwarding the draft audit report of the Lead-in-Soil Demonstration
-Project. I appreciate the opportunity to respond to the audit report
draft and anticipate the Exit Conference. We request that our full
response be included as part of the audit report on the Lead-in-Soil
Demonstration Project. (Our identifying project number 7179.)
Our response is structured in two sections. The first section
sets forth general information to enhance understanding of our
response and positions on the findings and recommendations of the
draft audit report. The second section responds to specific findings
and recommendations.
GENERAL
1. There are two enclosures. The first enclosure is the Summary
of Findings and the full Findings and Recommendations sections of your
report. (Please disregard extraneous markings.) Paragraphs of the
report have been numbered. Oujr responses are identified to the
numbers to facilitate the review of our comments.
The second enclosure is the Project Manager's response to me
on your report. This is incorporated by reference as an integral part
of the Trustees, Inc. response. \
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«*
I wish to emphasize several points contained in the LFK
Project Manager's report. His report clearly sets forth events that
actually occurred during the- implementation of the Lead-in-Soil
project. These events are supported by documentation and records of
the occurrences. They preponderantly support our position that the
EPA had taken the responsibility for developing the Program Design and
the Scientific Protocols. I think it is clear from the audit report
and the Project Manager's comments as well that these were the
elements most crucial to implementing the project and its success.
These events were discussed with the auditors. We also provided
evidence and written comments to clarify and fix these
responsibiities. Nonetheless the audit report finds that Trustees,
Inc. was responsible for these areas and that failures in these areas
substantially precluded a successful project. We simply cannot
understand how the Inspector General's report could reach this
conclusion.
2. It might be helpful to identify the three parties directly
involved with implementing the project. Trustees, Inc. as the awardee
or recipient organization has responsibility as defined in the award
document and implemented in cooperation with EPA. The office referred
to as Lead Free Kids Project office (LFK) is the office that was
established by DH&H to work with EPA to achieve the projected
objectives. Trustees, Inc. is of course responsible for activities of
the LFK project by working in concert with this office. The success
or failure of the accomplishments of LFK must be evaluated in light of
agreements and understandings reached with EPA before and during
project implementation. EPA the third agency involved directly with
the project had responsibilities as set forth in the cooperative
agreement and in accordance with procedures and understandings that
developed as the project was being implemented. EPA as the fund
awarding agency has the authority, and exercised that authority, to
assume responsibility for certain components of the program. The
relevancy and authority underlying this statement is further defined
in th$ report.'
'f .
3. It is germane to this report to observe the following. We
responded to two earlier draft; audit reports on this particular audit
and project. The first draft was undated but received 3/11/88. A
second draft audit report came by cover letter dated 4/19/88, and
finally this report was transmitted by letter dated 8/15/88. We
understood that each of the earlier versions was the report and all
that remained was an Exit Conference;and issuance of the report with
our comments incorporated. We again assume this to be the case.
I want to state that in our response to the prior two drafts
of this audit report we provided detailed answers and other
information relative to the audit findings, trustees. Inc. also
provided documentation to support Our positions on various matters
in an attempt: to clarify questionable areas.~ We are now faced with
the formidable task of providing answers and other information to
address the same topics, essentially. Although the topics are
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"*. **.
essentially the same, the focus is different and much of the prior
research and information and documentation gathered and provided in
prior comments are inappropriate to the current report. We thought
that our prior responses had: addressed and substantively resolved
issues raised by the audit. In both prior instances we were led to
believe that the findings'we replied to would constitute the audit .
report that was to be issued. Of course, this was not the case.
We've never before experienced this process. It seems to us only
fair and ethical that when we are asked by auditors to provide
responses to findings that the findings would not be changed other
than to correct errors and misrepresentations in the report.
SUMMARY OF FINDINGS
Page 2 through page 6 of your audit report draft sets forth the
Summary of Findings. I have numbered paragraphs of the finding
summaries S-l through S-26. I have commented on these paragraphs as
is appropriate. My comments are keyed to the paragraphs to facilitate
your review of our comments. Our positions are more fully stated in
comments to the full findings and recommendations.
Paragraphs S-l and S-2. We take no exception to the Inspector
General evaluating the effectiveness of project management or in
concluding that principal objectives were not met. The failures of
the project/ however, should be identified to the responsible party in
so far as is possible. The implications in these paragraphs, other
summary findings, and the full report of Findings and Recommendations,
is that Trustees, Inc is responsible. We disagree. Our disagreement
with this conclusion is addressed more fully in our response to
summary finding 1 and to the full finding and recommendation Number 1.
We have also addressed this in Paragraph 1 of the "General section.
We do not agree that consultant fees of $113,220 be-set aside.
The method of procurement was approved by waiver of EPA. Although the
waiver did not in itself approve the specific costs there was general
knowledge of EPA staff people concerning these consultant charges.
The LFK Project Manager monitored the consultants' efforts and
approved of their work.
We make no comments here on the general statement of areas
needing improvement since they can only be- effectively understood in
the context of the finding.
Objectives are not specifically identified in this report.
However, prior drafts of findings did identify the objectives. In
responding to that draft we stated and provided supporting evidence
that Trustees, Inc. fully or partially met all 9 objectives for which
we were solely responsible. Several objectives were shared and others
were,EPA responsibilities. We generally completed our portion of
shared objectives. : '
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"' -** * fc.
It is without question in our opinion that EPA agreed to assume
responsibility for the Program Design. The cooperative agreement does
not state, and it does not follow, that Trustees, Inc. was solely
responsible for the design as is.suggested in the report. Formal .
minutes of meetings and various memoranda, notes and events support
our position on this. LFK Project Manager's response goes in to this
more fully. We have previously submitted other data to support our
position. We were never advised by EPA in writing or in any other
manner that we were deficient in meeting Program Design'deadlines,
schedules, etc.
Summary Finding Number 1- The Lead-in-Soil Demonstration Project
(Paragraphs) S-3 Through S-7) Program Design Has Not Been Developed
The crucial point of this finding is that the key objective o£
developing the Program Design was not met. Two points need "to be
made. First, Trustees, Inc. has developed a Program Design that has
been accepted by the EPA Regional Administrator. This occurred in
early July, 1988, prior to the preparation of the most recent audit
report draft. We did this when we were given the authority and
latitude to do so by EPA. Secondly, the finding by the Inspector
General that Trustees, Inc. is responsible for the failures of Program
Design is inaccurate. The audit findings do not support the position
of the IG that Trustees, Inc. was responsible for Program Design. The
IGs conclusion rests on certain statements in the cooperative
agreement and statements made by EPA staff. The statements referenced
in the cooperative agreement do not support the conclusion of the IG.
Information provided by EPA staff and accepted by the IG is not true.
Support of our position on Program Design is more fully developed in
the full report on this finding.
SUMMARY FINDING: Need To Strengthen Administrative Controls.
This finding comprises 6 separate findings. We generally
disagree with the IGs conclusion that Trustees' compliance was limited
in the areas identified in the finding. We also disagree with the
recommendation that $113,220 be set-aside. We provide comments in the
findings discussed below that relate to specific areas.
a. Weak Procurement Practices (Paragraphs.S-8-S-9)
Trustees, Inc. disagrees with this finding. The EPA approved by
letter of waiver the services of the consulting firms. Your report
acknowledges this. EPA was aware of the procurement process during its
development.
We disagree with the recommendation that $107,064 be set-aside.
We accept the recommendation that EPA staff review procurement during
monitoring site visits. We think they have done this.
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b. Poor Contract Management (Paragraphs S-ll-S-13)
While we agree that contracts were not properly drawn and
signed, we' do not think this necessarily reduces the assurance -that
services were provided within agreed-Jcosts. . Services were identified
and monitored by LFK staff arid payments were made only after the
Project Manager had ensured that the consultants had provided the
services invoiced* ,
We disagree with the recommendation in paragraph S-12, and think
it violates OMB Circular A-102, Attachment O, paragraph 6. We
disagree that $6,166 should be set-aside. The Project Manager has
provided additional information on mapping costs and the contractor.
c. Unsupported Consultant Services (Paragraphs S-14-S-20)
The LFK Project Manager provided justification for the necessity
to use JCEA firm. He has given additional assurances that the
services were rendered. Extentuating circumstances prevailed as
evidenced by and approval of the waiver relevant to this purchase.
Trustees, Inc. could not provide the recruiting within the short and
critical timeframes. EPA knew of these procurement actions. Some of
the things suggested Trustees, Inc. could do was impossible under the
circumstances that prevailed.
d. Lack of Control over Payroll Record Keeping (Paragraphs S-21-S-22)
There are no Time and Attendance records per se maintained at
LFK office other than the Biweekly Time Sheets submitted to the
payroll section of our Accounting Department. The Biweekly Time
Sheets were not reported to be deficient. Employees have been paid
based on Biweekly Time Sheets.
We will review payroll and related records as stated in the full
finding.
e. Property Management Records NpJ^ Maintained (Paragraphs S-23-S-24)
We agree that Property Management records were not maintained in
accordance with Federal regulations. The equipment had been
identified and inventoried, and was under proper control. We will
ensure that all equipment is properly recorded and inventoried. We
will safeguard vehicles keys. We see no need at this time for mileage
logs for the vehicles. ;
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f. Noncompliance with Reporting Requirements (Paragraphs S-25-S-26)
We agree that some reports were not provided timely as required
by the Cooperative Agreement. There were extenuating circumstances in
some cases as stated in our comments in the full finding. It i,s
already the responsibility of the Compliance Department to see that
all reports are submitted timely.
RESPONSES TO FINDINGS AND RECOMMENDATIONS
Responses to Findings and Recommendations are identified by
Title and Numbers keyed to paragraphs of your audit report beginning
on page 10 of Enclosure 1.
Findings and Recommendations Number 1 -The Lead-in Soil Demonstration
(Paragraphs 1-36) Project Has Not Been Developed
AUDIT REPORT SYNOPSIS
Paragraph 1. It states that a program to reduce lead
poisoning has not been developed/ and that the key objective to
develop a proper program design has not been attained and this
has resulted in other objectives not being achieved or only
partially so. It is stated that these failures are a result of
Trustees, Inc. misunderstanding its responsibilities, unsettled
scientific issues and compliance with Massachusetts State Lead
Law.
Paragraphs 2-19, & 33. These paragraphs cover background
and events and topics relating to the Program Design. It is the
Inspector General's conclusion that Trustees, Inc. was
responsible for, and failed irt developing and implementing, the
Program Design. Paragraph 33 also reiterates this conclusion.
Paragraphs 20-30. Protocols are discussed. Also discussed
is the Research Coordinator and the process to recruit the
position. Paragraph 20 states that Trustees, Inc. did not have
anyone qualified to prepare protocols and did not hire such an
individual because Trustees believed that they were not
responsible :for development of protocols. It also states that
the cooperative agreement clearly states that the Trustees, Inc.
will develop and distribute for review comprehensive research
protocols. Paragraphs 21-30 further discusses the Research .
Coordinator position, the process to recruit .the position and the
flaws in that process, and how the person hired was not
qualified.
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It is apparently the Inspector General's conclusion that
failures of protocol development are attributable to the
selection of an -unqualified "person for the Research Coordinator
Position.
' Paragraphs 31-33. These paragraphs contain general advise
to EPA and/or Trustees r Inc.
Paragraphs 34-36.
recommendations.
These paragraphs set forth the
COMMENTS OF TRUSTEES, INC.
Paragraph 1 is incorrect. Trustees, Inc. has developed a
Program Design. The Program Design was acknowledged and accepted
by letter to Trustees, Inc. from the EPA Regional Administrator
dated July 14, 1988. We accomplished this when EPA gave us the
authority and latitude to do it. We also believe that this
achievement lends credence to our position previously stated, and
which we still maintain, that the responsibility to develop a
program design did not rest with us until around December when at
our request EPA gave Trustees, Inc. approval to develop the
program design. It should also be noted that the cooperative
agreement was not even drawn up until September 18, 1987 and work
on the project began in May 1987. Other relevant comments are
made in Paragraph 1 of the general section and more fully
addressed in the Program Manager's response/ Enclosure 2.
Paragraphs 2-19. We emphatically deny that we
misunderstood our responsibilities. We also contend that we
fully accepted them as set forth in the cooperative agreement,
and as developed through project implementation. Additional
background and amplification of responsibilities is provided as
previously stated.
The matter of who was responsible for what would seem to be
simple to determine from the cooperative agreement. However, it
isn't really that simple or straight forward. To elaborate on
this and provide evidence as to why we feel as we do about who
was responsible for Program Design and' Protocols we wish to
include the following.
We believe it is correct and appropriate to say that EPA
has the authority to define'responsibilities. This is inherent
in the award process which EPA controls, and seems supported by
EPAidirectives. If responsibilities are not clearly defined, as
is the case in this project or even if they are then one
must look to procedures and the process that occurred as the
program was implemented. We have provided,background
information, minutes of meetings/ and memoranda pertinent to what
actually occurred. We think that this data supports the :
Trustees, Inc. position on this matter.
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EPA ASSISTANCE ADMINISTRATION MANUAL, 5700, 12/3/84,
provides policies and procedures for managing the administrative
aspects-of EPA financial assistance programs. The references
herein refer to the EPAs manual. Chapter 15 addresses special
conditions for cooperative agreements^ It states that these
agreements must contain provisions that reflect the substantial
Federal involvement required during the project. The provisions
should specify such details as: what the Federal involvement will
be, when it will be performed, how it will be accomplished, and
who will be responsible for performing EPAs portion ;of the work,
and that they are generally included as special conditions.
Under the Performance Monitoring section, page 44-1, paragraph 1
states there is significant involvement at all stages of the
project. It further states that EPA Project Office is the
recipient's main point of contact for technical guidance and
output related issues, and that the officer has the basic charge
to manage and monitor the performance of work under the terms of
the assistance agreement. Page 44-5, paragraph 5, identifies the
EPA Project Officer as the person to monitor work performed and
ensure that the recipient complies with the terms of the
assistance agreement. Among other matters, it states that the
Project Officer is expected to assure the project is on schedule
and to identify and resolve problems as they arise. EPA has
never notified Trustees, Inc. in writing or in any other way that
we were delinquent in developing the Program Design. No such
notification was given to us because the Project Officer knew
that the EPA had assumed the responsibility for program design.
Also Special Condition 32 states that the EPA Project Manager
will conduct frequent reviews to evaluate project activities to
ensure compliance with applicable EPA requirements and
regulations.
I would also refer to our Project Manager's comments.
Enclosure 2. The Project Manager clearly highlights areas of
EPA's responsibility and differentiates those of Trustees, Inc.
He also discussed these areas with the auditors. Finally, there
was a so-called Lead Team, referred to in my previous response,
representing parties interested in the project and that shared
responsibility for its successful implementation. They met often
and worked out issues and assigned responsibilities for
activities of the.project. There was never any discussion of
"Trustees, Inc" failures on project design.
While we agree with the statement in paragraph 33 that
greater EPA participation does not relieve the Trustees, Inc. of
their responsibilities, it must first be determined what those
responsibilities are before criticising Trustees, Inc. for
failure to meet them. We do not understand, and disagree with,
paragraph 11 where it is stated that recipients retain primary
responsibility to accomplish agreement objectives, and, that EPA
would provide assistance not leadership in the project.
Trustees, Inc. does npt know where in the agreement you find that
EPA will provide assistance not leadership in the project. We
believe that such a blanket statement is not contained in the
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agreement. At any rate, the statement would have to be
interpreted in the context of the agreement. Responsibilities
are as defined in the agreement. The word "conjunction" in
paragraph 6- seems to support our position that the
responsibilities cannot be determined other than by studying the
progress of the project. Conjunction, means, of course,.to work
conjointly or together.
Paragraphs 20-30. We agree that the person hired for the
position: was not suitable to develop and write protocols. The
operative question, however, is was this his responsibility. We
maintain that EPA assumed; the primary responsibility for
developing protocols. The agreement does very clearly state, as
contained in the report, that Trustees, Inc. will develop and
distribute for review comprehensive research protocols. Page 1
of the SOW also states...Trustees, Inc. conjunction with
EPA...and that preparation shall include developing study
protocols in cooperation with EPA.
We think the SOW does not specifically and solely charge
Trustees, Inc. with the responsibility for protocols. Since EPA
has the inherent authority to control the project within the
nature of the agreement, it is without question to us that EPA
agreed to develop protocols, and we believe that the
implementation process and certain matters that we've documented
and provided to you support us in this.
Paragraphs 31-33. These paragraphs raise questions about
the conclusions reached by the report, even though the findings
and recommendations state that Trustees, Inc. was responsible for
Program Design and Protocols I refer specifically to par 32
where EPA is advised that they need to clearly identify the role
each agency is to play and assure that this is understood.
Paragraph 33 seems to be saying that Trustees will be held
responsible for accomplishing project goals regardless of
agremeents. This seems inappropriate.
Recommendations - Paragraphs 34-36. Since Trustees, Inc.
developed a Program Design that was accepted by the EPA Regional
Administrator we assume the primary recommendation, paragraph 33,
to be null and void. However, we fail to understand why the
report did not acknowledge this fact. We also agree that roles
and responsibilities should be clear beyond question and agreed
to by all parties. This, must be followed by action that allows
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each party to fulfill their respective roles and carry out their
responsibilities.
Findings and Recommendations Number 2 - Need to Strengthen Administrative
(Paragraphs 37-156) Controls
This finding identifies and discusses 6 .areas found deficient by
the auditors. The areas are: Procurement Deficient Solicitation^
Contract Administration; Documentation Consultant Services & Payroll;
Equipment Records; and Reporting. Each of these areas are discussed
below in the order in which they appear in the audit report.
a. Weak procurement practices for consultant services.
(Paragraphs 39-50)
AUDIT REPORT SYNOPSIS
Paragraph 39 states the Trustees did not assure that the LFK
program staff adhered to principles of open and free competition when
obtaining consultant services, and questions the soundness of the
decision to hire the consultants. Other paragraphs furnish what the IG
considered support for the finding and conclusions.
Recommendations in paragraphs 49 and 50 suggest that the entire
contract costs for the consultants be set-aside due to noncompliance with
Federal procurement regulations and that Trustees, Inc. furnish
justification for what we did. It is also recommended that EPA staff
$ review our procurement actions during monitoring visits.
COMMENTS OF TRUSTEES , INC.
We basically disagree with the findings, conclusions, and
recomendations. We would have done things differently had we not
attempted to accommodate the expressed needs of EPA to expedite the
project. We felt that the exigencies of the situation justified the
procedures that were followed and that the best interest of the project
was served. As you state in the reportf EPA agreed to the basic actions.
The process was fully explained in prior comments of the LFK Project
Manager. The adequacy or propriety given to selecting the firms is a
matter of opinion. It is our opinion that the firms selected could best
provide the services the project needed. We also believe that
requirements were sufficiently outlined in the RFP for a proposal to be
made. We believe the review and selection was proper and served the best
interest of the project.
We disagree that contract costs for consultants should be set-aside
due to noncorapliance with Federal procurement regulations. As is stated
in the audit report, a letter of waiver was approved by the EPA Regional
Administrator and included this particular purchase of service.
Background and what Trustees, Inc. had done concerning this transaction
was detailed in the waiver request which the EPA Administrator approved.
We believe no violation was commited and that additional information is
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unnecessary and without justification. We have no problem accepting
recommendation that EPA staff review our procurement actions during
monitoring visits.
b. Poor Contract Management. .
(Paragraphs 51-60) -
AUDIT REPORT SYNOPSIS
; The findings in paragraphs 51 through 58 states that Trusteesf Inc.
did not develop and administer three consultant contracts appropriately.
That this failure reduces the assurance that services were provided
within agreed costs.
It is recommended in paragraphs 59 and 60 that mapping costs of
$6,166 be set aside and that further documentary evidence be provided to
support map and service purchases. The recommendation advises EPA to
ensure that Trustees, Inc. complies with specific Federal procurement
regulations.
TRUSTEES, INC. COMMENTS
We agree that contracts were not properly drawn and signed. We do
not think that this necessarily reduces the assurance that services were
provided within agreed costs. Services were identified and monitored by
LFK staff and payments were made only after the Project Manager had
ensured that the consultants had provided the services invoiced. ^^
Audit report findings have been discussed with LFK Project Officer
and we will take actions to see that this kind of situation does not
reoccur. This has also been discussed with our Purchasing Manager and
other staff to ensure proper procedures are followed, and that payments
are made only for services rendered in accordance with our procedures.
We disagree with the set-aside for mapping costs. The LFK Project
Manager has provided additional information on mapping costs and the
contractor.
We accept the recommendations in paragraph 60 except for item 5 of
that paragraph. We believe this to be unnecessary and that it would be
an impediment to project administration and implementation. It also
seems to violate paragraph 6, Attachment 0, of OMB Circular A-102.
c. Unsupported Consultant Services.
(Paragraphs 61-93)
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AUDIT REPORT SYNOPSIS
The findings are essentially as follows:
(1) tfhat Trustees, Inc. has not adequately monitored contracts.
There was insufficient justification for services to be provided by
consultant JCEA, and, insufficient assurance that the services were
provided and goals and objectives met. Paragraph 87 states that this
resulted in costs being incurred without the program achieving its
objective.
(2) The report questions charges in the areas of Recruitment,;
Training, and Community Relations.
(3) The auditors believe that Trustees, Inc. or existing LFK
staff could have performed many of the services JCEA was to provide,
and in fact, in some areas information was available at Trustees, Inc.
or LFK staff and should have been used.
The recommendations are set forth in paragraphs 88 through 93.
These recommendations asks that costs amounting to $37,625 be
set-aside pending further documentation from Trustees, Inc.
TRUSTEES, INC. COMMENTS
The nature of this finding is essentially the same as findings on
Poor Contract Management and Weak Procurement Practices for Consultant
Services. The LFK Project Manager provided justification for the
necessity to use JCEA firm and has given additional assurance that the
services required of JCEA were rendered, and that goals and objectives
were met.
I would add the following comments concerning Recruitment,
Training, Community Relations.
Trustees, Inc., as opposed to project staff, is essentially an
administrative organization designed and staffed to ensure compliance
with grants and contracts, and to provide certain support services in
areas of program development, accounting, personnel, purchasing and
compliance. Our staffing is not such that we can actually perform
technical training, or specialized recruiting in abbreviated
timeframes. We have developed pay scales and related benefit packages
appropriate to most activities involving Trustees, Inc.
There were unusual and extenuating circumstances connected to
this demonstration project. We relaxed or allowed our procedures to
be. circumvented for .several reasons. Meeting time requirements
to implement the project were critical for reasons we've already
stated. The nature :of procurements requested and approved for waiver
was also set forth in the letter approved by EPA. Also, EPA worked
closely with LFK Project Manager and was fully aware of the services
being provided by the consultants. EPA and Project Manager met often
and with others on a regular basis. These kinds of activities were
discussed. We felt that we were acceding to and cooperating with EPA.
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We believe the recommendations in paragraphs 88 through 92
be withdrawn. AH parties were .aware of these charges and the
circumstances that prevailed. An EPA waiver was given for these
transactions. Time constraints effectively ruled-out Trustees, Inc.
performing some of the suggested activities, and the particular matter
or nature of some of the contracted services was beyond our.staffing
and/or expertise.
d. Lack Of Control Over Payroll Record Keeping.
(Paragraphs 94-126)
AUDIT REPORT SYNOPSIS
Paragraph 94 in summary states that Trustees, Inc. (1) Did not
provide adequate control over LFK payroll systems, (2) Time and
attendance records of LFK program staff could not be reconciled, (3)
Internal control system did not assure accuracy of source documents
received from LFK, and (4) LFK Program Office did not follow certain
requirements of our PERSONNEL POLICY MANUAL.
Paragraphs 95 through 124 contain information supporting the
conclusions of Paragraph 94. These paragraphs outline discrepancies,
as the auditor sees them, between LFK records and Trustees, Inc. and
relates information told to them by staff of LFK or Trustees, Inc.,
and cites requirements of Trustees, Inc. PERSONNEL POLICY MANUAL.
Recommendations are made in Paragraphs 125 and 126. Paragraph
125 asks that we be required to document that LFK and Trustees, Inc.
payroll records have been reconciled. That this include reviewing and
adjusting, as necessary, sick and vacation records, and asssuring that
negative compensatory time is not paid. Paragraph 126 suggests an
internal control system be developed that will assure accuracy of
payroll costs, and that this be reviewed by EPA. And finally, that
Trustees, Inc. train all program staff in Trustees, Inc. personnel
policies.
TRUSTEES, INC. COMMENTS
I will respond first to the findings of paragraph 94:
Re Item (1). This is a conclusion w'ith which we disagree.
Trustees Inc. internal control systems, including payroll, are
reviewed yearly by an international public accounting firm. Systems
reviews also are.made by various firms and/or agencies. Payroll
internal control procedures:have never been found to be- inadequate.
Re Item (2). There are no Time and Attendance records per se
maintained at LFK office. Records reviewed by the auditors were
informal and unofficial records maintained by program people so that
the whereabouts of personnel would be known. These records'were
informal and simply assisted in personnel controls. We thoroughly
discussed this with the auditors and likewise responded in prior
written comments. The kinds of records the auditors reviewed are not
required by Trustees, Inc. Furthermore, we know of no directive or
any generally accepted practice that requires them.
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Re Item .(3). The only supporting documents we require from
office are BIWEEKLY TIME SHEETS. Employee.payments are based on the
time sheets. The time sheet is attested to by.signatures of both the
employee and-person responsible for his/her time reporting. The '.
auditors reported no discrepancies between these records, -
Re item (4). There may: have been, some failure to comply with
some personnel policies. This is discussed below. ,
Paragraphs 95-101. The inconsistencies and inaccuracies cited by
the auditors between LFK and Trustees> Inc. payroll records, {time and
attendance records, sign-in sheets, sick and vacation records) ;
concludes by observing that official payroll records maintained by
Trustees, Inc. must be verifiable to source documents, and because of
problems with source documents and record keeping at the LFK office
Trustees payroll records are inaccurate.
The only supporting documents required or received by Trustees,
Inc. is the BIWEEKLY TIME SHEET. We have already stated that as far
as we know the auditors found no discrepancies with these time reports
as related to the individual payroll records. Paragraph 101 states
that official payroll records must be traceable to source documents.
The sentence that states "This is possible by maintaining the payroll
records by the Project Management" does not make sense to us. I would
say, however, that we believe, and auditors have not reported
otherwise, that the BIWEEKLY TIME SHEETS are "in 'agreement with
official payroll records.
Paragraphs 102 through 123 focus on the violations of
Probationary period of employees and vacation leave accrual and the
allowance atid payment of negative compensatory time. The paragraphs
also provides information on our personnel policies and other
information we provided to the auditors.
Leave records should be maintained by the Program Office.
Allowances for sick and vacation time must be in accordance with
Trustees, Inc. policies. Records maintained by the Program Office
must be in agreement with our> policies and time taken and paid per the
payroll register of our Accounting Department. Inconsistencies will
be, and have been, reviewed:and adjustments made where there were
violations. The report acknowledges that adjustments were made. We
will continue to pursue this.
As we previously commented, the finding relative to Probationary
period seems to violate our personnel policies. However, page 19,
paragraph 11.c, does allow probationary employees to use accrued sick
leave at the discretion of the Program Director. We will ensure that
the Program Manager is aware of Trustees, Inc. probationary period -
requirements. '. . .
the*first recommendation. Paragraph 125. The Biweekly Time
Sheets are in agreement with Trustees, Inc. payroll records. These
are the LFK; documents that support Trustees Inc. related payroll
records. Trustees,. Inc. payroll register for LFK "staff will be
reviewed. Sick and vacation leave earned will be computed based on
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Trustees,'Inc. personnel policies. Sick and vacation leave taken a
paid per Trustees, Inc. payroll records will be ascertained and
balance available determined and adjusted for employees as is
necessary. (This has been done, at least partially, as is
acknowledged in the audit- report.) Negative compensatory time will
not be charged to the project. -
Re' recommendation, Paragraph 126. Source documentation for
payroll costs is accurate!. The Biweekly Time Sheet is. the source
document for payroll charges. This document does support payments
made to project staff personnel. The time sheet is attested to by the
signature of the: employee and the Project Manager, or authorized
representative accountable for the time reported. The Project Manager
has been advised that sick and vacation records must be maintained
accurately in accordance with our personnel policies. Trustees, Inc.
provides an orientation for all Project Managers or Principal
Investigators and others. The orientation is presented by Trustees,
Inc. Managers. Our policies and procedures are extensively covered.
Personnel are provided orientation booklets that thoroughly cover our
operations. Each Program Office is provided a copy of Trustees, Inc.
PERSONNEL POLICY MANUAL, and our PERSONNEL HANDBOOK is available for
every employee
e. Property Management Records Not Maintained.
(Paragraphs 127-135)
AUDIT REPORT SYNOPSIS
The report finds that Trustees, Inc. did not maintain property
management records for equipment purchased with project funds in
accordance with the Code of Federal Regulations (CFR). That equipment
listings were inadequate, and that project vehicles were not under
proper security.
The recommendation is that we provide evidence to EPA staff that
equipment is properly recorded for inventory, and that we use mileage
logs and safeguard vehicle keys.
TRUSTEES, INC. COMMENTS
We concur that property equipment records were not maintained in
accordance with:the CFR. The equipment had, however, been inventoried
and identified and was under proper control, albeit items ordered had
been included on the inventory sheets that had .not been received at
that time. Trustees, Inc. has now properly inventoried and tagged all
project equipment. We are in the' process of searching for a software
package that will enable; us to computerize our property management,
and that allows for the data required by Fedreal regulations. If we
cannot purchase such a package, we will.develop the software.. LFK
equipment will be included in this process, of ^course.
Vehicle keys will be safeguarded. We see no need for mileage
logs at this time. If they are required we will maintain them.
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f. Noncompliance With keporting Requirements.
(Paragraphs 136-156(
AUDIT REPORT SYNOPSIS
The findings identify< four reports which Trustees, Inc. failed to
submit. It also concludes that the Compliance Department has a system
to monitor budgets but was not doing so for this project. It is
further stated that Compliance had no budget for the project and that
the Compliance Manager minimized this in that the project had just
started and was very unlikely to be exceeded.
It is recommended that we provide evidence of how we will meet
reporting deadlines, and that the Compliance Department be given
responsibility for ensuring timely submission of all reports.
TRUSTEES, INC COMMENTS
Re the quarterly financial report of expenditures, paragraphs
138-144. We concur that this was required per the agreement we
signed. However, our reason for not submitting it was not because we
failed to get the information from the Program staff as stated in the
audit report. Rather, as we previously answered, we understood that
EPA did not require the report even thought it was stipulated in the
Special Condition section of the agreement. EPA did not ask us for it
and they did not provide object classes necessary for us to report the
expenditures.
The technical report discussed in paragraphs 145 and 146 is our
responsibility. We agree that it was our responsibility to ensure the
submission of the technical report discussed in paragraphs 145 and
146. We do not understand what is meant by the word "handle" in the
report.
The only comment I would make regarding the Quarterly Federal
Cash Transaction Report (SF-272) is that we were aware that the report
was required. We were: remiss in not submitting it because we had
neither received nor asked for fund reimbursement from the Federal
Government for the costs we incurred in this project at the time of
audit.
Blood sampling protocols were inappropriately submitted for the
Quality Assurance Plan discussed-in paragraphs 148 and 149 because"the
requirements of the report were misunderstood. At the time of the
prior draft of audit findings further work Was required to submit this
report and staff people had been terminated. This report will be
appropriately submitted in the future. :
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It is true that the Compliance Department had not incorporated-
the project budget in Trustees, Inc. financial system. The Compliance
Manager, however, was fully aware of budget limitations and
constraints. Budget matters were discussed at staff meetings and other
meetings. We also agree that we are responsible to ensure that
program people understand their responsibilities. This was emphasized
to program people. This is developed during the negotiation process
and further stressed during orientation; We think the fact that no
unauthorized expenditures were disclosed supports that the Compliance
Manager and others were aware of budget constraints. (Paragraph
150-152)
Trustees, Inc. agrees with the goal of the recommendation in
paragraph 156. We also believe that we are in compliance with the
recommendation.
Trustees, Inc. met with EPA personnel in the initial stage of the
project. At that meeting, we presented the orientation mentioned
earlier in this report that we give to Principal Investigators and
others. We provided information on our procedures and operations and
gave them materials pertinent to Trustees, Inc. We discussed the
project, and many questions were answered by both parties.
Our Compliance Department has full responsibility for ensuring
that all reports are submitted timely. Compliance, no doubt, failed
to pursue some areas in which they would generally be more aggressive
because of the close relationship and cooperation of EPA and LFK
program people. Because of this close working relationship we
assumed, apparently incorrectly, that EPA was receiving all reports
they required. I would again reiterate that Trustees, Inc. was not
advised by EPA of deficiencies.
My thanks again for this opportunity to respond. If there are
any questions on our response please call George Parkin at 424-4325.
Sincerely,
TRUSTEES OF HEALTH & HOSPITALS
OF THE CITY OF BOSTON, INC.
John L. Christian
Vice President/General Manager
JLC:jw
ENCL.
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APPEITOIX 2
DISTRIBUTION
Office of Inspector General
Headquarters Office (A-109)
Director, Audit Operations
Staff A-udit Control File
Region
Regional Administrator, Region I
Director, Waste Management Division
Financial Assistance Section
Audit Follow-up Coordinator
Headquarters Office
Chief, Program Assistance Unit
Director, Grants Administration Division
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U»S. Envi rT>r-A.,t.-, j
Mbre r ~- -- - - - ;
tOl M Street, S.W.
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