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TABLE OF CONTENTS
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SCOPE AND OBJECTIVES I
SUMMARY OF FINDINGS 2
ACTION REQUIRED 8
BACKGROUND 8
AUDIT FINDINGS AND RECOMMENDATIONS
PROGRAM PERFORMANCE
1 - UNSATISFACTORY PROGRAM PERFORMANCE
UNDER COOPERATIVE AGREEMENTS 10
2 - PROBLEMS WITH PERFORMANCE OF REMEDIAL INVESTIGATIONS
AND FEASIBILITY STUDIES (RI/FS) 20
3 - MONITORING OF PREREMEDIAL
FUNCTIONS IS INADEQUATE 30
4 - REGIONAL OVERSIGHT ACTIVITIES
NEED IMPROVEMENT 42
FINANCIAL AND COMPLIANCE
5 - PROCUREMENT SYSTEM DEFICIENCIES 48
6 - FINANCIAL MANAGEMENT OVERSIGHT FUNCTIONS
REQUIRE IMPROVEMENT 57
7 - INADEQUATE LETTER OF CREDIT PROCEDURES 64
8 - MORE EFFECTIVE REPORTING PROCEDURES
ARE NECESSARY 68
9 - LACK OF COMPLIANCE WITH COOPERATIVE AGREEMENT
SPECIAL CONDITIONS 71
10 - MANAGEMENT OF SUPERFUND PERSONAL PROPERTY
NEEDS TO BE STRENGTHENED 75
EXHIBIT A - MATRIX OF AUDIT REPORTS REVIEWED
AND DEFICIENCIES NOTED 78
EXHIBIT B - SCHEDULE OF COSTS CLAIMED AND RESULTS OF AUDIT
UNDER THE COOPERATIVE AGREEMENTS AUDITED 79
EXHIBIT C - SCHEDULE OF THE FUNDS AWARDED UNDER
THE COOPERATIVE AGREEMENTS AUDITED 80
ATTACHMENT 1 - EPA MANAGEMENT RESPONSE TO DRAFT REPORT 81
REPORT DISTRIBUTION 110
U.S. Environmental Protection Agency
Library, Room 24C4 PM-211-A
401 M Street, S.W.
W«3hln«ton. DC 20460
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UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D.C. 20460
March 29, 1988
MEMORANDUM
Off ICE OF
THE INSPECTOR GENERAL
SUBJECT:
FROM:
TO:
"Capping" Report on EPA, Office of the Inspector General
Audits of Superfund Cooperative Agreements
Fbr Fiscal Years 1985 Through 1987
Audit Report No. E5eE8-09-0018-80838
Ernest E. Bradley III
Assistant Inspector General for Audit
Charles L. Grizzle
Assistant Administrator for
Administration and Resources Management (PM-208)
J. Winston Porter
Assistant Administrator for
Solid Waste and Emergency Response (WH-562A)
SCOPE AND OBJECTIVES
We have prepared a "capping" report summarizing the EPA audit reports
issued on Superfund cooperative agreements awarded under the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980. The
report provides an overview of the findings contained in the Office of
the Inspector General for Audit (OIGA) Superfund cooperative agreement
audits issued during fiscal years 1985, 1986, and 1987. The purpose
of this report is to inform senior EPA management officials of the
recurring problems identified in our cooperative agreement audits, and to
reconmend actions or policy changes to alleviate the problems.
The audits summarized in this report were issued by our OIGA divisional
audit offices and were performed in accordance with the Standards for
Audit of Governmental Organizations, Programs, Activities, and Functions
issued by the Comptroller General of the United^ States. The "capping"
report represents a summarization of the findings contained in these
reports. During the preparation of this report, we did not perform
additional audit tests or verify any subsequent corrective actions
which may have been agreed to or taken by the Regions or the States.
It should be noted that most of the cooperative agreements were in
progress at the time of audit. Accordingly, the Regions and States
have an opportunity to correct any conditions that might adversely
affect cost recovery actions.
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ntte report represents a summarization of the audit deficiencies noted in 33
audit reports issued by the EPA, OIGA on Superfund cooperative agreements.
The audit reports covered cooperative agreement activities in 9 EPA Regions,
covering 20 States. The total value of the cooperative agreements reviewed
was $136,323,064. The reports included 7 audits directed at the Regions'
administration of cooperative agreements, and 26 audits of the individual
cooperative agreements. TVenty-four audits were performed by the DIG staff |
and nine by independent Public Accountants who were under contract to the EPA,
DIG.
It should be noted that the 33 audits were performed with varying scopes of
audit. In this regard, 24 of the audits were limited to a review of financial
and compliance areas, while the audit scope for 9 audits incorporated a review
of program performance. A list of the 33 audit reports reviewed is included I
in Exhibit A of this audit report. The exhibit lists the audit reports by
applicable EPA Region, recipient, and audit report number, and includes a
matrix summarizing the audit findings associated with each report. In addition, I
this exhibit includes an abbreviation of the names of the entities used through-
out this report.
Exhibit B of this audit report includes a schedule of the costs claimed and the
results of audit for those cooperative agreements where financial audits were
performed. Exhibit C summarizes the dollar value of the cooperative agreements
included in this report. |
SUMMARY OF FINDINGS
I
We concluded that work under the $136.3 million of Superfund cooperative agree-
ments was not effectively performed by the recipients, or adequately monitored
by the Regions. Since the activities addressed in these cooperative agreements I
were directed to some of the most serious and potentially serious hazardous
waste conditions in the Regions and affected states, increased EPA Headquarters
and regional attention needs to be directed to the cooperative agreement area.
The audits disclosed that performance goals and objectives of the agreements |
were often not attained. In priority areas, such as Remedial Investigation/
Feasibility Studies, work was substantially behind schedule. Similarly, priority M
preremedial actions related to preliminary assessments, site inspections, and I
hazard ranking systems frequently were not performed in a timely and effective
manner. He believe these conditions occurred, in part, because Remedial Project
Managers had not effectively performed their recipient oversight responsibilities.
The audit also disclosed deficiencies related to recipients': (i) procurement
systems frequently not being in compliance with the procurement requirements
contained in 40 CFR Part 33; (ii) accounting systems being inadequate to form a
basis for cost recovery under the Superfund program; (iiij letter of credit |
activities not meeting requirements; and (iv) personal property and equipment
systems not being properly managed to protect Superfund acquired items. Further, _
the audits noted that cooperative agreement special conditions and reporting
requirements were not always met by recipients, or adequately monitored by the
Regions.
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The findings included in this "Capping" report are summarized below. The de-
tailed findings, along with related recommendations for corrective action by
EPA Headquarters management are provided in the "Findings and Recommendations"
section of this report. It is noted that recommendations contained in the
individual audit reports were discussed with the applicable Regional Offices at
the time the reports were issued. Ws believe upon its final issuance, this
"Capping" report would be a useful report to disseminate to each Regional
Office to assist them in their administration of the cooperative agreements.
1. UNSATISFACTORY PROGRAM PERFORMANCE UNDER COOPERATIVE AGREEMENTS
Recipients had not effectively performed their cooperative agreement goals and
objectives, or were substantially behind schedule in their completion. As a
result, the planned improvements to the environment were not achieved. In this
respect, we found that: (i) EPA was not provided the information necessary to
determine if additional hazardous waste sites should be listed on the National
Priority List (NPL); (ii) the accelerated clean up of hazardous waste sites
had not been attained; (iii) the performance of the preremedial and remedial
planning requirements was substantially delayed; (iv) the levels of community
involvement provided for in the cooperative agreements were not attained;
and (v) the sampling and testing programs utilized by the recipients needed
improvement. Since many of the Suoerfund. sites addressed in the cooperative
agreements were experiencing problems with respect to groundwater and drinking
water contamination, it is important that additional emphasis be placed on the
recipients' attaining their goals and objectives. Several factors contributed
to these conditions, including the premature awards to some recipients that had
not met the financial, technical, and experience requirements for an award. In
addition, some Regions and recipients developed a complacent or passive attitude
towards the completion of the cooperative agreement objectives. Vfe further noted
that some regional offices and recipients failed to establish effective lines
of communication or working relationships with each other. Finally, the Regions
had not always maintained accurate management information systems to reflect
the status of the existing and proposed NPL sites within their geographical
boundaries (page 10).
2. PROBLEMS WITH PERFORMANCE OF REMEDIAL INVESTIGATIONS AND FEASIBILITY STUDIES
Cooperative agreement recipients were experiencing significant problems corn-
Dieting Remedial Investigations and Feasibility Studies (RI/FS). The problems
included untimely and ineffective performance on all RI/FS actions which were
reviewed in our cooperative agreement audit reports issued between FY 1985 and
FY 1987. Only 5 of the 37 RI/FS actions reviewed, or 14 percent, had been
completed, and only one of the five was completed in less than 2 years. The
remaining RI/FS actions have been in progress for as long as 5 years without
being completed. In one Region, work on eight RI/FSs had not begun, although
more than $6 million had been obligated for this work. The lack of timely
action delayed completion of the RI/FS process and the ultimate clean up of the
Superfund sites. All of the incomplete RI/FS actions pertained to sites with
significant environmental hazards, which require priority attention to assure
that remedial action is initiated in a timely manner. Some of the sites with
the delayed RI/FS reports were experiencing environmental hazards such as:
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(i) arsenic in drinking water supplies: (ii) copper, barium, lead, and zinc
in groundwater; {iii) wind-blown tailings contaminating groundwater; (iv)
contaminated resident wells, and (v) hazardous wastes in ground and surface |
waters. In view of the substantial problem which exists in the RI/FS area, we
believe that a significant improvement in the cooperative agreement recipients' _
RI/FS procedures, and in BPA's monitoring efforts will be reguired if this
condition is to be corrected (cage 20). '
3. MONITORING OF PREREMEDIAL FUNCTIONS IS INADEQUATE
Monitoring the preremedial functions specified in the cooperative agreements
needed to be strengthened to assure that they were performed in a timely and
effective manner. Our audits of the preremedial functions, which included |
preliminary assessments (PA), site inspections (SI), and hazard ranking systems
(HRS) scoring oackages disclosed the following conditions: (i) PAs were not _
completed within established schedules; (ii) Sis were not always accomplished I
in accordance with EPA requirements; and (iii) the FWS process has not been
consistently followed. The audits disclosed that some States failed to perform
any of the required PA and SI work. In addition, the Regions have not utilized
the ERS process in a manner which would assure the identification of the most
serious hazardous waste sites. These conditions precluded timely and effective
determinations as to the degree of severity of the hazardous waste problems and
whether the sites should be included on the NPL. These problems have also |
delayed the initiation of subsequent clean up actions on these sites. We
believe the preremedial area may become more acute under the requirements _
of the recent Superfund Amendments and Reauthorization Act of 1986 (SARA),
which establishes strict deadlines for the completion of PAs, Sis, and FIRS
scoring packages (page 30).
4. REGIONAL OVERSIOTT ACTIVITIES NEED IMPROVEMENT m
The R
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Superfund program is, to a large measure, based on its ability to obtain quality
contractors and subcontractors in a timely and cost effective manner. As a
means of accomplishing this objective, we believe that the effectiveness of the
procurement actions made under the cooperative agreement process must be
improved. Procurement problems noted in the audits included: (i) the failure
to provide for free and open competition; (ii) the absence of effective af-
firmative action clans; (iii) a lack of adequate documentation supporting the
procurement awards: (iv) the use of prohibited forms of contracting; (v) an
absence of adequate cost and price considerations; (vi) the failure to give
adequate public notice on competitive procurements; (vii) the lack of required
EPA standard clauses in the subagreements; and (viii) the omission of references
to the applicable Federal cost principles in the subagreements. Since many of
the cooperative agreement recipients had previously certified that their pro-
curement systems met the requirements of the CPR, the extent of the noncompliance
demonstrated that little reliance can be placed on these certifications. Also,
several of the deficiencies noted in our audits were previously discussed in
EPA Headauarters' reviews of some recipients' cooperative agreements. However,
timely corrective actions on the EPA Headquarters' recommendations were not
made {page 48).
6. FINANCIAL MANAGEMENT OVERSIGHT FUNCTIONS 'REQUIRE IMPROVEMEOT
The Regions had not developed monitoring procedures to assure that adequate
financial management systems were established and maintained by cooperative
agreement recipients. The extent of the deficiencies noted casts doubt on
the recipients' ability to account for the approximately $136.3 million of
Superfund site specific costs expected to be incurred under the cooperative
agreements included in this report. Since the National Contingency Plan requires
that adequate documentation be maintained to form a basis for cost recovery
under the Superfund program, improvements in the financial management area are
necessary. Specifically, our audits disclosed that recipients had unacceptable
timekeeping and labor charging practices, and failed to maintain their account-
ing systems in accordance with EPA regulations. A lack of Regional attention
to the recipients' financial management systems was considered a major cause of
these conditions. We believe that the accounting system deficiencies noted in
the audits represent significant internal control weaknesses, which affect the
integrity of the accounting systems, and jeopardize the Federal government's
ability to recover Superfund costs from responsible parties. The audits also
disclosed that two EPA Regions had not deobiigated approximately $11 million of
unneeded Superfund monies (page 57).
7. INADEQUATE Lb'lM'biK OF CREDIT PROCEDURES
Recipients did not fully comply with the letter of credit (LOC) requirements
provided in their cooperative agreements and the LOC Users Manual. As a
result, the LOC was not effectively utilized as a means of disbursing Federal
funds under the cooperative agreements. The audits noted that: (i) required
Federal Cash Transaction Reports (SF-272) were not submitted within the required
timeframes; (ii) staff in one Region was changing the certified SF-272 reports
without written notification to the recipients; (iii) drawdown amounts were not
calculated properly; (iv) drawdowns were not made on a timely basis; and (v)
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regional reviews of recipients' drawdown requests were not adequate. These
conditions were primarily.attributable to a lack of regional and recipient
management attention to the requirements of the LOG system, including a lack of I
written LOC operating procedures for the recipients. While some LOC guidance
was included in various user manuals, it was also apparent that this material
was either not available or not used by the recipients. We believe that
compliance with LOC orocedures would be improved if LOC information were
condensed and presented in a written summary for use by recipient personnel
(page 64).
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8. MORE EFFECTIVE .REPORTING PROCEDURES ARE NECESSARY
Superfund cooperative agreement reporting procedures were not complied with by I
recipients or adequately monitored by the Regions. The required reports, which
included Financial Status Reports and Quarterly Progress Reports were necessary
to keep management apprised of the financial and technical aspects of the
project. We attributed the reporting problems to: (i) the recipients' failure H
to implement the procedures necessary to comply with the requirements of their
cooperative agreements; and (ii) a failure to give priority to the reporting
requirements (page 68). |
9. LACK OP COMPLIANCE WITH COOPERATIVE AGREEMENT SPECIAL CONDITIONS
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Regional procedures required improvement to assure that recipients complied
with the cooperative agreement special conditions. Our audits disclosed that
many recipients had not complied with one or more of their cooperative agreement I
special conditions, including those applicable to.: (i) progress reporting;
(ii) use of the letter of credit; (iii) Federal procurement standards; (iv)
conflict of interest statements? (v) site safety plans; (vi) National Contingency
Plan; and (vii) timekeeping systems. To ensure that the objectives of the |
cooperative agreements are satisfied, it is important that all special conditions
be met (page 71). '
10. MANAGEMENT OF SUPERFUND PERSONAL PROPERTY NEEDS TO BE STRENGTHENED
Management of personal property and equipment purchased under Superfund cooper- I
ative agreements was not in accordance with the requirements of the Federal
property regulations. Our audits disclosed that the Federal government's
interest in the propertv and equipment was not properly protected since: (i)
items: were not always recorded in recipient's property management records, and |
the Federal interest was not recorded; (ii) some items could not be located by
the recipient; and (iii) lost or stolen items were not reported to EPA. H
Although property and equipment purchases under the Superfund cooperative I
agreements have generally been nominal to date, such purchases are expected to
become more significant as the program moves from the planning to remedial action
stages. Therefore it is important that EPA emphasize the need to comply with I
the applicable Federal property regulations to both its Regional personnel and
the cooperative agreement recipients (page 75).
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Management Garments
A draft report was provided to Agency officials for comment on February 12,
1988. A preliminary Agency response to the draft report was received on March
15, 1988, and the final response was received on March 24, 1988. An exit
conference was held with Agency officials on March 17, 1988. With the
exception of recommendation b. of Finding No. 3 titled "Monitoring of
Preremedial Function Is Inadequate", the Agency generally concurred with the
audit recommendations, and stated that actions had already been taken or were
underway to correct many of the conditions noted. The Agency's comments to
Finding No. 3 are summarized following recommendation b., along with additional
auditor comments as appropriate. Since the Agency has fully concurred with the
balance of the audit recommendations, we have not incorporated its comments
into the individual audit findings. Instead, the Agency's complete response
has been included as Attachment 1 to this report. The Agency highlighted the
following actions as indicative of the improvements that have been, or will be,
initiated:
1. "We have reviewed the management of every Region's cooperative agreements.
Between August and December 1987, OARM and OSWER staff visited every regional
office. They met with senior regional officials, including program, finance,
and grants staffs to determine how each Region manages cooperative agreements,
how the program, finance and grants staffs interact, and what regional cooperative
agreement activities need improvement.
'2. "We are conducting Management Assistance Program (MAP) reviews of
State management systems. These reviews emphasize procurement, property,
general administration, and finance. Headquarters has led this effort but we
will delegate the MAP reviews to the Regions this fiscal year in order to
expand the reviews into more states. We expect the Regions to incorporate
these reviews into their regular oversight of Superfund cooperative agreements.
3. "EPA is revising the Superfund 'Guide for Preparing and Reviewing
Superfund Cooperative Agreements.1 This guide defines roles and responsibilities
of regional reviewers and explains the process reviewers should follow when
they review and award a cooperative agreement. We are developing a companion
guide for State use as well.
4. "We are developing and implementing two training courses. One is a
Superfund procurement training course. We have given this course in five
Regions and are scheduling the training in the remaining Regions. The second
is a cooperative agreement administration training course to inform regional
Superfund project officers of their responsibilities for managing Superfund
cooperative agreements.
5. "EPA is helping the States improve their administrative management of
Superfund cooperative agreements by implementing the Gore cooperative agreement
program. Core cooperative agreements will fund a 'core' of State staff to
carry out basic non-site specific administrative activities, such as developing
and maintaining accounting and property management systems.
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6. "EPA has strengthened the technical assistance we offer to States by
shifting the responsibility for administrative oversight of cooperative agree-
ments from Remedial Project Managers (RPMs) to specialists in Administrative I
Assistance Units (AAOs).
7. "We are developing a regulation covering requirements of Superfund
cooperative agreements. The regulation will clarify property, procurement, |
cost recovery, and documentation requirements of cooperative agreements. We
plan for this to be effective October 1, 1988." _
ACTION REQUIRED "
In accordance with EPA Directive 2750, the action official is required to I
provide this office, within 90 days of the audit report date, a written
response of the actions taken or proposed to be taken on the audit recom-
mendations.
BACKGROUND
Hie "Superfund" program was established by the Comprehensive Environmental I
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 release, or threat of release, of I
hazardous substances from abandoned hazardous waste sites and other sources I
where response was not required by other Federal laws. A Trust Fund was
established by CEBCLA to provide funding for responses ranging from control
of emergency situations to provision of permanent remedies at uncontrolled |
sites. CEFCLA authorized a $1.6 billion program financed by a five-year
environmental tax on industry and some general revenues. CERCLA requires that _
response, or oavment 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 I
Act of 1986 (SARA), Public Law 99-499, enacted October 17, 1986. SARA rein-
stituted the environmental tax and expanded the taxina mechanism available for
a five-year period. It authorized an $8.5 billion program for the 1987-1991
period, The Trust Fund was renamed the Hazardous Substance Superfund. The |
basic regulatory blueprint for the Superfund Program is the National Oil and
Hazardous Substances Contingency Plan (NCP), 40 CFR Part 300. The NCP was .
first published in 1968 as part of the Federal Water Pollution Control Plan,
and has been substantially revised to meet CERCLA requirements. The NCP lays "
out two broad categories of response: removals and remedial response.
Removals are relatively short-term responses, and modify an earlier program I
under the Clean Water Act. Remedial response is long-term planning and action
to provide permanent remedies for serious abandoned or uncontrolled hazardous
waste sites.
CERCLA recognizes that the Federal government can only ensure responsibility
for remedial response at a limited nunber of sites representing the greatest
public threat. It therefore requires the maintaining of an NPL, which must be
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updated at least annually. The NPL is composed primarily of sites which have
been ranked on the basis of a standard scoring system, which evaluates their
potential threat to public health. In addition, each State was allowed to
designate its highest priority site, without regard to the ranking system.
CERCIA section 104(c){3) provides that no remedial actions shall be taken
unless the State in which the release occurs enters into a contract or coopera-
tive agreement with EPA to provide certain assurances, including cost sharing.
At most sites, the State must pay 10 percent of the costs of remedial action.
Preremedial activities (preliminary assessments, site inspections), remedial
planning (remedial investigations, feasibility studies, remedial designs), and
removals may be funded at 100 percent by EPA. For facilities operated by a
State or political subdivision at the time of disposal of hazardous substances,
the State must pay at least 50 percent of all response costs, including removals
and remedial planning previously conducted.
CERCLA 104(d}(i) provides that if a State or political subdivision thereof is
determined to have the capability to respond to the issues addressed in the
Act, they may be authorized to respond by use of a contract or cooperative
agreement. As a result, most States have participated in some part of the
Superfund program. CEPCLA 104(d)(2) provides a remedy to the Federal govern-
ment for failure of a State or political subdivision to perform satisfactorily.
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FINDINGS AND RECOMMENDATIONS
1 - UNSATISFACTORY PROGRAM PERFORMANCE UNDER COOPERATIVE AGREEMENTS
Recipients had not effectively performed their cooperative agreement goals and
objectives or were substantially behind schedule in their completion. As a
result, the planned environmental improvements were not achieved. In this
respect, we found that: (i) EPA was not provided the information necessary to
determine if additional hazardous waste sites should be listed on the NPL; (ii)
the accelerated clean up of hazardous waste sites had not been attained; (iii)
the performance of the preremedial and remedial planning requirements included I
in the cooperative agreements was substantially delayed; (iv) the levels of B
community involvement or public participation provided in the cooperative
agreements were not attained; and (v) the sampling and testing programs
utilized by the recipients were in need of improvement. Since many of the |
Superfund sites addressed in the cooperative agreements were experiencing
problems with respect to groundwater and drinking water contamination, it is
important that additional emphasis be placed on the recipients' attaining their
goals and objectives.
Several factors contributed to these conditions. Some cooperative agreements I
were prematurely awarded because the recipients did not meet the financial,
technical, and experience requirements for an award. In addition, some EPA
Regions and recipients developed a complacent or passive attitude to the
completion of the cooperative agreement objectives. We further noted that
some Regional offices and recipients failed to establish effective lines of
communication or working relationships with each other. Finally, the Regions
had not always maintained accurate management information systems to reflect
the status of the existing and proposed NPL sites within their geographical
boundaries.
Background
The Superfund process is described in detail in Subpart F of 40 CFR 300. This
subpart establishes the methods and criteria to be used in determining the |
appropriate response to be followed when hazardous substances are released, or
there are substantial threats of release to the environment. The ultimate goal
of a Superfund action is to initiate a permanent remedy for the affected I
hazardous waste site. The Superfund process can generally be divided into the
following three phases and their related subphases:
1. Discovery and Ranking (Preremediall
- Site Discovery
- Preliminary Assessment (PA) |
- Site Inspection (SI)
- Immediate Removal (if necessary)
- Hazard Ranking System (HRS) Scoring
- Nomination for National Priority List (NPL) (if appropriate) m
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2. Remedial Planning
- Remedial Investigation (RI)
- Feasibility Study (FS)
- Record of Decision
- Remedial Design
3. Remedial Implementation
- Remedial Action
- Initial Remedial Measures
- Operation and Maintenance
The use of cooperative agreements is authorized by Sections 104(c)(3) of the
CERCLA. Cooperative agreements allow a state or a political subdivision thereof
to take, or to participate in any necessary actions provided under CEIOA,
given that the State or political subdivision possess the necessary skills and
capabilities to do so. These actions are normally addressed in the cooperative
agreement as performance goals and objectives. The agreement is also used to
delineate EPA and State responsibilities for actions to be taken at the site,
to obtain required assurances, and as a commitment of Federal funding. EPA
uses the cooperative agreement as a means of encouraging State participation in
Superfund activities such as the preremedial programs, State management assis-
tance on EPA lead activities, and State lead sites.
Procedures for managing the cooperative agreements are discussed in the
publications entitled State Participation in the Superfund Remedial Program
(the purple book), and the Superfund State-Lead Remedial Project Management
Handbook. These publications provide guidance toboth the EPA Regional and
State staffs in the clean up of Superfund remedial response projects at NPL
sites.
The observations and conclusions included in this finding represent a summary
of the nine program and performance audits completed between FYs 1985 and 1987.
The audits covered the cooperative agreement activities of six State agencies
and four EPA Regional offices.
Lack Of Accomplishment Of Goals And Objectives
Our audit reports disclosed that performance under the cooperative agreements
reviewed were generally inadequate. As a result, the stated goals and objec-
tives of the cooperative agreements had not been performed in most instances
or were significantly behind schedule. The audits of the California SWRCB
South Bay cooperative agreement, and the Utah DOH cooperative agreement best
illustrate the recipients' inability to fulfill the required goals and objec-
tives of their cooperative agreements. However, several of the audits also
identified that other recipients were experiencing difficulty in accomplishing
priority preremedial (PA and SI) and remedial planning (RI/FS) work which were
established as cooperative agreement goals. A summary of the problems noted
are included in the following paragraphs.
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California SWRCB South Bay Site. The specific goals of the South Bay Multi-
Site Cooperative Agreement were to:
- Accelerate the clean up of groundwater contamination in the San Francisco
South Bay Area. _
- Acquire the data necessary to evaluate all sites not currently proposed
for inclusion on the NPL for possible future inclusion on the NPL.
- Evaluate the long-term and regional effects on the groundwater resource
caused by the investigative and clean up activities to be performed in
the South Bay.
The South Bay audit report disclosed that the above goals had not been accom-
plished, even though the original cooperative agreement completion date had «
expired. Although one of the goals was to obtain necessary information to I
evaluate all sites for possible inclusion on the NPL, there had been very
limited work done in this area by the recipient. In this regard, there had
been little progress on the 18 sites which were either listed or proposed for
listing, on the NPL. There was also limited action taken towards obtaining
the information necessary to conclude whether 73 additional South Bay sites
identified in the cooperative agreement should be recommended for listing on
the NPL. In addition, only 3 of 16 tasks included in the cooperative agreement |
had been completed. Wbrk on two of the tasks included in the South Bay
cooperative agreement had not even begun. One of these tasks was titled, »
"Program Analysis and Development" and provided for the recipient to identify I
ways of evaluating the long-term effects of the groundwater contamination on
the groundwater resources. The completion of this task was considered one of
the most important goals of the cooperative agreement, yet no work had begun
on the task even though the period of performance had expired.
Utah DOH. The multi-site cooperative agreement awarded to the Utah DOH was
also delinquent in the completion of its goals and objectives. The cooperative |
agreement included the following goals:
-Perform forward planning for the Silver Creek Tailings site. I
-Perform 21 PAs and 14 Sis.
-Assume the State lead for the RI/FS at the Sharon Steel and Olson-Neihart
Reservoir sites and perform the RI/PS work at these two sites.
Our review disclosed that none of the program objectives contained in Utah's |
cooperative agreement had been achieved. In summarv, we found that: (i) the
progress of the RI/PS work at the Sharon Steel site was significantly delayed;
(ii) the quality of the work performed at the Olson-Neihart and Silver Creek
sites was not adequate to support conclusions reached; and (iii) the perfor-
mance of the PA and SI program was sporadic, ineffective, and significantly
delayed. Although the Wasatch Chemical site was considered one of the most I
serious hazardous waste sites in Utah, we noted that action to clean it up had B
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not progressed towards remediation although 2 1/2 years had passed since its
discovery. Further, timely actions had not been taken to complete the pre-
remedial work to nominate the Kennecott Copper sites for inclusion on the NPL.
Preremedial Activities. The audit reports disclosed that the recipients were
experiencing difficulty in meeting their performance goals in the preremedial
area, particularly with respect to the completion of the PAs, Sis, and related
BBS scoring packages. The work in the prersmedial area was generally found to
be untimely and of questionable quality. This problem was identified in three
EPA Regions and at four State cooperative agreement recipients. The specific
details concerning the preremedial problems are discussed in Finding no. 3 of
this report titled "Monitoring of Preremedial Functions Is Inadequate".
Remedial Planning Efforts. Remedial planning has been significantly delayed
because of the problems encountered by recipients in the completion of their
RI/FS actions. Our audits disclosed that only 5 of the 37 required Rl/FSs had
been completed for the cooperative agreements reviewed. The RI/FS deficiencies
were noted in four EPA Regions and six State cooperative agreements. The RI/FS
area is discussed in detail in Finding no. 2 of this report titled "Problems
With Performance of Remedial Investigation and Feasibility Studies".
Public Interest Not Served
The audit reports indicated that the level of community involvement in the
Superfund hazardous waste planning process was not always adequate. The
cooperative agreements generally contained a requirement foe the recipients to
involve' the public in the Superfund process. However, we noted that these
requirements were not adequately fulfilled by the recipients, nor were their
accomplishments adequately monitored by the EPA Regional offices. Community
involvement problems noted in the audit reports on the California SWRCB South
Bay site, and the Pennsylvania DER are illustrative of this condition and are
described below.
California SWRCB South Bay. Even though the Region was aware that the recipient
was reluctant to perform the community involvement task under its cooperative
agreement, the Region did not increase its monitoring efforts. As a result,
virtually no work had been performed on this task, even though the 15-month
period of performance had expired. The South ^ay cooperative agreement, which
totaled $1 million, allocated $150,000, or about 15 percent, of the workload
effort to the community involvement area. The substantial funding level for
this task demonstrated a significant interest in this area on the part of EPA.
Community involvement is considered an important task in order to assure that
the nature of the action proposed for the multi-site project are understood
by the public. The involvement also allows the public to be a part of the
decision making process.
Pennsylvania DEH. The efforts taken by the State to advise the public of its
actions in the hazardous waste area resulted in a distorted picture of its pro-
gress, which, in turn, confused the public. To illustrate, in a September 1986
letter concurrently sent to the Region and released to the press, the State
advised that it was taking aggressive action to clean up its hazardous waste
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sites. The letter asserted that Pennsylvania had more money spent on more
sites than any other State, and that "Congressional inaction for over a year _
has stalled reauthorization of Superfund, with funding still a far-from-sattled
issue." The State offered to quickly improve the situation by lending State *
monies to allow for site studies "...that might falter during Congressional
debate on Superfund". The letter to the press left the public with the I
impression that the State was working to alleviate the hazardous waste problem,
and that the lack of action was the fault of the Federal government. However,
in reality, the State was directly responsible for the more than two year delay
which had been experienced in completing the required RI/FS reports. In this |
respect, the State failed to utilize $6 million of available Superfund monies
to initiate work on the RI/FS reports. _
Sampling and Testing Procedures Were Inadequate
The audit reports noted deficiencies in sampling or testing procedures used by I
recipients in 6 of the 9 audit reports reviewed. The reports indicated that
the procedures used to obtain and analyze samples from the hazardous waste
sites were inadequate. An example of the sampling and testing problem noted
during the audit is summarized below.
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* The Rhode Island audit report noted that sanples of hazardous waste _
collected at the request of the State at the Picillo site were not stored or I
analyzed as required by the National Contingency Plan (NCP). In this regard,
samples of hazardous waste were stored in trailers, and solid waste material
collected by both the recipient and EPA were stored in unsealed barrels in an I
open environment. These samples, which were collected as evidence for use in
litigation by the State against Potentially Responsible Parties (PRP), were
never analyzed due to lack of funds. At the time of the audit, the samples had
been in storage for approximately four years. The actual chemical contents of |
these sanples was unknown because a detailed analysis had never been performed.
The State alleged that the samples of hazardous waste stored in the trailer
collectively could present a health and environmental risk as a result of
vandalism or fire. The audit staff observed that the 55-gallon drums adjacent
to the storage trailer were filled with sample jars that contained both liquid
and solid sanples. These drums were not sealed and contained over 2,100 samples.
The Region subsequently determined that, due to the age of the samples, the
benefits from analyzing the samples would not iustify the expenditure of more
than $1,000 per sample for analytical testing.
With regard to the physical security of the sanples, the audit report concluded
that the security arrangements did not provide adequate protection against
unauthorized entry, or the commission of criminal acts which could jeopardize I
the local population. A review of the four logbooks available at the Picillo
guard office showed that the guards have been unable to prevent unauthorized
entry. This was illustrated by the fact that the guard room itself was vandalized
on two separate occasions in July and August 1985.
Factors Contributing To Poor Program Performance
There* were several factors which led to poor progran performance by the cooper-
ative agreement recipients. These factors included: (i) premature cooperative
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agreement awards to recipients who did not have the qualified personnel, or the
financial and management capabilities necessary to perform under the cooperative
agreements? (ii) a generally passive attitude on the part of the recipients and
Regions towards completing the tasks, goals, and objectives of the cooperative
agreements; {iii} failure of EPA Regions and recipients to establish effective
lines of communication and working relationships; and (iv) inadequate management
information systems in some Regions which precluded an accurate indication of the
status of existing and proposed NPL sites.
Premature Awards. Our audits at the California SWRCB South Bay, Pennsylvania
DER, and Utah DOH concluded that cooperative agreements were awarded to
recipients who did not have the technical or administrative expertise necessary
to accomplish the goals and objectives of the cooperative agreements.
40 CPR 30.301 provides that assistance will be awarded only if the applicant
meets certain criteria, including:
Financial resources, technical qualifications, experience, organization,
and facilities adequate to carry out the project, or a demonstrated
ability to obtain these,
Resources to meet the project completion schedule contained in the_
assistance agreement.
Accounting and auditing procedures adequate to control property, funds,
and assets, as required in Subpart E of this part.
Hie audit of the South Bay cooperative agreement disclosed that, at the time
the cooperative agreement was awarded in September 1985, the recipient did not
have the personnel resources necessary to perform the objectives of the agree-
ment. Additionally, the State did not expeditiously attempt to acquire the
necessary capabilities after the cooperative agreement was awarded. This
situation occurred primarily because of a: (i) State hiring limitation; (ii)
lack of qualified Intergovernmental Personnel Act (IPA) employees within
Region 9? and (iii) lack of action on the part of the State to reassign other
qualified oersohnel necessary to perform the work. It should be noted that
the State was originally awarded the cooperative agreement on the basis of its
expertise in groundwater contamination, and because it was already the lead
State agency in the South Bay contamination problem. However, its inability
to perform under the cooperative agreement resulted in a delay in the clean up
of South Bay hazardous waste sites.
Personnel Shortages. Ttie State did not make the technical staff available to
perform the required tasks, or initiate timely actions to acquire the necessary
staff. As of October 1986, or 13 months after award of the agreement, the
State had only 2 of the 6 IPA positions, and 3 of the 8 EPA funded State
positions staffed. Ttiis staffing arrangement was not adequate to perform and
complete the required cooperative agreement tasks by December 31, 1986.
State had been restricted from hiring, because of a State policy limiting
new hires. However, the State did not attempt to reassign qualified personnel
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from other areas to perform the required PA and SI work. In addition, the
State was unable to utilize $202,000 of cooperative agreement funds which were
available for four IPA positions, because of a lack of interested EPA candidates.
In this regard, we did not find any evidence that, at the time of award of the
agreement, the Region had assessed its ability to furnish the four additional
IPAs required fay the cooperative agreement. As a result of the staffing
shortfalls, the State had not met all of the goals and objectives of the
cooperative agreement requirements, particularly in the areas of the performance
of PAs, Sis, and community relations.
Accounting and Financial Problems. 40 CFR 30.301 also requires that recipients
have an adequate accounting system as a prerequisite to obtaining a cooperative
agreement. However, the audit disclosed that the State did not have the
accounting and financial management procedures necessary to adequately record
and report costs incurred under the cooperative agreement. Specifically, we
found problems with expenditures exceeding the allocated funds, letter of
credit drawdowns exceeding calculated allowable costs, and the inability of the
accounting system to account for costs by task, expense, or site categories.
In summarv, it was our opinion that the award of the cooperative agreement
before the recipient was ready to perform has delayed the completion of the
requirements of the cooperative agreement.
* The audit report on the rjtah DOH also disclosed that the cooperative
agreement was awarded to the State although it did not have the required
financial or management capabilities. During the initial period of performance
under the cooperative agreement, the State did not have either the technical or
managerial organizational staff, nor the accounting procedures necessary to
perform the tasks required. Additionally, the State did not move expeditiously
to acquire the necessary resources and capabilities after the cooperative
agreement was received. In this respect, the State did not have the capability
to perform under the agreement until a Superfund Program Manager was hired in
April 1985, or 5 months after the award. By the end of June 1985, the size of
the State staff had increased to four employees, including the manager. Such
a staffing arrangement was not adequate to perform and corolete the required
work by September 30, 1985, as specified in the cooperative agreement. It was
September 1986 before the State had increased its staff to 12 employees. The
audit report concluded that the premature award of the cooperative agreement
resulted in a minimum of a oneyear delay in the exoected completion of the
cooperative agreement work.
* The Pennsylvania DER audit reported that Region 3 knew at the time that
the cooperative agreement was awarded that the State was ill-equipped to manage
the sites. In this respect, the audit report disclosed that the cooperative
agreement application made clear that the State planned to hire a project
management consultant to prepare the RI/FS workplans. A subsequent combined
EPA Headquarters and Region 3 "Management Assistance Visit" to the State warned
that, the State's procurement procedures were not in accordance with 40 CFR Part
33. The report further commented that the State's procurement process could
result in unnecessary delays in awarding contracts. This deficiency was con-
firmed in a later EPA OIG interim audit report. The premature award of the
cooperative agreement before the State obtained the managanent and procurement
systems necessary to perform has resulted in at least a two-year delay in the
award of the RI/FS contracts.
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Passive Attitude Towards Cooperative Agreements. Our audits of Regional
administration of the States' cooperative agreement activities indicated that a
generally passive attitude existed with respect to the completion of the co-
operative agreement goals and objectives. This condition was evident in Regions
3, 8, and 9, and six State agencies. Specifically, the audit reports noted that
Region 8 had not taken an aggressive role in ensuring that the objectives of the
cooperative agreements in the States of Wyoming, Utah, North Dakota, and South
Dakota were effectively performed. In addition, the audit of the Pennsylvania
DER indicated that the State was reluctant to take appropriate action when PRPs
failed to perform. Further, the California SWRCB South Bay audit report indicated
that the State expressed a disinterest in following EPA's Superfund procedures.
These reports are further discussed below.
* The Region 8 audit report disclosed that the Region was not aggressive
in initiating effective oversight of the States' activities. The States were
therefore given a large degree of latitude in establishing their cooperative
agreement Superfund programs. Such an approach would only be effective if the
recipient States had the desire and capability to meet the goals and objectives
of the program. We did not find that the States in Region 8 possessed these
attributes, and therefore the Region's approach was not fully successful. To
the contrary, the combination of inadequate Regional and State action resulted
in performance deficiencies under the cooperative agreements. There was no
indication that the Region initiated any penalties or other sanctions against
the cooperative agreement recipients for instances of nonperformance. Instead,
the Region re-established the goals and objectives into the subsequent year's
cooperative agreement. While we recognize the Region's desire to have the
States fully participate in the program, it was our opinion that the Region
should more aggressively pursue instances of nonperformance.
* The Pennsylvania DER audit report indicated that the State was reluctant
to enter into formal legal consent orders and agreements with PRPs. The con-
sent orders represented the State's guarantee that remedial studies and clean
ups by PRPs would be performed in accordance with the National Contingency
Plan. The audit disclosed that the State had not initiated a consent order for
6 of the 8 NPL sites included in the cooperative agreement. This was contrary
to EPA procedures which consider the consent order to represent an enforcement
tool which can be used to ensure that the agreed upon work is performed. The
State, however, was reluctant to press the PRPs to sign the consent orders.
The State believed that it was more beneficial to get the PRPs to perform the
required remedial work on an informal basis. This philosophy not only conflicted
with FPA's policy, but left the State with little leverage to force recalcitrant
PRPs to actually perform the work. As a result, final clean ups and NPL
delistinqs have been delayed for several years.
* The audit of the California SWRCB South Bay cooperative agreement
reported that the State had long maintained the attitude that nothing could be
gained by listing South Bay sites on the NPL. In addition, the audit report
noted that it was the preference of the PRPs in the South Bay area not to be
listed on the NPL. The recipient believed that the use of the NPL would
adversely effect its "coooerative working relationships" with the PRPs and
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complicate progress towards site clean up by adding additional governmental
agencies. The audit concluded that the State was more interested in performing
its State water pollution control enforcement responsibilities, than following I
the Federal procedures for designating an NPL site. The State process was much
less cumbersome and informal, than the progression of steps a site goes through
under the NPL process. The State's actions have precluded the Region from
effectively controlling and monitoring the site clean up process. In addition, |
the State's actions were inconsistent with the intended purpose of the cooper-
ative agreement which included the requirement to "Acquire the data necessary
to evaluate all sites not currently proposed for inclusion on the NPL for
possible future inclusion on the NPL."
Effective WorkingRelationships Need To Be Established. The audit report on I
Region 8's administration of the cooperative agreement disclosed problems with
the working relationships between the Region and the Utah DOH.
The audit report concluded that the lack of effective progress towards the |
remedial phase of hazardous waste clean ups in Utah has been significantly
hindered by a strained working relationship between the State and the Region.
It was apparent that the problem stemmed from the fact that the State was
unhappy with the Region's oversight of its Superfund program, and believed that
it should be allowed to implement its own program with minimal interference.
The audit report observed that 'both Regional and State personnel were aware
that satisfactory progress under the cooperative agreement had been adversely
affected by their poor working relationship. Both entities have made substantial
positive efforts since the audit report was issued to improve their mutual
cooperation. We believe that only in this manner can the mutual benefits-of a |
successful cooperative agreement be reached.
Inadequate Management Information Systems. Our audits of Regions 8 and 9, and
the New Jersey DEP disclosed that improvements were needed in the information
systems used to manage the Superfund NPL hazardous waste sites. In Region 9,
we found that the two primary systems utilized to control the California SWRCB
South Bay hazardous waste sites were not accurate. The two systems were the
Comprehensive Environmental Response, Compensation, and Liability Information
System (CERCLIS) and the Site Management System (SMS). The CERCLIS is EPA's
automated tracking system, and represents an inventory of all potential |
hazardous waste sites known to EPA. The SMS was developed by EPA to provide
quick access to the status of the South Bay during all phases of remedial
response action. However, the audit noted that the two information systems did
not agree. Specifically, about 26 percent of the South Bay sites listed in
CERCLIS as of December 1986, were not listed in the SMS. Also, approximately
14 percent of the sites on the SMS were not listed in the CERCLIS as of December
1986. Further, many CERCLIS sites had differences in the names, addresses, and
cities for the same sites included in the SMS. Since the Superfund Amendments
and Re authorization Act of 1986 (SARA) requires the completion of a PA on all
CERCLIS sites in early 1988, a reconciliation of the CERCLIS and SMS informa-
tion will be required in order to meet this date.
A similar CERCLIS problem was found in our audit of Region 8's administration I
of its cooperative agreements. In this instance, the CERCLIS management infor-
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mation system did not contain current or accurate information on many Superfund
sites. In addition, the New Jersey DEP audit noted that documentation main-
tained by project site managers was incomplete. The report concluded that a
primary cause for this condition was the fact that the site managers maintained
files in their office rather than in a central location. As a result, the
method of recordkeeping varied between site managers, which in some instances,
has resulted in an absence of sufficient information necessary to monitor the
status of cooperative agreements.
Recommendat ions
We recommend that the Assistant Administrator for Administration and Resources
Management: (i) review the adequacy of the Regions' performance in awarding
and administering cooperative agreements; (ii) note any deficiencies in the
Regions' management; and (iii) monitor the Regions' actions to ensure that the
deficiencies are corrected. Particular attention should be given to ensure
that the recipients: have the technical and administrative capabilities to
perform; increase their public participation efforts; give increased attention
to accomplishment of cooperative agreement goals and objectives; and establish
effective lines of communication and working relationships with recipients.
We recommend that the Assistant Administrator for Solid Waste and Qnergency
Response iirolement an effective'CERCLIS quality assurance program to ensure
that the Regions correct inaccuracies and omissions in CERCLIS, and update
CERCLIS in an accurate and tireelv manner in the future.
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2 - PROBLEMS WITH PERFORMANCE OF REMEDIAL INVESTIGATIONS AND FEASIBILITY STUDIES
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Cooperative agreement recipients have experienced significant problems com- g
pleting Remedial Investigations and Feasibility Studies (RI/FS). The problems
included untimely and ineffective performance on all RI/FS actions which were _
reviewed in our cooperative agreement audit reports issued between FY 1985 I
and FY 1987. Only 5 of the 37 RI/FS actions reviewed, or 14 percent, had been
completed, and only one of the five was completed in less than 2 years. The
remaining RI/FS actions have been in progress for as long as 5 years without
being comoleted. In one Region, work on eight RI/FSs had not begun, although
more than $6 million had been obligated for this work. The lack of timely
action has delayed completion of the RI/FS process and the ultimate clean up
of the Superfund sites. All of the incomplete RI/FS actions pertained to sites £
with significant environmental hazards, which require priority attention to
assure that remedial action is initiated in a timely manner. Some of the sites ^
with the delayed RI/FS reports were experiencing environmental hazards such as:
(i) arsenic in drinking water supplies? (ii) copper, barium, lead, and zinc in "
groundwaterr (iii) wind blown tailings contaminating groundwater; (iv) contam-
inated resident wells, and (v) hazardous wastes in ground and surface waters.
In view of the substantial problem which exists in the RI/FS area, we believe
that a dramatic improvement in the cooperative agreement recipients' RI/FS
procedures and in EPA's monitoring efforts will be required if this condition *
is to be corrected. |
Background _
The Superfund State-Lead Remedial Project Management Handbook, dated December
1986, indicates that the remedial investigation and feasibility study are
interdependent activities and are performed concurrently, with each activity
influencing the execution of the other. The RI is a field-oriented effort to
collect sufficient site characterization data to permit the development and
remedial responses for a hazardous waste site. The RI begins after a detailed
scope of work for the site has been approved. The basic purpose of the RI is |
to define the problems and dangers associated with the site. The site is mapped
and investigated thoroughly by sampling the area, groundwater, surface water,
soils, vegetation, animals, and other appropriate elements to determine the I
extent of the hazard. The wastes present in drums, tanks, pits, lagoons, or
other locations or containers also are characterized by sampling and analysis.
After the data are gathered, the danger presented by the site is assessed and I
treatability studies, in the form of pilot or bench scale treatment processes, I
are performed to determine an approoriate remedial action to control or remove
the hazard.
The FS identifies and analyzes the various remedial technologies available to
eliminate the hazards associated with the site. Alternatives are evaluated for _
their effects upon, and ability to protect, the environment and public health.
In addition, the alternatives are examined in terms of the regulations and ~
procedures established by each governmental agency controlling site remedies
and a cost analysis of each alternative is performed. The results of these I
investigations and studies are used by the State and EPA to develop the Record
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of Decision (ROD) for the site. They also are used by the consulting firms to
prepare a Predesign Report which includes conceptual site plans, outline
specifications, and a preliminary schedule and projected cost estimate for
remedial action.
The RI/FS process culminates with a report which presents the findings and an
evaluation of the various alternatives. The time goal generally recommended by
EPA to complete the RI/FS report ranges from 12 to 24 months as indicated by
the following table, which identifies the key steps in a Rl/ps process.
KEY STEPS IN THE RI/FS PROCESS
REMEDIAL INVESTIGATION
FEASIBILITY STUOY
12-24 MONTHS
,7-4 MONTHS,
PROCUREMENT/
OBLIGATION
1 MONTHS
TIME GOALS
SOURCE: October 1986 Project Officer Training Course
The problems concerning the completion of the RI/FS activities were noted in
six of the audit reports issued during FTs 1985 through 1987. It should be
noted that this represented all of the reports where the scope of the audit
included coverage in the RI/FS area. The RI/FS problems were noted in the
following four EPA Regions: Region 8 (Denver); Region 3 (Philadelphia);
Region 2 (New York); and Region 1 (Boston). The applicable States where the
problems were noted included the States of Montana", North Dakota, Utah,
Pennsylvania, New Jersey, and Rhode Island. In total, our review covered 37
RI/FS actions in these States, of which only 5 had been completed at the time
the audits were performed. Many of the RI/FS actions had never begun and
others had been in process for periods up to 5 or more years. The above
statistics indicate that a substantial problem exists with respect to the
completion of the RI/FS reports. The correction of this problem will require
substantial improvements on the part of both EPA and its cooperative agreement
recipients. '
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Region 8 RI/FS Activities Are Not Effective
Our audit disclosed that progress towards the completion of the RI/FS reports
required under three of the cooperative agreements awarded by the Region was
slow and sporadic. These cooperative agreements covered work at five hazardous
waste sites which were included in the National Priority List (NFL). The audit
report concluded that these sites were not well managed by the Region. In this
respect, the Region did not assure that the States expedited action on the
RI/FS work at these sites, but instead allowed the State agencies to move at
their own pace. In most cases, this pace was quite slow. While some delays
were attributable to local opposition against moving forward in the Superfund
process, we did not find that the Region actively assisted the States when
these situations occurred. In the suboaragraphs below, we discuss the lack of
RI/FS prooress at the following five NPL sites: the Sharon Steel Site, Utah;
the Olson-Neihart Reservoir Site, Utah; the Milltown Reservoir Sediments Site,
Montana; the Arsenic Trioxide Site, North Dakota- and the Silver Bow Creek
Site, Montana.
Sharon Steel Site, Utah. This site is located in a heavily populated suburb
of Salt Lake City, Utah. The site consists of approximately 260 acres of
tailinos from a mine milling facility which operated from about 1880 to 1959.
The tailings are 40 to 50 feet deep in some locations. Releases from the site
in the form of wind-blown tailings and contamination of groundwater have been
documented. The site received a Hazard Ranking System (HRS) score of 72.03
and was included on the NPL in October 1984. In addition, the site was
incorporated into the multi-site cooperative agreement awarded to the Utah
DOH in September 1984. Progress of the RI/FS work at this site has been very
slow, and development of an acceptable workplan has been unsatisfactory.
Problems with the notifications to, and negotiations with, the Potentially
Responsible Parties (PRP) also had a negative effect on progress at this site.
Although this site has been on the NPL for over 2 1/2 years, little actual
RI/FS work has been accomplished. As a result of Federal litigation against
the PRPs, EPA assumed the lead for the site in early 1987. The Federal lead
RI/FS was anticipated to begin with groundwater sampling in June 1987. There-
fore, it appears that substantial additional effort will be required before the
RI/FS at this site is completed.
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Sharon Steel Site
Picture shows the various strata of the tailings
which are beinq eroded bv the Jordan River. The
pictures were taken under a normal river flow
condition.
Olson-Neihart Reservoir Pite, Utah. The Olson-Neihart Reservoir evolved as a
hazardous waste site through the continual deposit of slurried mine tailings
into an existing irrigation reservoir. Aoproximately 200,000 cubic yards of
tailings are in the reservoir which is located in the Wasatch Mountains in a
soarselv oooulated area. High concentrations of zinc, copper, manganese, iron,
and cadmium were found at the site. TVie audit disclosed that there had been
no significant actions taken to initiate RT/FS work on this site, although
nearly two years had passed since the site was placed on the NPL. At the ti'ne
of the audit in September 1986, no remedial work had been done, and the RI/FS
workplan had not boen approved, tlie site was considered significant bv EPA
because of the potential, effect that the mine tailings could have on water
nuaUtv. The RT/FS process was delayed primarily as a result of a lack of
effective actions on the part of the Utah DOH in the procurement of construc-
tion services for the installation of underground monitoring wells at the site.
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Olson-Neihart Reservoir Site
Picture of Gofer Dam which holds the impounded
tailinqs. The tailings are approximately 40
feet deep at the base of the dam.
Milltown Reservoir Sediments Site, Montana. Samples taken from drinking
wells in the community of Milltown, Montana in 1981, showed elevated levels of
arsenic in the drinking water supply. The Milltown Dam was built in 1906 to
provide hydroelectric power to the area. Although the facility remains in
operation, the reservoir has been filled over the years with mine tailings.
Region awarded a cooperative agreement to the Montana DEH on June 27, 1983,
for preparation of an RT/FS at the site. The site was included on the NPL
in the Pall of 1183. The consulting firm hired to perform the RT/PS had
difficulty with the performance of the required tasks, and fell about 6 months
behind schedule. This condition, in addition to the qualitv of the work,
ultimately led to the termination of the consultant's contract by the State
in February 1987. In this regard, the State reported in one of its quarterly
reports that "The draft FS report was poorly done and it was becoming evident
that the contractor. . .was not performing as expected." The report: also com-
mented on problems with the RT/PS report and stated that "The main area of
discrepancy was with. . .validating their data in regard to arsenic speciation."
The report further stated that "The draft FS report was received on 11/13/86.
It was evident that little work had been done since the 1985 version. Comments
from the 19fl5 version wera not incorporated into the draft... it was felt it was
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poorly done." As a result of the termination and the problems with the quality
of the work, some of the testing performed by the consultant may have to be
redone. This could delay the initiation of further remedial action, although
more than 3 1/2 years have passed since the initial RI/FS work began.
Arsenic Trioxide Site, North Dakota. Normal drinking water sampling disclosed
the existence of arsenic in the drinking water supplies of the Cities of
Lidgerwood, Rutland, and Wyndmere, North Dakota. The sampling levels were
either at the maximum or exceeded the maximum levels allowed under EPA's
Safe Drinking Water Act. In addition, wells in the surrounding rural farming
communities were also found to contain high levels of arsenic. A specific
source of the arsenic contamination was not readily identifiable. This
situation resulted in the award of a cooperative agreement to the North Dakota
DOH on August 24, 1982, to perform an RI for the purpose of identifying the
extent and potential sources of contamination. The cooperative agreement
specified that work would be completed by December 3, 1984. In addition, the
recipient was awarded a cooperative agreement to perform an PS on July 1, 1985.
Our audit disclosed that the reguired RI/FS work had not been completed,
although about five years had passed since the initial cooperative agreement
award. Because of the poor quality of the documentation in the project files,
we were not able to ascertain the cause of the delays. Additionally, there
was no indication as to what actions were taken bv the Region to encourage the
State to speed up their progress. However, a memorandum in the file stated
that one year of the delay was attributable to the fact that the State was
unable to hire personnel. Obviously the State did not attach a high priority
to the site since they did not assign other State personnel to work on the
project. As a result of the delays, EPA Headquarters urged that the Region
take back the site lead, and complete the RI/FS as a Federal lead site. The
Region opposed this suggestion contending that the delays had been beyond the
State's control, and that a change in lead responsibilities may damage its
working relationship with the State. The Region therefore granted the State
an additional time extension, and agreed to have an EPA contractor assist in
the completion of the various tasks remaining under the RI/FS. We believe
that more effective Regional monitoring of the State's activities would have
expedited the completion of the RI/FS.
Silver Bow Creek Site, Montana. The original site was added to the NFL in
September 1983. It extended approximately 15 miles upstream from the
confluence of the Clark Fork River and Silver Bow Creek. EPA awarded a
cooperative agreement to the Montana DEH in September 1983, for performance
of an RI/FS at the site. It was subsequently determined that an additional
9-mile area may also qualify as an NPL site. As a result, a site inspection
(SI) and HRS scoring package for this additional area was completed. The site
was scored at 49.9 and was added to the original Silver Bow Creek NPL site,
extending that site 9 miles further up the Silver Bow Creek. The site contained
arsenic, cadmium, copper, barium, lead, and zinc. There have also been releases
of pentachloroohenols (PCP) via qroundwater discharges from the Montana Pole
NPL site. A removal team has been assessing the potential for acute health
impacts from the presence of elemental mercury at a public ball field within
the boundaries of the Silver Bow Creek site.
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Although the Silver Bow Creek site has been on the NPL since September 1983,
the Region estimated it would be at least two years before adequate informa-
tion would be available to make a well informed decision on the future RI/FS
actions required at the site. This would result in a minimum study period of
5 to 6 years before completion of the RI/FS. In view of the significance of
this site, further delays in the completion of RI/FS process do not appear to
be in the best interests of the public.
RI/FS Activities Delayed In Region 3
The audit report on Region 3's monitoring of the Pennsylvania DER concluded
that the failure to proceed with RI/FS activity has delayed clean ups, and
unnecessarily tied up over $6 million that EPA needed for other Superfund
projects. DER was initially awarded a cooperative agreement for $513,000 for
an RI/FS at one NPL site in June 1984. The available funds increased to over
$6 million by September 1986 to conduct RI/FS work at seven additional sites.
However, the State had not initiated RI/FS work at any of the eight sites.
The audit report attributed the RI/FS delays to: (i) a lack of qualified
State personnel; (ii) a failure of the State to follow Federal procurement
requirements; and (iii) the reluctance of the State to acknowledge that it was
responsible for the delays. To the contrary, the State has publicly implied
that EPA was responsible for the delays. These areas are discussed below.
Staff Qualifications. EPA knew prior to the cooperative agreement award that
the State lacked the staff to perform the RI/FS activities. In the State's
application for the cooperative agreement, it was clear that the State had
little in the way of Superfund staff and that it planned to hire a project
management consultant to prepare the RI/FS workplans. Although EPA was aware
of the limited capability, it processed the State's application for the
agreement in just three days.
Federal Procurement Regulations. A management assistance review, performed
jointly by the Region and EPA Headquarters personnel in May 1985, determined
that the State procurement procedures were not in conformance with the CFR.
The review concluded that the State evaluation process could result in
unnecessary delays- in awarding contracts. A subsequent report prepared by
the EPA OTG covering cooperative agreement activities through June 30, 1985,
also reported that the State's procurement system did not meet Federal re-
quirements. The report concluded that the procurement system certified by the
State appeared more applicable to small purchases, such as typewriters, rather
than the award of large contracts. Although the above reports identified
significant procurement system deficiencies, the State did not initiate adequate
corrective action, and therefore was unable to perform any of the required
RI/FS procurement actions.
Responsibility For Delay. Our audit disclosed that, while the Region should
have performed in a more aggressive manner, the primary responsibility for the
lade of RI/FS work rested with the State because of its inability to procure
the necessary consulting services. However, in discussing the delay in RI/FS
efforts, the State publicly indicated that the Federal government was at- fault*
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We believe that the State's inability to recognize its shortcomings and to
initiate the actions necessary to correct its existing procurement problems,
have been primarily responsible for the more than two year delay which has been
experienced to date.
For illustrative purposes, we have summarized the effects of the State's inef-
fective management practices on a Pennsylvania township site. The name of the
township was omitted from the audit report because of an impending enforcement
issue. In this case, the township first became aware of a problem with PCP in
1953. Over the years some initial clean up steps were performed, such as the
installation of filters to prevent contaminants from reaching a nearby stream.
In 1982, the site was placed on the NPL. Subsequent inspections indicated
that the filters had not been maintained and that contaminants were entering
the stream. Although the State selected a contractor to perform the RI/PS in
January 1986 to determine the final clean up options, the formal contract had
not been signed at the time of the audit, one year later. This condition was
particularly bad, since the State had promised the public, as early as 1984,
that the RI/FSs were about to start. The latest date for beginning the RI/FS
work was estimated as June 1987. It is entirely possible that the RI/FSs could
have been completed or substantially completed by that date if the State had
effectively performed their procurement responsibilities.
The Region was aware that most of the $6 million of cooperative agreement funds
provided to the State for potential RI/FS work was not required, The audit
report stated that "...the Region evidently wanted to reserve the money for
future use." As a result, DER continued to have 56 million of unused RI/FS
funds available for more than two years. The Region also considered deobligating
the funds provided for two specific RI/FS projects, since it believed that the
work could be performed by the site owners. However, the Region only asked DER
to return about $500,000 associated with one of the projects. The DER ignored
the Region's request for the return of the funds, and the Region did not pursue
the request any further.
Improvements Needed In The Timeliness Of RI/FS Work In Region 2
The audit of Region 2's monitoring of the New Jersey DEP cooperative agreement
disclosed problems with the timeliness in which the RI/FS work was performed.
The report indicated that RI/FS work was taking two or more years to complete.
This condition occurred primarily because the RPMs were not actively involved
in the oversight of the RI/FS process, and because the State was taking too
long to award its contracts. As a result, at the time of the audit, only 4 of
22 RI/FSs were completed, thereby delaying the actual clean up of the Superfund
sites.
The audit report further commented that the four completed RI/FSs required from
23 to 34 months to complete. According to State personnel, completion of the
remaining 18 RI/FSs was expected to require 21 to 40 months, while the Region
approved time extensions to the cooperative agreement period of performance in
order to complete the RI/FS work at 15 Superfund sites, the environmental hazard
created by these sites remains.
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The Region's midyear review commented on delays in the RI/FS process and
stated that: "An analysis of the missed State projects reveals major schedule
delays averaging six to nine months, with one project (Beechwood/Berkeley) in
jeopardy of slipping more than twelve months into fiscal year 1987 before the
RI/PS is completed." Part of the delay was attributable to the time taken by
the State to award contracts. The audit found that of the 22 cooperative I
agreements reviewed, only one RI/FS contract had been awarded in less than
six months. Over one-half of the awards took at least 10 months, including
seven that took over a year to award. The audit report attributed the problems
to the State's use of the unsuitable lump-sum contracting process. In this |
regard, the Region stated that while the lump-sum method may offer the
potential for low cost, it did "not have the flexibility to deal with un-
anticipated circumstances and unknowns so often characterized by Superfund
sites." As a result of the delays, the audit report recommended that the Region
evaluate whether the RI/FS work could be completed more timely by assianing the
work to EPA contractors, in lieu of the State. I
Problems With Duality Of RI/FS Work Performed In Region 1
The audit report for the Rhode Island DEM noted that Region 1 found the quality |
of the draft RI/FS reports unacceptable. In particular, the Region indicated
that RI/FS reports did not meet the National Contingency Plan (NCP) standards.
It is interesting to note that the RPMs had not noted this shortcoming during
the initial review and approval of the State's RI/FS contracting procedures.
The quality problems were found on the reports prepared for the Picillo and _
the Western Sand and Gravel hazardous waste sites. Because of the problems I
with the RI/FS reports, actions on the sites have been delayed for approximately
18 months. The problems at each of the sites are further discussed below.
Picillo Site. The draft RI/FS report prepared by the State's engineering ,
consultant was found to be unacceptable because it had not met the standards
of the NCP and EPA guidance. The two major problems noted by the Region were:
(i) a lack of a remedial investigation determining the nature and extent of
the problem presented by the release; and (ii) an absence of an assessment as
to whether the threat posed could be mitigated and minimized by controlling
the source of the contamination, or whether additional remedial actions would I
be required. The Region also noted that the RI/FS report did not reference
the fact that PCS and phenol contaminated soils were present at the site.
Because of the unacceptable performance of the RI/FS consultant, a new
consultant was subsequently brought in to complete the RI/FS work.
Western Sand and Gravel Site. The consultant utilized to prepare the RI/FS
report for this site also had not adhered to the requirements of the NCP. In
this respect, it should be noted that the contract between the State and the
consultant omitted any reference to the necessity to comply with the NCP. As
a result, upon submission to the Region, the RI/FS report was subjected to I
numerous delays and rewrites. It was estimated that completion of the RI/FS
report was delayed by about eight months because of the report's failure to
adhere to the NCP requirements. The audit report attributed the problems
to the State's overall lack of control of the project throughout the RI/FS
stage. In responding to the audit report, the State accepted responsibility
for the delays and agreed to take action to prevent the recurrence of similar
problems in the future.
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Reconmendat ions
We reconroend that the Assistant Administrator for Solid Waste and Emergency
Response:
| a. Birohasize the importance of Regional monitoring of recipients' RI/FS acti-
vities as a means of assuring that completion schedules are met.
I b. Oversee the Regions actions to expedite the recipients' RI/FS activities,
when they have fallen behind schedule in the completion of their RI/FS
work.
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3 - MONITORING OF PREREMEDIAL FUNCTIONS IS INADEQUATE
Procedures for monitoring the preremedial functions specified in the coopera-
tive agreements needed to be strengthened to assure that they were performed
in a timely and effective manner. Our audits of the preremedial functions,
which included preliminary assessments (PA), site inspections (SI), and
hazard ranking systems (HRS) scoring packages disclosed the following
conditions: (i) PAs were not completed within established schedules; (ii)
Sis were not always accomplished in accordance with EPA requirements; and (iii)
the HRS process had not been consistently followed. Our audits disclosed that
some States failed to perform any of the required PA and SI work. In addition,
the Regions have not utilized the HRS process in a manner which would assure
the identification of the most serious hazardous waste sites. These conditions
precluded timely and effective determinations as to the degree of severity
of the hazardous waste problems and whether the sites should be included on
the Superfund National Priority List (NPL). This delays the initiation of
subsequent clean up actions on these sites. We believe the preremedial area
may become more acute under the requirements of the recent Superfund Amendments
and Reauthorization Act of 1986 (SARA), which establishes strict deadlines for
the completion of PAs, Sis, and HRS scoring packages.
Background
Subpart F of 40 CFR 300 provides a detailed description of the Superfund
process. The initial steps in the process are called the preremedial phase,
and include preliminary assessments, site inspections, and hazard ranking system.
The PA is the first step in the actual site evaluation process. The PA attempts
to evaluate the magnitude of the potential hazard, identify the source and
nature of the release, and identify potentially responsible parties. A site
generally must be listed on the Comprehensive Environmental Response,
Compensation, and Liability Information System (CERCLIS) before the PA can be
performed with CERCLA funding. After the PA is concleted, the Region must
determine whether or not the site merits further action. If further action
is to be initiated, the next step in the preremedial process would be the
coupletion of an SI.
The purpose of the SI is to characterize the problem at the site to the extent
necessary to ascertain what, if any, further action is necessary, and determine
if the site should be considered for inclusion on the NPL. The major objectives
are to: (i) determine if there is any immediate danger to persons living or
working near the site, and if an immediate removal action is necessary; (ii)
provide sufficient information to develop the most accurate HRS score; and
{iii) identify the major sources of contamination.
The purpose of the HRS is to provide a method of establishing the relative
risk or danger of a particular site in relation to all other sites by
considering the (i) population at risk; (ii) the hazard potential of'the
substance at the site; and (iii) the potential for contamination of drinking
water supplies, direct human contact, and the destruction of sensitive eco-
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systems. Computation of the HRS score is based on data developed during the
SI. The HRS score ranges between zero and 100. A score of 28.5 or more is
required for nomination to the NPL.
We reported deficiencies in the preremedial area in five of the audit reports
issued during FYs 1985 through 1987. It should be noted that these were the
only audits which included a review of the preremedial chase in the audit
scope.
Completion Of Preliminary^Assessments Are Behind Schedule
Our audit reports disclosed that completion of PAs was behind schedule under
the cooperative agreements with the Utah DOH, Wyoming DEQ, South Dakota CWNR,
Maryland DHMH, and the California SWRCB South Bay site. In this respect,
none of the PAs required for the three Region 8 States had been completed
within the required timeframes. The Maryland DHMH and South Bay audit reports
indicated that only about 60 percent of the required PAs had been conpleted at
the time of our audit. Such delays preclude the Regions from making timely
assessments regarding the severity of the hazardous waste problems at the
affected sites. The PA performance deficiencies are further described below.
Utah Cooperative Agreement. The cooperative agreement provided for the com-
pletion of 21 PAs by September 1985. However, none of the PAs were completed
as of that date. The lack of performance necessitated an extension of the
cooperative agreement performance period to September 1986. While the State
had prepared draft cooies of all of the PAs by the end of the revised performance
period, only three PAs had been approved by EPA. One factor contributing to
the State's delays was a lack of control over specific action dates as to when
the individual PAs were to be performed and submitted for review. As a result,
we noted that 13, or more than half, of the PAs were submitted to the Region
simultaneously on March 28, 1986. Another factor contributing to the delays
was the Region's process of completing its review of PAs and returning the
results of its review on 17 PAs to the State on June 10, 1986. Neither the
State nor the Region had the resources to deal with the heavy workload caused
by the simultaneous submission of large numbers of PAs. We believe that this
could have been avoided if the Region and the State had prepared a mutually
acceptable delivery schedule for the PA reports at the beginning of the year.
Such a schedule would have helped spread submission of these reports over the
year.
The Region also had difficulty making timely reviews after PAs were received.
To illustrate, the draft PA for the Lark Tailings site was initially submitted
on December 5, 1985. However, the Region did not comment on the draft report
until June 10, 1986. A revised PA was submitted by the State on September 2,
1986, or about 271 days after its original submission. As of September 16,
1986, the PA had not been approved by the Region. Another illustration of
delays in the Region's PA review occurred for the American Barrel Yard site.
Two draft PAs were submitted by the State for this site, including an initial
submission in April 1986.
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Neither of the draft PAs had been approver! hv the Region as of September 1986.
It is rv:>ted that the draft PAs indicated a maior health concern ber-ause
transient peonle had access.! to the thousands of barrels at this sit?, some of
which have shown a stronci presence of gases.
American Barrel Yard Site
Close-up picture of the barrel site showinq
the front entrance gate.
Wyoming And South Dakota Cooperative Agreements. The Wyominq cooperative
agreement required that a tota^of 39 PAs~Ee performed. However, the State was
unable to meet this commitment. While the State had a fairly active PA program
during the early stages of the cooj^rative agreement, the Superfund activities
in the state came to a halt after the State's only cooperative agreement
employee resiqned in .Tune 1986. There was inactivity for about 9 months;
until the Reqion authorized an RPA contractor to begin performing PAs in the
State in an effort to meet the SARA requirements.
With respect to the South Dakota DWR cooperative agreement, we noted that
work on 20 PAs was not performed because of an 11-month delay in awarding the
cooperative agreement. The State requested the agreement in May 1986, but it
was not awarded until April 1987. '^hile the Region ultimately used an EPA
contractor to perform four of the PAs, the majority of the PA work was not
performed.
Timeliness PC Region 8 Actions On CanpletedPAs. In addition to State delavs
In completing the PAs, there were also delays by Reqion R in acting on the
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PAs. In order to get a perspective on the extent of the Region's delays in
completing PA reviews, we reviewed the time, between State completion of a PA
and initiation of an SI for 31 sites. Initiation of the SI was used since the
actual date of Regional completion of its PA review was not always readily
available. Our review, which included several sites from each State in Region
8, disclosed that an average of 449 days elapsed between the date of the State's
final PA report and the date that an SI field visit was initiated. To illus-
trate, the Yankton Landfill in South Dakota, had a PA completed on September 1,
1981. The PA report recommended that further remedial action in the form of an
SI be performed. However, an SI site visit was not initiated until November 7,
1985, or over 4 years later. Some other examples of significant delays are as
follows:
Site
Salt Lake City Landfill !Sto. 1 & 2, Utah
Whitewood Custom Treaters, South Dakota
Syro Steel, Utah
Standard Oil-Greybull, Wyoming
No. of Days
Between Completed
PA and SI Field Visit
2,202
1,295
435
364
The lack of timely performance of the PAs in Region 8 was attributable, in
part, to the fact that neither the State or Regional personnel considered the
PA process to be a high priority. This was a contradiction with the objectives
of the cooperative agreements which established performance of PAs and Sis as
important action items. The PAs represent an important part of the Superfund
process, and are the first step in identifying and prioritizing sites, which
may require some form of remedial action. Accordinglv, we believe they should
be accorded sufficient priority to assure that they are completed and acted
upon in a timely manner.
Maryland DHMH Cooperative Agreement. Onlv 20 of the 32, or 63 percent of the
PAs required under the cooperative agreement had been completed within the
original performance period which ended in September 1984. The cooperative
agreement performance period therefore had to be extended through June 1985 to
allow the State additional time to deliver the required final PAs. It should
be noted that Region 3 contributed to the delay by its failure to complete its
reviews of the State's draft PAs in a timely manner. In some cases, as long as
11 months were required by the Region to review and return the draft PA to the
State.
Delays in completing PAs also occurred under a subsequent cooperative agreement
awarded to the State for the period ending in June 1986. In this case, the
State completed only 33 of the 45 required PAs. Again the grant period had
to be extended to allow the State sufficient tiine to complete its work on the
PAS.
California SWRCB South Bay Multi-Site Cooperative Agreement. The cooperative
agreement specified that 50 PAs were to be performed. Although the cooperative
agreement was awarded in September 1985, the State did not begin preparing PAs
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until the spring of 1986. The PAs performed at that time were accomplished by
an EPA Intergovernmental Personnel Act (IPA) employee who was assigned to work
on the cooperative agreement. It did not appear that any PA work would have
been initiated if this assignment had not been made, even though the State
had staff capable of performing the PAs. As of December 1986, the State had
completed only 29 of the 50, or 58 percent, of the required PAs.
We also noted that only 4 of the 29 PAs completed related to the 91 sites
listed in the cooperative agreement. We were advised by State personnel that
priority was given to new sites. While there may be some rationale for such
an approach, we believe EPA should participate more actively in the selection
of sites for PAs to assure that there is agreement in the order that sites
will receive PAs.
Inadequate Site Inspection Efforts
The audit reports indicated that Sis were not always accomplished in accordance
with EPA requirements, or in a timely manner. In this respect, we found
problems with the completion of Sis required under the cooperative agreements
awarded to the States in Region 8, and to the Pennsylvania DEH, Maryland DHMH,
and the California SWRCB. The audit reports also disclosed deficiencies in
the quality of the Sis prepared by the Utah DOH and South Dakota DOH. In order
to assure timely decisions as to whether any future action at the sites is
required, it is important that the Sis be scheduled and completed as soon as
possible. A discussion of SI conditions noted in the audit reports is provided
below.
Region 8 Cooperative Agreements. The audit report noted that an average of
more than 10 months was required to complete the SI process. With the exception
of Utah, which performed its own Sis, the Sis were, for the most part,
accomplished by an EPA contractor. It was the intention of the Region to
expand the States' participation in the SI process. If this is the case,
additional training on the SI process will be required. In addition, Regional
oversight of the States' performance will have to be increased to assure
adequate performance. In this respect, written guidance, concerning the
performance of the SI, will have to be prepared by the Region.
Although Utah was authorized to perform its own Sis, none of the 14 required
Sis were completed within the original cooperative agreement period of perfor-
mance which ended in September 1985. Further, several of the Utah sites which
have been delayed in the SI process represent significant hazardous waste
problem areas. One of these sites, the Wasatch Chemical site in Utah, represents
one of the most serious hazardous waste sites in the State. The site, located
in an industrial area of Salt Lake City, presents a serious potential health
hazard as a result of ground and surface water contamination. However, our
review disclosed that clean up action on this site had not progressed to the
remedial stage, although more than 2 1/2 years had passed since the initial SI
sampling work was performed in May 1984. A subsequent SI in 1985 was conducted
and included sampling of the whole site. The SI resulted in an HRS score of
87.5 on September 13, 1985* The HRS score was far in excess of the 28.5 minimum
required for consideration for inclusion on the NPL. Although the significant
hazardous waste problems at this site have been known since 1984, long-term
remedial action had not been initiated.
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We reviewed 9 SI reports prepared by Region 8 and concluded that 7 failed to
meet the requirements of EPA, Office of Solid Waste and Emergency Response
(OSWER) Directive 9345.1-1, dated December 1985. This directive stated that
the two most important purposes of the SI were to:
"...1) understand the potential threat posed by a siteto the extent
possible within the limited scope of the SI, and
"2) to determine the need for further Superfund activity at a hazardous
substance site."
The 9 Sis reviewed included those performed by Utah, as well as some performed
by South Dafcota. As indicated, we found that 7 Sis failed to meet at least
one of the two criteria established by the OSWER directive. The most common
deficiency was the failure to perform the necessary sampling during the SI
process. This led to the Sis concluding that additional site testing should
be performed. To illustrate, the St. Regis Paper Co.-Wheeler Division, South
Dakota SI report which was not dated, indicated that no sampling had been
performed. However, the report concluded that samples of the groundwater,
waste, runoff, and soils were needed. The report also indicated the possibility
of contamination of drinking water due to the presence- of PC? and creosote
sludges. In view of the potential environmental problems and the lack of
sampling, it appeared that the results of the SI are of little value in
ascertaining whether future remedial work is necessary.
Since the reports reviewed did not fulfill the primary objectives of an SI, it .
appears that additional Regional training on the techniques of performing an
SI is required. Also, the Region's procedures need to be improved to document
whether or not the Region considered the Sis performed by the States to be
acceptable or unacceptable. The project files for the 9 Sis reviewed did not
indicate whether the Region considered the work unacceptable, or if additional
work at the sites was required. The Region has the responsibility for assuring
that the States possess the necessary technical staff and facilities to perform
the Superfund work before the cooperative agreements were awarded. In addition,
the Region is responsible for monitoring the progress of the States' SI activity
under the cooperative agreements. Our review disclosed that the Region had not
fulfilled these responsibilities. It had not provided the States with any
written instructions, training, or other guidance detailing the minimum
requirements for performance of an SI.
Pennsylvania PER Cooperative Agreement. The audit report indicated that the
SI reports were not prepared in a timely or quality manner. A total of 20
Sis were selected for review during the audit. However, eleven of the SI
files were not reviewed because the files could not be readily located. We
were advised that the files were maintained in various locations. The nine
files which were available for review, disclosed that periods of up to tvo
years were required to finalize the results of the State's one day SI field
visit. For example, the SI for the Vbortman Farm site took over 18 months to
finalize. The SI for the Hebelka site required about 2 years to complete.
There was also a problem with the quality of the work performed at the East
Mount Zion site. The recipient's sampling at this site showed that a serious
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hazardous waste contamination problem existed. This led to the eventual
inclusion of the site on the NPL. However, an independent sampling performed
for Region 3 bv an EPA contractor did not disclose any contamination problem.
Because the sampling efforts were hot coordinated, there was no opportunity to
reconcile the differences before the site was listed on the NPL. Duplicate
sampling by the Region and the recipient is a costly and wasteful practice,
which could be avoided by the development of a site-specific sampling plan
early in the SI process.
Maryland DHMH Cooperative Agreement. The audit report disclosed that the State
had not completed the 12 required Sis. This situation occurred because the
State had not prepared the required Quality Assurance Project Plan. Before
any sampling could begin, such a plan had to be approved by the Region.
Because of the State's nonperformance, the cooperative agreement period was
extended twice from the original completion date of June 1985 to December 1986.
However, the State was still unable to complete the Sis, since EPA continued to
consider the plan submitted to be unacceptable. The State maintained that they
were not advised of the unacceptability of the plan until 8 months after it was
submitted. The State commented that it had not been given any direction on
what corrections were necessary to make the plan acceptable. Because of this
lack of communication, the required Sis remained incomplete, and the remedial
progress at the affected sites remained at a standstill.
California SHRCB South Bay Multi-Site Cooperative Agreement. The cooperative
agreement required that Sis be performed at 30 sites; however, none of the
required Sis were completed* The Sis are necessary to provide information for
ranking additional sites. Because the Sis were not completed, no additional
sites received HRS scoring packages, and consequently no new sites had been
proposed for the NPL. It should be noted that completion of the Sis has been
a high priority goal of the cooperative agreement since it was awarded in
September 1985.
Our audit also noted an apparent deviation from normal EPA practices for the
conduct of Sis. It is our understanding that groundwater samples for the SI
workplans are being taken by the potentially responsible parties (PRP). EPA's
normal practice is to conduct its own independent sampling. The deviation was
highlighted in the Final Work Plan for the South Bay Multi-Site Cooperative
Agreement. The workplan recommended that, in order to bring the State into
compliance with the NCP, the sampling would have to be done by the State
rather than the PRPs. Although the state indicated that it would follow EPA
procedures, it requested sampling information from selected PRPs in conjunction
with the completion of the Sis.
Hazard Ranking System Inconsistencies
Our audit report disclosed that neither the recipients nor the Regions were
consistently applying the HRS process. The HRS process was established to
provide a uniform method for ranking hazardous waste sites in order to assure
that the most serious sites are included on the NPL. However, in the three
-Regions where the HRS process was observed, we noted that the HRS process was
bei;:*g misused. W& found that: (i) Region 3 may have been overzealous in its
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use of the HRS system; (ii) Region 8 indicated a reluctance to accept the HRS
scores; and (iii) Region 9 allowed one of its recipients to avoid the use of
the HFS process. Our observations in each of these Regions are discussed
below.
Region 3. The Region spent a considerable amount of effort revising the HRS
scoring packages for Pennsylvania DER sites. This resulted in the inclusion
of seven sites on the NPL, which did not qualify for listing before the
revisions were made. In one case, six revisions were required before the HHS
score reached the 28.5 required to qualify for inclusion on the NPL. The
rationale for the multiple revisions was not always adequately documented in
the files. The audit report therefore raised the question "Were the contrac-
tors competent, or was the Region over-zealous to get sites on the NPL?" The
following examples illustrate some of the multiple revisions made by the
Region, several of which, in our opinion, were of questionable value:
" The Hebelka site received a total of six HRS scores ranging from 13.2 to
31.94 between June 1983 and June 1985. The first three scores were rejected
because they were based on the wrong location. The other two scores below the
28.5 threshold were rejected because the Region contended that the contractor
miscalculated the distance from the hazardous waste to the water table. The
sixth score of 31.94 was calculated by the contractor and an EPA Regional
employee, and was dated the same as the fifth score which was calculated at
only 21.2. The higher score was based primarily on a calculation that considered
the hazardous waste closer to the aquifer of concern. The previous scores
were based on a distance of 80 feet, whereas the final score was based on a
distance of only 6 feet. The Reoion indicated that its conclusion was based
on a report prepared by the (J. S. Geological Survey (USGS). However, USGS
representatives advised the audit staff that the wells used for the sixth HRS
score had no direct bearing on the site since they were too far removed from
the actual site. On the basis of this information, it would appear that the
final HRS score was overstated. However, the Region has proposed this site
for inclusion on the NPL and announced plans for a $500,000 RI/FS.
" The HRS score for the Berks Sandpit site was originally computed at
31.99 by an EPA contractor. However, EPA Headquarters noted an error in the
score and reduced it below 28.5. A memorandum in the State's files stated that
the Region "...was working on this to try to get the score back over 28.5."
The Region subsequently rescored the site at 32.02. Documentation supporting
the increased score was not available during the audit.
' The Shriver's Corner site, which consisted of two separate sites,
received HRS scores from an EPA contractor of 14.94 and 13.91. The State
reviewed each score and concurred in the calculations; however, the Region
did not concur with the scores. The Region therefore combined the sites and
recomputed a single HRS score of 46.13. The Region indicated that its HRS
calculation considered several factors which were not previously addressed,
such as increased population and volume figures. Since the sane project files
were reviewed by all parties, it was difficult to understand the wide disparity
in the HRS scoring for this site.
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Region 8. Our review disclosed that the procedures used by the Region to
review and approve HRS scoring packages were not adequate. As a result, the
HRS scoring packages submitted in support of the Olson-Neihart Reservoir and the
Silver Creek Tailings sites were not adequate to withstand the challenges made
by outside sources. In addition, the Region's handling of the preliminary HRS
scoring package Cor the potentially significant Kennecott Copper site was
inadequate. The successful remediation of a serious health threat is dependent,
in part, on how well the HRS scoring package was prepared and supported. An
HRS score that is not based upon adequate supporting information will not |
withstand the challenges of a PRP or of local government entities. The HRS
scoring of these sites is discussed further in the following paragraphs. H
* The Olson-Neihart Reservoir site in Utah was included on the October
15, 1984, NPL update. The SI was performed by Utah DOH staff. The HRS scoring
was performed by an EPA contractor, and the site was given a score of 33.75. I
During preparation for negotiations with the PRP for the site, the Region
became concerned with the inadequacy of the data supporting the HRS score.
Some of the deficiencies noted were: (i) the upgradient and downgradient
groundwater samples were taken 4 years apart by different parties; (ii) no data |
on the depth of the aquifer and whether the wells were completed to the aquifer
of concern; and (iii) based on the data available, there had not been an .
observed release to the surface waters. These data were critical to achieving
the HRS score of 33.75. The significance of the deficiencies noted made it
difficult to understand how the HRS score had been initially accepted without
questions being raised as to the adequacy of the HRS scoring package. These
questions should have been asked several years before during the quality
assurance review performed on the HRS scoring package. Based on subsequent
sampling work performed by the State, we understand that the site is to be
recommended for elimination from the NPL. |
* The Silver Creek Tailings site is located in the resort community of
Park City, Utah. The site consists of about 80 acres of mine tailings that
vary in depth from one to ten feet. A tract of expensive custom homes and
commercial buildings were constructed on the site during the past several
years. The soil samples showed high concentrations of lead, cadmium, arsenic,
and silver. The DEH subsequently issued its PA report in April 1984, and its
SI report in August 1984. The SI report recommended that the site be considered
for the NPL. The site was evaluated by an EPA contractor and assigned an HRS
score of 38.4 in January 1985. The city subsequently engaged a consultant to |
review the accuracy of the HRS scoring package. The consultant raised several
issues concerning the reliability of sanpling data, the validity of the
conclusions reached, and the resultant HRS score. Specifically, the consultant
challenged the State's conclusion concerning the interconnection of aquifers
underlying the site and the validity of the surface water sampling technique
employed by the DOH staff. Upon receipt and review of the consultant's report, I
EPA Headquarters urged that the Region conduct more sampling to confirm the
validity of the HRS score. However, the Region initially refused to conduct
additional testing to support the HRS score. As a result of the lack of
Regional action, the site was eliminated from consideration on the NPL. The
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Region has subsequently initiated an extensive reevaluation of the
The reevaluation will be very expensive and time consuming, and delay the
remediation process hv at Least two years.
Silver Creek Tailings Site
Picture of silver Creek tailings site with
expensive homes in the background.
* The Kennecott Topper sites represent potentially the most significant
hazardous waste sites in the State of. Utah. However, little action had been
taken to ascertain the fulI extent of the hazardous waste problems at these
sites, or to initiate a schedule of corrective action for the nine individual
Kennecott Topper sites listed on the C^RCLIS.
The Kennecott Tailings Pond was located in Magna, Utah. The pond, which
covered approximately 5,000 acres, had been built up to a height of 80 to 90
feet of smelter tailings. It is bordered on the south by the Oquirrh Mountains,
on the north bv the Great Salt Take, and on its other sides by marshy alkali
flats and fresh water creeks and canals. A draft report, issued in Oecanber
198S indicated that the pond had high levels of arsenic, lead, and chromium.
An exceptionally high preliminary HRS score of 79. l1^ was calculated based on a
scoring of air, groundw.^ter, and surface water releases. It should be noted
that the tailings pond was in close proximity to local population and industry.
This was reflected in the draft reoort which stated "should the tailings ponds
be found to present environmental hazards, the potential for impacts up^n local
population and industries is high."
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As of the end of 1986, no action had been taken by the Region to recommend
that this site be included on the NPL. The files are vague as to the cause
for the excessive delay. However, the results of an EPA contractor review
issued in September 1986 disclosed problems with the sampling rationale used
to support the HPS score, although it indicated that there was a definite
problem with the Kennecott Tailings site. The files did not explain why it
took 9 months for the Region to obtain the contractor's report concluding that
the sampling was inadequate. Since the actual sampling was performed in July
1985, there was, in reality, a 14-month delay in determining that the sampling
was inadequate. As of June 1987, little progress had been made toward correcting
the HPS scoring, or rescoring the site so that it could be nominated for
inclusion on the NPL. We were advised that the PRP was voluntarily conducting
groundwater studies of the general area of this site. It should be noted that
the PHP's study may take several years to complete, and even then there is no
assurance that the PRP will move forward after the study to clean up this sits.
We therefore believe that EPA should take the lead on this site, and have its
contractor perform the work required and orepare an adequate HRS scoring
package.
Region 9. The Region has allowed the California SWRCB, the recipient of the
South Bay cooperative agreement to circumvent the HRS process. The recipient
has long maintained the attitude that nothing could be gained bv following the
HRS process and listing South Bay sites on the NPL. In addition, it was the
preference of the South Bav industries not to be listed on the NPL. The
recipient felt the use of the NPL would adversely affect its cooperative working
relationships with the PRPs, and complicate its progress toward site clean up
by adding one or two more government agencies to the process. The recipient
was more interested in performing its water pollution control enforcement
responsibilities with respect to the State's Waste Discharge Requirements (WDR)
than following the Federal procedures for designating an NPL site. The WDR
process is much less cumbersome than following the progression of steps a site
must go through under the NPL process. As a result of the above attitude, no
HRS packages had been prepared under the cooperative agreement for any of the
South Bay sites. It is noted that preparation of HRS packages was a priority
under the agreement and in fact several PAs and Sis were available for South
Bay sites prior to the award of the cooperative agreement. The State's
reluctance to follow the NPL process has precluded the Region from effectively
controlling or monitoring the site clean up process. We consider the State's
actions to be inconsistent with the intended purpose of the cooperative agreement.
Recommendations
We recommend that the Assistant Administrator for Solid Waste and Emergency
Response:
a. Issue a directive to require the Regions to: (i) include delivery sched-
ules for the completion of specific PAs and Sis in the cooperative agree-
ments; (ii) establish guidelines for timely Regional reviews of the PAs and
Sis; and (iii) require careful Regional monitoring of PA and SI delivery
schedules and the initiation of appropriate actions when the recipients
fall behind schedule.
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b. Review the HRS scoring quality assurance process to ascertain what
additional controls are necessary to unprove the consistency and accuracy
of HRS scoring packages.
AGENCY O3MMENTS
The Agency generally agreed with recommendation a. With respect to recom-
mendation b., the Agency provided several clarifying comments which it believed
led to several wrong conclusions by the auditors. The Agency indicated that
its current procedures require that all HRS scores of 25.0 or greater must be
submitted to EPA Headquarters for a quality assurance review. The Agency also
provided additional clarifying information concerning the Silver Creek Tailings
site. The response stated that the site was removed from the NPL because of
the SARA amendments, and not because of a lack of action by the Region.
AUDITOR COMMENTS
The Agency's comments are acknowledged, however, they were not responsive to
our audit recommendation b. We recommended that the Headquarters HRS scoring
quality assurance process needed to be improved, because of the inconsistent
application-of the HRS process noted in our audits. The Agency's response did
not address the concern, but merely reemphasized its existing quality assurance
process, which in our opinion, has not adequately ensured the consistency and
accuracy of the HRS scoring packages. In regard to the Silver Creek Tailings
site, we agree that the SARA amendments led to the actual delisting of the site
from the NPL. However, timely Regional action to conduct more sampling to
verify the original HRS score may have precluded the delisting.
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4 - REGIONAL OVERSIQfT ACTIVITIES NEED IMPROVEMENT
The Regions have not effectively performed their oversight responsibilities
under the Superfund cooperative agreements. This condition contributed to
delays in performing cooperative agreements and may adversely affect cost
recovery efforts against PRPs. These shortcomings have primarily resulted
from (i) a lack of sufficient training and guidance to assist the Regional
staff in the performance of their Superfund responsibilities, (ii) Remedial
Project Managers (RPM) often failing to take an aggressive role in assuring the
completion of the reouired cooperative agreement work, (iii) poor communication
of Superfund requirements to the cooperative agreement recipients, and (iv)
inadequate documentation of Superfund cooperative agreement files. Improvements
in each of the above areas are essential to assure that Superfund cooperative
agreement requirements are successfully performed.
Background
The EPA has selected the RPM as the focal point of its Superfund site management
program. The term "RPM" is defined as "...the Federal official designated by
EPA...to coordinate, monitor, or direct remedial activities or other response
under Subpart ?..." of the National Oil and Hazardous Substances Pollution
Contingency Plan (NCP). There have been several guidance documents issued by
EPA for use by the RPMs. The RPM's role for a State lead site, under a
cooperative agreement, is provided in the publication titled State Participation
in the Superfund Remedial Program (the Purple Book), dated February 1984, and
in Superfund State-Lead Remediar~Project Management Handbook {the Handbook),
dated December 1986. The Purple Book was ".. .developed to assist both EPA
staff and State officials in implementing EPA policies and procedures related
to State participation in the Superfund remedial program." The Handbook was
"...prepared to assist...RPMs in overseeing and managing. State-lead response
projects." Both guidance documents note that the role at each particular site
will be determined by the ability of the State to assume responsibility for the
site. The greater the State's ability to manage, the less responsibility the
RPM is required to retain. The Handbook describes EPA's approach to oversight
as follows:
"The RPM should seek to maintain a spirit of EPA/State cooperation
during the cooperative agreement project period. Vfoerever possible,
EPA should acknowledge excellent State performance and, through cor-
rective action, assist States to solve problems that impede Superfund
program/project progress..."
The Purple Book and the Handbook leave individual RPMs and Regions considerable
latitude in their monitoring and oversight functions.
Problems with t!he oversight function were noted in 11 of the audit reports
issued during the period covering FYs 1985 through 1987. The majority of the
audit reports issued during this period did not include a review of this area
in their audit scope, and therefore did not contain any observations on the
oversight function.
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RPMs Require Additional Training And Guidance
Our audits disclosed several instances where additional Regional training or
guidance material were required to assist the RPMs in the performance of their
cooperative agreement functions. In this regard, some RPMs did not have the
qualifications or training necessary to perform their duties. This condition
created considerable inconsistencies in the way that cooperative agreements
were managed. It is our opinion that the establishment of formal written
procedures concerning the day-to-day RPM activities would help assure a more
consistent treatment of the cooperative agreement issues by the responsible
HPMs. The Regions were generally reluctant to establish such procedures,
since they believed that the guidance should be developed nationally at the
EPA Headquarters level. Some illustrations of the types of problems noted
in our audits are included in the following suboaraaraphs.
audit report on California SWRCB's South Bay Superfund sites
disclosed that the Region had not made effective use of its RPMs' capabilities.
For the most part, the RPMs assigned to the project were inexperienced and
not knowledgeable of the role of the RPM. It was also noted that the RPM
position was vacant at the time of the audit in May 1987. Since the RPM
had the primary responsibility for coordinating, monitoring, and directing
activities under the cooperative agreement, it was inportant that this position
be permanently filled by a knowledgeable and experienced individual. During
the audit exit conference, the Region informed us that the RPM position had
been vacant for 4 weeks due to staff turnover, and that a senior project
officer was now assigned to the cooperative agreement.
* The audit report on Region 8's administration of cooperative agreements
disclosed that the Region had not developed adequate guidance to assist the
RPMs in the performance of their cooperative agreement administrative respon-
sibilities. Such guidance was necessary since some of the RPMs were not
effectively managing their assigned cooperative agreements. Specifically,
the Region had not established uniform RPM procedures for: (i) controlling
the receipt and disposition of work products submitted to the Region for review
or approval; (ii) reviewing the cooperative agreement work products; and (iii)
notifying recipients of the status of the reviews. The establishment of formal
written procedures would help assure a more consistent treatment of cooperative
agreement issues by the responsible RPMs.
" The audit of Region 9's administration of the California DOHS cooperative
agreements disclosed that the RPMs had not received adequate training in the
procurement and contract administration areas. The RPMs were therefore reluctant
to become involved in reviewing procurement actions and contracts made under the
cooperative agreements. It was our opinion that greater RPM involvement in the
recipients' procurement activities could have reduced the extent of the procure-
ment deficiencies noted during our review of the California Stringfellow and
Purity Superfund sites.
More Aggressive RPM Role Is Necessary
The audit reports disclosed that the RPMs have not taken an aggressive role in
assuring the completion of the required subagreement work. This resulted in
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unnecessary delays at many Superfund sites, additional costs, and contributed
to the ineffective performance experienced under some Superfund cooperative _
agreements. The Handbook encourages active RPM involvement and states that
"...the RPM must develop a strong proactive approach to project management.
The proactive approach is to look ahead, develop anticipatory actions and
work-around strategies and modifications to work plans in order to accommodate I
the changes and problems that are certain to occur..." It also provides that
"When a project problem is identified, the RPM...should immediately initiate
discussions designed to identify necessary corrective actions..." However, we
noted that the RPMs were not always taking effective action to assure that the |
cooperative agreement goals and objectives were met. Some examples of Regional
inaction are described below. _
" The Region 8 audit report concluded that the Region had not aggressively*
pursued instances of nonperformance under its cooperative agreements with the
States of North Dakota, South Dakota, Wyoming, and Utah. Under the North
Dakota cooperative agreement, the State's progress in completing work at the
"Arsenic Trioxide Site" was unsatisfactory. In this respect, more than 4 years
had passed and required work remained incomplete. Part of the problem was
attributable to the stoppage of work by the State for about one year because |
it was unable to hire personnel. There was little evidence of RPM involvement
or action to expedite the State's"progress at this site. As a result of the M
long delay, SPA Headquarters urged the Region to take back the lead on the I
site. However, the Region refused, because it believed that this would have a
damaging effect on EPA-State relations. We believe that the Region's passive
attitude with respect to the accomplishment of the program objectives was a
contributing factor to the ineffective performance under the cooperative m
agreement.
* Several of the audit reports discussed problems with the recipient's . |
submissions of quarterly progress reports. In these instances, there was no
evidence that adequate follow-up action was taken by the RPM to assure the ^
receipt of the reports. The quarterly reports are a useful management tool,
since they provide summary information on the current project status and the
expected completion dates of the various project phases. We believe that the
RPMs need to more aggressively pursue those instances in which the recipients
are not submitting the quarterly progress reports or other essential site I
related information.
* The audit report on Region 3's monitoring of the Pennsylvania cooperative |
agreement discussed the fact that the State did not penalize or take other
sanctions against contractors for inadequate performance, although the M
completion of remedial work at several Superfund sites was delayed. To the
contrarv, the contractors were generally paid in full for their services. The m
delays in the remedial process ultimately resulted in public concern over how
the sites were handled by EPA. The audit report recommended that contractors1
work be more aggressively monitored in order to assure that high quality products
were received in a timely manner.
Poor Communication of Superfund Requirements |
There has been a general failure on the part of the Regional staff to communi- M
cate and subsequently monitor the financial and procurement requirements with I
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cooperative agreement recipients. These conditions have an adverse effect on
the Regions' ability to manage the project, since it limits the management
information available to them. Some examples of the communication problems
noted are described below:
Financial Administration. Most Regions did not monitor the recipients'
compliance with the financial commitments of the cooperative agreements.
Numerous audit reports disclosed problems with the recipients' submission of
the Financial Status Reports and required Letter of Credit reports. In some
instances, the Regions were totally unaware of their responsibilities in the
financial management area. In these cases, the planning and management benefits,
which could be derived from the recipients' financial reports, were not realized.
Procurement Requirements. The audit reports showed that the Regions were not
adequately monitoring the recipients' procurement activities. It was their
general belief that, as long as the recipient certified that its procurement
section met the requirements of 40 CFR Part 33, no additional monitoring was
required. Even in those instances where a recipient did not certify its
procurement system, the Regions did not adequately monitor the recipients'
procurement process. Such a lack of involvement is contrary to the requirements
of the Handbook which provides that certification "...does not eliminate or
reduce the RPM's responsibility for reviewing and concurring on the State's
final contract documents, change orders, etc., to determine that the State
complied both with the site-specific requiranents and schedule in the CA and
with aeneral Superfund program requirements." Minimal Regional review of the
recipients' procurement actions before they are made would help to assure that
EPA's procurement requirements are met. Some examples of the procurement
deficiencies noted in our audits are discussed below.
* The Region 9 audit report on administration of the California DOHS
cooperative agreement discussed the Regions' failure to monitor the recipient's
procurements, even though they were aware the recipient had not complied with
Federal procurement requirements. In addressing the finding, the Region stated
that when a recipient certifies that its procurement system is adequate to meet
the intent of 40 CFR Part 33, it is the recipient's responsibility to determine
that Federal procurement requirements are met. It was the Region's position
that the RPM was only responsible for reviewing the recipient's actions for
technical compliance with the NCP and Superfund guidance. The Region added
that the RPMs did not have the proper training to review procurement actions.
We believe that the Region's position is contrary to the intent of the Handbook
which indicates that the RPM has a continuing responsibility in the procurement
process. In instances where RPMs lack procurement expertise, they should
either receive training or utilize the services of Regional support staff that
possess necessary expertise.
* The audit report on Region 3's monitoring of the Pennsylvania cooperative
agreement discussed a delay in the procurement of RI/FS services at eight
Superfund sites. The procurements began in June 1984, and although a total of
$6 million of Superfund funds had been obligated for the sites, no subagreements
had been awarded as of September 1986. The Region was aware of the recipient's
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inability to perform the procurements, but did not initiate corrective actions
to assist the recipient or otherwise communicate its concerns to the recipient.
As a result, remedial progress at the Superfund sites has been delayed a minimum
of two years.
The audit report on Maine DEP's cooperative agreement noted that
contracts and subcontracts totaling about $589,000 were awarded under the
coocerative agreement without proper documentation submitted to the Region
before award. Our review of the procurements disclosed deficiencies including
a lack of required affirmative action steps and an absence of all required EPA
contract clauses. Although the Maine DEP had not certified its procurement
system, the RPM had not taken necessary steps to monitor the recipient's
procurement process. The audit report concluded this condition was due to
the recipient's lack of familiarity with the procurement requirements and a
lack of training of the RPM.
Inadequate Documentation Of Cooperative Agreement Files
Our audits showed that RPMs have not always complied with the recordkeeping
requirements of 40 CFR Part 30 or the Purple Book. This resulted in a wide
disparity in the adequacy of the project files maintained for Superfund
cooperative agreements. Adequate recordkeeping is particularly important for
large, complex, and controversial Superfund sites. In these cases, EPA may be
required to participate in lengthy legal proceedings to recover costs from the
responsible parties, and therefore accurate recordkeeping is essential.
40 CFR Part 30 requires that adequate books, records, and documents and other
evidence be maintained to track the project. These requirements are further
expcinded by the Purple Book, which states that: "...Regional files should
document and support all actions taken at the site. Documentation should be
sufficient to identify the source(s) and circumstances of site problems and
potentially responsible parties, provide an accurate account of Federal costs
incurred, and demonstrate actual and potential impacts to public health and
welfare or to the environment..." It also states that "...a State entering
into a Cooperative Agreement must maintain a file containing all relevant
documents and communications pertaining to the development and implementation
of the Agreement. These records should include such site-specific documenta-
tion as ledgers, purchasing and contracting files, receipts, vouchers, travel
authorizations, methods of equipment usage, and depreciation." Contrary to
the above requirement, the required files were often not maintained or could
not be readily located. Examples of problems noted in our audits are provided
below.
* The audit report on Region 8's administration of cooperative agreements
disclosed that RPMs were not maintaining adequate project files, and that the
files varied widely between RPMs. The Region had not established a standard
defining the proper organization or content of the files. We found instances
in which essential project documentation was missing from the files. Of
particular concern was the complete absence of documentation of telephone
conversations and meetings held by RPMs. Since ,the RPMs deal with many issues
on a verbal basis, it is important that this information be documented and
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incorporated into the project records. With the tendency for movement of RPMs
between sites and other functions, this form of documentation becomes essential
to the continuity of the project.
* The New Jersey DEP audit disclosed that documentation maintained for 3
of 4 Superfund sites was incomplete. According to the audit report, this
condition adversely effected the State's ability to adequately monitor the
status of the cooperative agreements.
Recommendations
We recommend that the Assistant Administrator for Administration and Resources
Management:
a. Instruct the Regions to issue written directives clearly delineating the
responsibilities of the RPM, the Assistant Administration Unit, the
Financial Management office, and the other Regional units involved in the
award, oversight, and management of Superfund cooperative agreements.
b. Ensure that Regional administrative personnel involved in managing the
Superfund cooperative agreements receive adequate training to fulfill
their responsibilities.
We recommend that the Assistant Administrator for Solid Waste and Emergency
Response:
a. Review existing guidance to RPMs in light of the areas discussed in this
"Capping" report and develop additional guidance on the RPM function.
b. Consider the establishment of an RPM certification program, requiring the
completion of specified standard courses, along with subsequent annual
refresher training. The training should emphasize the oversight of
recipient performance under cooperative agreements and procedures for
maintaining effective communications with recipients. It should also
cover RPM procurement responsibilities, and project file documentation
requirements.
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5 - PROCUREMENT SYSTEM DEFICIENCIES
Our audits of the Superfund cooperative agreements disclosed widespread
nonoompliance with procurement requirements contained in 40 CFR Part 33,
The extent of procurement deficiencies is of particular concern since the
value of the cooperative agreements included in this review exceeded $136
million, and in many agreements, the majority of the activities are conducted
by contractors. The ultimate success of EPA's Superfund program is, to a large
measure, based on its ability to obtain quality contractors and subcontractors
in a timely and cost effective manner. As a means of accomplishing this
objective, we believe that the effectiveness of the procurement actions made
under the cooperative agreement prooess must be improved. Procurement problems
noted in the audits included: (i) the failure to provide for free and open
competition; (ii) the absence of effective affirmative action plans; (iii) a
lack of adequate documentation supporting the procurement awards; (iv) the use
of prohibited forms of contracting; (v) an absence of adequate cost and price
considerations; (vi) the failure to give adequate public notice on competitive
procurements; (vii) the lack of required EPA standard clauses in the subagree-
ments; and (viii) the omission of references to the applicable Federal cost
principles in the subagreements. Since many of the cooperative agreement
recipients had previously certified that their procurement systems met the
requirements of the CFR, the extent of the noncompliance demonstrated that
little reliance can be placed on these certifications. Also, several of the
deficiencies noted in our audits were previously discussed in EPA Headquarters'
reviews of sane recipients' cooperative agreements. However, timely corrective
actions on the EPA Headquarters' recommendations were not made.
Background
40 CFR Part 33.110 stipulates that it is the State's responsibility to evaluate
its own procurement system and to determine whether its system meets EPA's
requirements. EPA's implementing guidance for the above regulation is found
in its Manual entitled State Participation in the Superfund Remedial Program.
Volume II of the Manual is entitled State Procurement Under Superfund Remedial
Cooperative Agreements and provides detailed guidance on Superfund procurements.
The Manual requires that each application for a Superfund cooperative agreement
be accompanied by a completed Procurement System Certification Form for
Applicants for EPA Assistance (EPA Form 5706-48). Part B of the EPA Form
5700-48 provides the following certification language:
Based upon my evaluation of the applicant's procurement
system, I as authorized representative of the applicant,
certify that the applicant's procurement system will meet
all the requirements of 40 CFR Part 33 including the
attached subparts before undertaking any procurement
action with EPA assistance.
The subparts referenced in the EPA Form 5700-48 included, in part, the
following:
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40 CFR
Part
Reference
33,210
33.230
33.235
33.240
33.250
33.275
33.285
33.290
33.405-
430
33.505
33.510
Section Title and Summary of Requirement
SUBAGREEMENT ADMINISTRATION. System must ensure that
contractors perform in accordance with all applicable
contract requirements.
COMPETITION. System must have procurement transaction
procedures that provide open and free conpetition.
PROFITS. System procedures must allow only fair and
reasonable profits to contractors.
SMALL, MINORITY, WOMEN'S AND LABOR SURPLUS AREA BUSINESSES.
System must award a fair share of subagreements to such
businesses.
DOCUMCTTTATION. System must reouire that procurement records
and files for purchases over $10,000 include items specified
in this section.
FEDERAL COST PRINCIPLES. System procedures for determining
allowable costs must comply with the cost principles
specified in this section.
PROHIBITED TYPES OF CCNTRACTS. System may not allow use of
cost-pius-percentage-of-cost (multiplier) or percentage-of-
construction types of contracts.
POST AND PRICE CONSIDERATIONS. System procedures must allow
for consideration of cost and price as required in this
section.
FORMAL ADVERTISING. System procedures related to formal
advertising including those for bidding and contract awards,
must meet the requirements of these sections.
COMPETITIVE NEGOTIATION. System procedures for negotiation
of subagreements must meet the specified requirements.
PUBLIC NOTICE. The recipient must give adequate public
notice for comoetitively negotiated procurements.
Subpart P SUBAGREEMENT PROVISIONS. Subagreements for procurement
under EPA assistance must contain the appropriate clauses,
or their equivalent, specified in this subpart.
An applicant may elect not to certify its procurement system. Under such
circumstances, the applicant must allow EPA to review and approve all proposed
procurements before they are awarded in order to assure that the provisions of
40 CFR Part 33 were followed.
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Need toAdhere to 40 CFR Part 33 Requirements
Many of the cooperative agreement recipients incorrectly certified that their
procurement systems were adequate to meet the requirements of 40 CFR Part 33.
Other recipients that could not certify their systems accepted the cooperative
agreements with the provision that the requirements of 40 CFR Part 33 would
be followed. However, audits of these recipients disclosed that often they
either had not: (i) adequately compared their procurement systems with the
CFR requirements, and therefore were not aware of conflicts which prevented
compliance; or (ii) followed their procurement procedures in performing Superfund
procurements. As a result, recipients did not comply with several sections of
the CFR, including those applicable to competition, small business, documentation,
prohibited types of subagreements, cost and price considerations, public notice,
subaqreement provisions, and Federal cost principles.
Procurement deficiencies were noted in 22 of the audit reports issued during
the period covering FYs 1985 through 1987. Some of the procurement deficiencies
had been previously identified in earlier OIG audit reports, or in reports
prepared by EPA Headquarters. However, the recipients failed to take appropriate
corrective actions. The most common areas of noncompliance noted in the audit
reports are summarized below:
Competitive Procurement Techniques. Pursuant to 40 CFR 33.230, all procurement
transactions must be conducted in a manner which provides maximum free and open
competition. Thus recipients are not to engage in any procurement practice
which tends to unduly restrict or eliminate competition. The regulations
allow the recipient to use a prequalified list of persons, firms, or products
if certain restrictions were met, and competition was not restricted by its
use. However, our audits disclosed that not all recipients were in compliance
with the above regulations. Several examples of this noncompliance are
discussed in the following subparagraphs.
* The audit report on the Florida DER disclosed that proper competitive
techniques were not utilized in the award of two contracts, valued at a total
of about $751,000. 40 CFR 30.605 provides that noncompetitive negotiations
can only be used when one of the following conditions exist:
- The item is available only from a single source;
- A public exigency or emergency exists and the urgency for the require-
ment will not permit a delay incident to competitive procurement;
- After solicitation from a number of sources, competition is inadequate;
or
- The EPA award official authorizes noncompetitive negotiation.
The auditors determined that none of the above conditions existed, and there-
fore concluded that the procurements resulted in an unnecessary restriction of
competition. As a result of this lack of competition, there was no .assurance
that the services could not have been obtained from other contractors at a
lesser cost to the Federal government.
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* The California DOHS audit report disclosed that the State's procurement
techniques did not always provide for maximum open and free competition.
The audit disclosed problems with competitive bidding in 5 of the 11 contracts
reviewed. Competitive bidding techniques were not utilized during the two
occasions that the State amended its emergency hauling contracts under the
Stringfellow cooperative agreement. In one of these occasions, conpetition
was restricted due to the contractor's elimination of competition bv under-
bidding the cost of the liquid waste disposal portion of the hauling work.
The California OOHS audit report also commented on a restrictive bidding
situation which occurred during the award of a foam installation contract at
the McColl Superfund site. In this case, the specifications identified a
specific firm as the only firm that could perform the work. This restriction
eliminated all other rotential firms from competition. As a result of criticisn
of its restrictive bidding practice, the State reopened the procurement on a
competitive biddinq basis and realized a savings of about $492,000 as a result
of the elimination of the restrictive specification.
There was also a lack of free and open competition in the award of the RI/FS
contract at the McColl Superfund site. In this case, the contract was awarded
on a sole source basis without adequate -justification. The State justified
the award because the contractor had previously performed work at the site.
However, 40 CFR 33.715(a)(2) requires that approval of a sole source award
be based on reasons other than the fact that the same firm provided the
facilities planning or design services.
Prior to our audit, the California DOHS had received prior procurement system
reviews by EPA Headquarters and the Auditor General of California. However,
the recommendations made in these reviews were not implemented by DOHS
officials. One of the EPA Headquarters' recommendations was that the State
"Prepare written procedures on how DOHS will make procurement awards on its
EPA funded procurements." This recommendation was not implemented by the DOHS
and, in our opinion, was one of the major contributing causes to the procurement
system deficiencies noted in'our audit of the California DOHS.
Small, Minority, Women's, and Labor Surplus Area Businesses. 40 CFR 33.240
requires recipients to take affirmative steps to award a fair share of business
to small, minority, and women's businesses and from labor surplus area firms.
Several of the audit reports issued indicated that the cooperative agreement
recipients' had not taken appropriate affirmative action steps.
The audits of the Delaware DNREC, and the North Dakota DOH indicated that
the States did not have laws or codes covering affirmative action requirements
for small, minority, or women's businesses. As a result, affirmative action
steps were not taken in the procurement actions initiated under EPA's
cooperative agreements. The New Jersey DEP, the Illinois EPA, and the Maine
DEM cooperative agreement audit reports also indicated that the required
affirmative action steps were not taken by these States for Superfund procure-
ments. The audits noted that three of these five State agencies had previously
certified that their procurement systems met the intent of 40 CFR Part 33.
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Procurement Documentation. 40 CFR 33.250 provides that files for procurements
in excess of $10,000 shall include: (i) the basis for contractor selection;
(ii) a justification for the procurement method selected; (iii) a justification,
if free and open competition was not allowed; (iv) a justification for the type
of subagreement; (v) the basis for the cost or price of the award, including an
analysis of same; and (vi) a justification for any rejected bids. Instances of
nonconpliance with this requirement ranged from relatively minor cases in which
only a few items of documentation were not available, to cases where virtually
no documentation was maintained to support the procurement actions. Some
examples of the documentation problems noted are discussed below:
* The California OOHS, the Arizona DOHS, the New York DEC, and the
Illinois EPA certified that their procurement systems met the intent of 40
CFR Part 33. However, our audits disclosed that most of the documentation
required by the regulations was not maintained for their cooperative agreement
procurement actions. In this respect, the Illinois EPA claimed that State
regulations did not specify that the documentation be maintained. However,
this statement directly contradicted the information provided in its procurement
system certification. The New York DEC responded that it was not their standard
procedure to prepare and maintain the documentation. Again, this was in conflict
with the information provided in the State certification.
* The Louisiana DEQ failed to maintain the required documentation for
the Superfund contracts, claiming that it was unaware of the documentation
requirements. While the Louisiana DEQ did not certify the procurement system,
it accepted the cooperative agreement which included a requirement to follow
the requirements of 40 CFR Part 33.
Prohibited Types of Subagreenents. 40 CFR 33.235 prohibits the use of cost-
plus-percentage-of-cost (CPPC) and percentage-of-construction-cost subagreanents.
However, our audit reports disclosed that the use of the CPPC type of subagreement
was a frequent problem. It appeared that this problem occurred because the
State agencies were not familiar with the types of compensation provisions which
would constitute the prohibited contracting method. In essence, any contract
reimbursement provisions, which authorize a fixed rate factor that combines
overhead and profit, and apply this factor to other subagreement costs,
constitutes CPPC contracting. In these instances, the cost and profit
percentages are not separately identified, thereby opening the possibility for
abusive profits. For this reason, this method of contracting is prohibited by
the Federal government. Also, the U. S. Comptroller General has stated that
"Such fixed rates are inconsistent with the basic principles of a cost type
contract in that they will not normally result in reimbursement of the actual
cost..."
Some examples of the CPPC contracting method noted in our reviews are summarized
below:
" The Florida DER audit report indicated that four CPPC subagreements,
with a total value of $543,907 were awarded. The report concluded that EPA
should not participate in the costs of these Subagreenents, other than on the
basis of a fair and reasonable value for the services provided.
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" The California SWRCB audit report indicated that a subcontract awarded
under the South Bay cooperative agreement provided for reimbursement on a
CPPC basis, The subcontract allowed reimbursement of direct expenses to be
charged at "cost plus 10 percent". The State indicated that it considered the
subcontract to be acceptable because it represented the subcontractor's "normal
business practice". Wa did not consider this to be a valid argument for
violating the CFR prohibition on this form of contract.
" The California DOHS report commented that, under the McColl cooperative
agreement, a $1.4 million contract award was made on the CPPC basis. A similar
situation existed under a $1.5 million contract awarded under the Stringfellow
cooperative agreement. Upon discussion of this matter with State personnel,
they agreed to amend the contracts and billing processes to an allowable cost
reimbursement method.
* The New York DEC and the Louisiana DBQ reports also disclosed that the
CPPC method of contracting was used. Representatives of both organizations
indicated that they were unaware that the CPPC method of contracting was
prohibited. However, the New York DEC had previously certified that its
procurement system was in compliance with the provisions of 40 CFR Part 33.
While the Louisiana DEQ did not certify its procurement svstem, it did accept
the cooperative aqreement with the understanding it would comply with 40 CFR
Part 33, including the provision prohibiting the CPPC method of contracting.
Cost and Price Considerations. 40 CFR 33.290 requires that a cost analysis
be performed on all negotiated change orders and subagreements estimated to
exceed $10,000. It also requires a price analvsis of all formally advertised
procuranents estimated to exceed $10,000 if there are fewer than three bidders.
Further, 40 CFR 33.250(a){5) specifies that the cost or price analysis documen-
tation be maintained in the procurement file. Although the basic objective
of cost or price analysis is to assure that reasonable contract prices are
obtained, we found several instances of noncompliance in this area as follows:
* The California DOHS audit report disclosed that, under the Purity
cooperative agreement, a $749,500 fixed price subagreement was awarded without
adequate cost and price considerations. This condition was compounded by the
fact that: (i) the firm receiving the award was not the most qualified overall
offerer; (ii) the fixed price award amount was $461,300 more than the most
qualified offeror's price of $288,200; and (iii) there was no evidence that an
attempt was made to negotiate a reduction in the proposed price. The audit
considered the price difference to be excessive, and informed the Region that
any payments in excess of the most qualified offeror's price would represent
a waste of Federal funds. The Region supported the audit position, and has
limited Federal reimbursements to the $288,200 amount.
* The Arizona DOHS audit report indicated that a $378,998 subagreement
was awarded without evidence that a price analysis had been conducted. A
price analysis was mandatory, since only two bidders had submitted bids.
* The New Jersey DEP report indicated that change orders totaling $1.2
million under nine subagreements were approved without evidence that cost or
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price analyses were performed. The audit report noted that several of the
change orders increased the value of the subagreements by 50 percent or more.
Accordingly, the need for such analysis to prevent excessive profits should
have been apparent.
* The New York DEC report disclosed that four subagreements were awarded
without any evidence that the required cost analysis was performed. The State
advised that cost analysis documentation was not normally prepared for the
files. The audit also noted that similar problems had been previously raised
during reviews conducted by EPA's Regional and Headquarters personnel. The
audit, results indicated that no corrective action had been taken by the
recipient to assure compliance with the Federal requirements.
Public Notice. A recipient is required by 40 CFR 33.510 to give adequate
public notice for competitively negotiated procurements. This method of
procurement is often used to procure technical services under cooperative
agreements. The CFR requires that the notice must: (i) indicate how a bidder
may obtain associated documents; and (ii) contain enough information for the
bidder to prepare a proposal, including information concerning the evaluation
criteria, and its relative importance. Additionally, 40 CFR 33.515 requires
that the evaluation of the proposals be uniform and objective, and conducted
solely in accordance with the criteria contained in the public notice. The
cooperative agreement audits completed have disclosed problems with the
recipients' compliance with the public notice requirements. While the degree
of compliance problems varied, several audits disclosed a general disregard for
the CFR requirements. Some examples of the problems identified during the
audits are summarized below:
* The California DOHS audit report indicated that the State had not
utilized criteria described in the public notice document for the award of a
subagreement on the Purity cooperative agreement. The State was not satisfied
with the results of its established evaluation process, and therefore, contrary
to its own legal counsel's advice, arbitrarily changed its evaluation criteria
after proposals were received. There was no documentation in the files
indicating that the bidders were informed of any factors, weights or other
criteria to be used by the State to override the technical and cost evaluation
factors specified in the public notice.
* The Delaware DNREC, the Louisiana DBQ, the New York DEC, and the
Illinois EPA audit reports noted that the States failed to include the relative
importance of each evaluation criteria in their public notices. In some cases,
the absence of the criteria appeared to have been an oversight; however, some
omissions appear to have been intentional. To illustrate, the Delaware DNREC
indicated that it excluded the information because they thought its inclusion
would cause the bidders to "customize proposals to the selection criteria."
The New York DEC excluded the information in order not to "stifle creativity"
by the bidders. In each of these instances, the recipients showed a lack of
understanding of the Federal procurement process. The selection criteria is a
necessary element of the procurement process, since it can be used to direct the
bidders efforts into areas, most important to the recipient. The audit reports
for the Florida DER, the Illinois EPA, and the Michigan DNR indicated that
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bidders were not provided adequate information on how to obtain the associated
documents necessary to complete their bids. This deficiency could result in
the submission of incomplete or inadequate proposals by the bidders, thereby
eliminating them from consideration in the competitive selection process.
Subaqreement Provisions. Subpart F of 40 CFR 33.1005 through 40 CFR 33,1030
set the minimum subagreement provisions to be included in all recipient
subagreements awarded under EPA programs. Subpart F contains the following
requirements:
1. 40 CFR 33.1015 specifies that a subagreement must contain the
following: (i) Nature, scope, and extent of work to be performed; (ii)
timeframe for performance; (iii) total cost of the subagreement; and (iv)
payment provisions.
2. 40 CFR 33.1016 discusses the labor standards provisions.
3. 40 CFR 33.1019 covers patents and copyright clauses.
4. 40 CFR 33.1020 discusses the violating facilities clause.
5. 40 CFR 33.1021 covers the energy efficiency clause.
6. 40 CFR 33.1030 contains the model subagreement clauses.
The model clause provision establishes a series of subagreement clauses for
inclusion by recipients in their subagreements. Recipients may use these
clauses or they may substitute their own clauses if they are at least equivalent
to the suggested clauses.
Our airiit reports disclosed that about one-half of the recipients reviewed
were not in compliance with the above Subpart F requirements. Since these
requirements represent the minimum assurances necessary to protect the Federal
government's interests, additional emphasis is required in this area. Some
examples of the extent of recipient noncompliance with the required subagree-
ment clauses are discussed below:
The California DOHS audit report noted that the method of reimbursement
was not included in at least six subagreements. The State also failed to
include the model clauses required by 33.1030 or equivalent clauses in at least
seven subagreements. The missing subagreement clauses dealt with such issues
as privity of subagreement, contract changes, differing site conditions, ter-
mination, defective cost and pricing, audit access to records, gratuities, and
final payments.
* The Pennsylvania DER audit report indicated that the subagreements did
not include many of the required model subagreement clauses. This condition was
allowed to continue although a prior EPA Headquarters review had identified the
same deficiencies.
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" The audit reports for the Michigan DNR, the Illinois EPA, the California
SWRQB, the New York DEC, the Louisiana DBQ, the Florida DER, the Maine DEP, and
the Arizona DOHS also disclosed that their subagreements did not include all of
the model subagreement clauses.
Federal Cost Principles. 40 CFR 33.275(d) states that all contractors and
subcontractors must comply with the cost principles contained in the Federal
Acquisition Regulations, formerly the Federal Procurement Regulations. Our
audit reports for the California DOHS, the California Upper San Gabriel Valley,
the California SWRCB, and the Arizona DOHS indicated problems in this area.
One of the problems with subagreements awarded under the California DOHS
cooperative agreement was that they cited State regulations, but there was no
corresponding reference to the Federal cost principles in the State regulations.
This situation resulted in an absence of proper cost principles in all
subagreements awarded under Superfund cooperative agreements.
Recommendations
We recommend- that the Assistant Administrator for Administration and Resources
Management:
a. Instruct each Region to maintain sufficient procurement expertise in-house
to adequately review State procurement systems and assist States in
complying with Federal procurement requirements.
b. Provide for comprehensive procurement training of Regional personnel working
on assistance agreements.
c. Instruct the Regions to undertake a comprehensive review of those States
where procurement system deficiencies have been noted in management reviews
or audit reports to determine if the deficiencies have been corrected.
d. Instruct the Regions to undertake a detailed review of the State procurement
systems that have not been subjected to prior management reviews or audits.
Appropriate corrective actions should be initiated to correct all deficiencies
noted in these reviews.
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6 - FINANCIAL MANAGEMENT OVERSIGHT FUNCTIONS REQUIRE IMPROVEMENT
The Regions had not developed monitoring procedures to assure that adequate
financial management systems were developed and maintained by cooperative
agreement recipients. The extent of the deficiencies noted casts doubt on
the recipients' ability to account for the approximately $136.3 million of
Superfund site specific costs expected to be incurred under the cooperative
agreements included in this report. Since the National Contingency Plan requires
that adequate documentation be maintained to form a basis for cost recovery
under the Superfund program, improvements in the financial management area are
necessary. Specifically, our audits disclosed that recipients had unacceptable
timekeeping and labor charging practices, and failed to maintain their accounting
systems in accordance with EPA regulations. A lack of Regional attention to
the recipients' financial management systems was considered a major cause of
these conditions. We believe that the accounting system deficiencies noted
represent significant internal control weaknesses, which affect the integrity
of the accounting systems, and jeopardize the Federal government's ability to
recover Superfund costs from responsible parties. The audits also disclosed
that two EPA Regions had not deobligated approximately $11 million of unneeded
Superfund monies.
Background
The National Contingency Plan, 40 CPR 300.69 states "(a) During all phases,
documentation shall be collected and maintained to support all actions taken
under this Plan, and to form the basis for cost recovery".
40 CFR Part 30, Subpart E provides EPA's regulations relating to financial
accounting and records requirements. 40 CFR 30.510 provides that recipients
of EPA funds are to maintain a financial management system that (i) includes an
accurate, current, and complete accounting of all financial transactions for
the program; (ii) includes records together with supporting documents showing
the source and application of all program funds and income; (iii) consistently
applies accepted accounting principles and practices; (iv) includes procedures
for determining allowable, allocable, and reasonable costs? and (v) includes
a comparison of actual costs versus budgeted object class amount. In addition,
the recipient is responsible for ensuring that the accounting records accurately
and completely represent the organization's operation. 40 CFR 30.410 provides
that the cost principles in Office of Management and Budget (OMB) Circular A-87
are applicable to cooperative agreements. Attachment B of the Circular requires
that "Salaries and wages of employees chargeable to more than one grant program
or other cost objective will be supported by appropriate time distribution
records. The method used should produce an equitable distribution of time and
effort".
Deficiencies in the recipients' financial management systems were noted in 22
of the audit reports issued during FYs 1985 through 1987.
Timekeeping Procedures Require Improvement
The timekeeping procedures followed, by many recipients did not ensure the
accuracy of labor costs charged to the Superfund cooperative agreements. Our
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audits disclosed that: (i) instructions on the proper timekeeping procedures
to be followed were not adequate; (ii) supervisory personnel were not always
reviewing and approving employees' timesheets; (iii) labor distribution
procedures were inadequate and did not assure that accurate time expenditure
information was accumulated by Superfund site; and (iv) labor costs were not
accurately recorded on the accounting records or adequately identified by task
or subtask. As a result, management could not determine whether the time j§
charges accurately reflected the actual labor costs incurred under the Superfund
hazardous waste sites. These deficiencies are further discussed in the paragraphs
below. I
Timekeeping Instructions. Employees were not adequately instructed on the
proper timekeeping procedures to be followed under cooperative agreements.
To illustrate this condition, the Utah DOH audit report noted that timecard
instructions did not contain a detailed list of activity codes for specific
Superfund sites. Although Utah's management was aware of the employees'
difficulties in charging time to the appropriate Superfund site, they did not
take timely action to adequately train or advise employees on the proper
timekeeping procedures to follow. In another example, the audit of the Phode
Island DEM indicated that employees were not given instructions on how to
complete the "work performed" section of the timecard. This condition resulted
in a delay in the State's ability to determine the labor charges applicable to
the cooperative agreement. It was further compounded by the fact that employees
had not completed the reverse side of the timecard, which provided space for "
recording a daily synopsis of work performed. The responsibility for assuring
that labor charges are accurate and properly supported rests with the recipients.
It is therefore imcortant that employees be provided the instructions and |
guidance necessary to perform these responsibilities.
Supervisory Review and Approvals. Recipients were not always ensuring that . I
supervisors reviewed and approved employees' timecards. An effective time-
keeping system requires the preparation and certification of timecards by each
employee and approval by their immediate supervisor. The timecard represents
the attestation by the employee and concurrence of an informed supervisor of
the time spent by the employee. The attestation and supervisory approval
represent two of the major internal controls of an effective timekeeping system.
However, our audits of the Rhode Island DEM, the Utah DOH, the Arizona DOHS, |
and the South Carolina DOHEC disclosed that timecards were not reviewed and
approved by supervisors. We generally found that the supervisors treated the M
timecard reviews as a low priority item, and therefore did not fully utilize
the reviews as a basis for providing timely feedback to the employee as a
means of avoiding timekeeping errors.
Labor Distribution Procedures. Several recipients were not accurately recording H
the actual time worked by Superfund site. In some instances the time was
charged on a predetermined basis, and in other instances, the time charges
were not supported by the available records. Under such circumstances, the |
reliability of the recipients' labor distribution systems is of questionable
value. Some of the labor distribution deficiencies noted are presented below.
The California DOHS report indicated that, although the State had a
timekeeping system in place, it opted to predesignate personnel to various
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proarams and claim their labor, fringe, and associated indirect costs on the
basis of this predesignated determination. This practice did not provide for
an accurate accounting of labor costs. It should be noted that a prior audit
of the State discussed a similar labor charging deficiency; however, this
problem had not been corrected.
* The audit reports for the Maryland DHMH, the Arizona DOHS, the Maine
DSP, and the North Dakota DOH also indicated that the States were utilizing
predesignated determinations rather than actual time charges to distribute
their employee labor costs. To illustrate, the North Dakota DOH used a system
of fixed percentage to allocate labor to its various EPA programs. The Maine
DSP established a procedure of charging two designated employees exclusively
to the cooperative agreement, although the employees worked on several programs
not connected with Superfund.
' The Utah DOH audit report disclosed that the State was utilizing
unacceptable labor charging and recording practices to allocate employees' time
charges. In this respect, the State's labor distribution system was not able
to differentiate between direct and indirect labor costs. The audit also found
a problem with the unsupported transfer of labor costs to the cooperative
agreement from other projects.
* The audit report for the California SWRCB South Bay site disclosed that
the recipient's timekeeping procedures were deficient as they did not require
Intergovernmental Personnel Act (IPA) employees to prepare supplemental
timesheets to identify the specific activities and sites where work was
performed. In addition, the recipient's accounting system did not have the
capability to account for employee labor costs by task or subtask as required
by the cooperative agreement. Without an adequate task accounting system the
Region was not provided the information necessary to assure that the task
ceiling amounts included in the cooperative agreements were properly controlled
and not exceeded.
Accounting System Deficiencies
Cost accounting systems utilized by 11 cooperative agreement recipients were
not in compliance with the 40 CFR requirements. Specifically, the audits
noted that the accounting systems (i) did not always provide for an accurate
accounting of Superfund costs; (ii) did not segregate allowable and unallowable
costs; (iii) allowed costs to be transferred between cooperative agreement
activities without EPA's approval; and (iv) did not assure that recipients
accurately computed their indirect cost rates. In our opinion, the above
accounting system deficiencies jeopardize the Federal government's ability
to recover Superfund costs from responsible parties. These deficiencies are
discussed further below.
Accounting For Superfund Costs. Our audits indicated that the recipients
had difficulty maintaining current, accurate, and complete accounting data on
the Superfund costs. This condition appears to result, in part, from the fact
that the financial and reporting requirements under the Superfund program
require more detailed accounting procedures than other recipient programs.
Some examples of this condition follow:
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" The California DOHS audit report disclosed that the recipient's
orocedures did not provide for accounting on a task or subtask basis as required
by the special conditions of the cooperative agreement. A similar condition
noted in an audit performed four years earlier had not been corrected.
Problems with the accounting for tasks were also noted in the California SWRCB
South Bay audit report.
* The audit of the New Jersey DEP indicated that its accounting for
Superfund costs was not accurate because it did not reflect all costs reported
in the State Treasury system. Similarly, the Rhode Island DEM audit disclosed
that its automated system did not accumulate data in a manner that was compatible
with Federal reporting requirements. Similar problems were also noted in the
Louisiana DEQ and the Michigan DNR audits.
* The audit reports also disclosed that the subrecipients under the
Washington Commencement Bay/ the Arizona DOHS, and the California SWRCB South
Bay cooperative agreements had not maintained the accurate systems necessary to
account for Superfund costs. In this respect, the audit report for Commencement
Bay indicated that Superfund expenditures for outside consultants were commingled
with other program expenditures. In the Arizona DOHS audit, the costs incurred
by .another State agency under an Intergovernmental Agreement could not be
supported, although the agreement specifically provided that supporting
documentation would be maintained.
" The audit reports for the Maryland DHMH, the Utah DOH, the Rhode Island
Dm, and the South Carolina DOHEC disclosed that costs claimed in cooperative
agreement financial reports were not adequately supported. This was illustrated
by the fact that none of these recipients could support their laboratory sample
analysis costs. In another example, the Maryland DHMH did not reconcile the
hours recorded on employee timesheets to labor claimed under the cooperative
agreement. In some instances the State claimed more hours for an employee than
were available.
Segregation Of Allowable And Unallowable Costs. Most of the audit reports
indicated that recipients had difficulty with the segregation of allowable and
unallowable costs. To illustrate, our audits disclosed that the Utah DOH and
the California DOHS had not established procedures to identify unallowable costs,
and to assure that these costs were excluded from the reimbursement claims
submitted under their cooperative agreements. Also, other recipients had not
effectively implemented their procedures for segregating the unallowable costs.
For example, the Michigan DNR erroneously claimed contractual service costs,
which were incurred before the effective date of the cooperative agreement. In
addition, the Arizona DOHS claimed training costs for its employees, although
training was not provided for under the scope of the cooperative agreement.
Fuirther, the South Carolina DOHEC used Superfund money to pay for telephone and
travel expenditures applicable to a non-Superfund program.
Cost Transfers. The audit reports indicated that some recipients did not
follow acceptable accounting procedures in the transfer of costs from one cost
category to another, and between cooperative agreements. For the most part,
the basis for these transfers could not be adequately supported.bv the avail-
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able records. In addition, the transfers had not been approved by EPA. Such
transfers preclude making comparisons of actual and budgeted costs. Since the
Federal government expects to recover the costs at Superfund sites, it is
important that cost transfers and other adjustments be adequately supported,
and approved by EPA. Examples of the transfers noted in the audits are discussed
below.
* The Utah DOH audit report disclosed that the State transferred labor
costs to the cooperative agreement from other projects and cost categories
without proper justification. The audit questioned the transferred costs as
unsupported. In addition to inadequate documentation, employees were not
aware that their labor costs were transferred, or the basis for the transfers.
Furthermore, there was no evidence indicating that the State had reviewed the
basis for, or the validity of, the requested transfers. The State's actions
created the appearance that the State was trying to maximize its cost recovery
under the cooperative agreement. The unsupported transfer of labor charges
demonstrates weak internal accounting controls, which hamper the State's
ability to support its Superfund efforts and EPA's opportunity to recover these
costs.
" The Maryland DHMH audit report disclosed that expenditures were shifted
from one cost category to another without EPA approval. This transfer was
prompted as a result of significant differences between the State's budgeted
and actual costs.
Use of Indirect Cost Rates. Several audits disclosed problems with the
recipients' use of indirect cost rates. One of the prerequisites of an adequate
accounting system is its ability to provide data on allowable and reasonable
costs. The proper development and use of indirect cost rates is important to
assure that such costs are allowable. Some illustrations of the problems which
were noted in our review are described below.
* The audit report for the California SWRCB South Bay disclosed that an
improperly calculated indirect cost rate was utilized to claim costs under the
coooerative agreement. The indirect cost rate was calculated based on a
combination of budgeted figures and prior year actual costs. Furthermore, it
appeared that unallowable general government expenses may have been included
in the indirect cost rate calculations.
* In the Utah DOH audit report, a problem with indirect costs stemmed from
the fact that the State's labor distribution system did not adequately differ-
entiate between direct and indirect labor charges. It was the State's policy
to charge the cost of paid leave directly to the last project or projects
worked on in the pay period before the leave was taken. This procedure
distorts the direct labor base on which the indirect costs are allocated.
Since the paid leave benefits are earned by employees throughout the year, they
should be allocated to all work during the year. Problems with the calculation
of indirect cost rates were also noted in the audits of cooperative agreements
to the Upper San Gabriel Valley Water District, the Delaware DNREC, the North
Dakota DOH, the Florida DER, the Oklahoma DOH, and the Maine DEP.
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Procedures For The Obligation And Deobliqation Of Funds Need To Be Strengthened
The(audit reports on Regions 2 and 3 disclosed that the Regions did not take
action to deobligate cooperative agreement funds of over $11 million when they
were no longer needed. In Region 2, funds available to the New Jersey DEP in
the anount of $4.9 million could have been deobligated since they were not
required. Similarly, in Region 3 over $6 million of funds available to the
Pennsylvania DER could have been deobligated, since the funds were excess to
the State's anticipated needs. In order to assure that funds are fully and
effectively utilized, it is important that the Regions continually monitor the
progress of the cooperative agreements and maintain obligations at a level
commensurate with that progress. Freeing up unneeded funds allows such funds
to be shifted to other program priorities.
SPA regulations and the Financial Management Manual provide criteria for
Regions to make changes in the amounts of financial assistance and adjust
obligations under cooperative agreements. In addition, on February 20, 1986,
EPA Headquarters issued a memorandum requesting all Regions to review their
coooerative agreements and note whether there was any potential for deobligating
unneeded funds. The objective of the memorandum was to free up funds that were
either no longer needed or would not be needed in the near future, so that
these funds could be shifted to other program priorities. The memorandum
established the following criteria when considering deobligations:
- Projects were complete and a settlement with the potentially responsible
parties (PRP) was imminent.
- Projects were complete and some funds remained available.
- The State did not anticipate awarding contracts before June 30, 1986.
- The State was experiencing delays in drawing down funds for various
reasons, and anticipated that such delays would continue until June 30,
1986.
Region 2. The Region 2 audit report disclosed that the Region had not taken
adequate action to deobligate about $4.9 million under the New Jersey DEP
cooperative agreement. These funds met the deobligation criteria established
in the EPA Headquarters' memorandum. In some instances, cooperative agreement
funds were no longer needed because the required work was being performed by
PRPs. Additionally, the Region maintained obligations for one cooperative
agreement, although the State declined to accept the agreement. Further, work
on several cooperative agreements was completed, but the remaining funds had
not been deobligated.
Region 3. The Region 3 audit report disclosed that $6 million of cooperative
agreement funds awarded to the Pennsylvania DER had not been utilized over a
two year period. The funds were available to perform RI/FS work at several
Superfund sites. However, the State was unable to utilize the funds because:
(i) State personnel did not have the experience necessary to initiate the
required procurement action; (ii) some of the funded work was performed by PRPs?
and (iii) some of the funds were for future needs that would not be accomplished
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within the agreement period. While the Region was aware of these conditions,
they were reluctant to initiate a deobligation of funds. When the Region
eventually decided to initiate a deobligation, the State was only requested to
reduce its obligation by $513,000. The State ignored the request and the
Region did not initiate formal deobligation procedures. As a result, the State
was allowed to tie-up over $6 million of funds which could have been used
elsewhere in the Superfund program.
Recommendations
We recommend that the Assistant Administrator for Administration and Resources
Management:
a. Instruct the Regional Offices to distribute the publication titled "State
Superfund Financial Management and Recordkeeping Guidance" (November 1987)
to all appropriate State personnel, and provide the States with a list of
Regional contact persons who can answer any questions regarding its context.
b. Instruct the Regional Offices to undertake systematic reviews of the
financial management systems of recipients whose systems have not received
complete EPA management reviews or audits. In addition, the Regions should
be required to ensure that the deficiencies noted in prior EPA reviews have
been corrected.
c. Ensure that adequate training is available to Regional financial management
personnel in Superfund financial management policies and procedures appli-
cable to State Superfund assistance recipients.
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7 - INADEQUATE LETTER OF CREDIT PROCEDURES
Recipients have not fully complied with the letter of credit (LOC) requirements
provided in the special conditions of their cooperative agreements and the LOC
Users Manual. As a result, the LOC was not effectively utilized as a means of
disbursing Federal funds under the approximately $136.3 million worth of
cooperative agreements included in this audit. Specifically, we found that:
(i) required Federal Cash Transaction Reports (SF-272) were not submitted within
the required timeframes; (ii) staff in one Region was changing the certified
SF-272 reports without written notification to the recipients; (iii) drawdown
amounts were not calculated properly; (iv) drawdowns were not made on a timely
basis; and (v) Regional reviews of recipients' drawdown requests were not
adequate. These conditions were primarily attributable to a lack of Regional
and recipient management attention to the requirements of the LOC system,
including a lack of written LOC operating procedures for the recipients. While
some LOC guidance was included in various user manuals, it was also apparent
that this material was either not available or not used by the recipients.
We believe that compliance with LOC procedures would be unproved if LOC
information is condensed and presented in a written summary for use by recipient
personnel.
Background
The LOC guidelines are identified in the special conditions to cooperative
agreements, and presented in the EPA Letter of Credit Users Manual. Some of
the requirements of the manual are summarized as follows:
* Make cash drawdowns only as needed for disbursements;
* Provide timely reporting of cash disbursements and balances, as required
by the LOC Users Manual;
* Require the same standards of timing and reporting on secondary recipi-
ents; if any;
* i>Jhen an LOC drawdown occurs, show on the back of the voucher the
cooperative agreement number, the appropriate EPA account number, and
the drawdown amount applicable to each activity account;
* Prohibit LOC drawdowns from another activity or site account without
written permission from EPA's project officer and award official;
* Require that funds remaining in an account after completion of an
activity, be returned to EPA, or adjusted to another activity or site
at EPA's discretion; and
* Advise recipients that requests for funds should be based on immediate
disbursement requirements, whenever possible, and EPA's disbursement of
funds will be made as soon as possible to minimize the Federal cash on
hand.
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The cooperative agreements further state that the "Failure on the part of the
State to comply with the above conditions may cause the unobligated portion of
the letter of credit to be revoked, and the financing method changed to a
reimbursable basis."
We found that LOG problems were included in eight of the audit reports
summarized in this review. An audit of recipients' LOG activities was not
included in the scope of several of the other audits completed during the
review period.
Federal Cash Transaction Reports Require Attention
Several recipients had not submitted their Federal Cash Transaction Reports
(SF-272) within timeframes prescribed by the LOG Users Manual. It was also
noted that one Region changed the recipient's reports without obtaining a
corrected and recertified SF-272 report. These deficiencies deprive EPA's
managers of an effective tool for managing the recipients' LOG activities.
Without accurate and timely reports, the Region's ability to monitor the
recipients' LOG activities was limited, since they did not have the information
necessary to approve the recipients' payment requests, and monitor the financial
status of the cooperative agreements. A further discussion of these areas is
provided below.
Timeliness of Reports. Our audits disclosed that the recipients had not
submitted the required SF-272 reports to the Regions within the 15 days specified
in the LOG Users Manual. The delays in submission of the reports ranged from 5
to 13 days for the Colorado DOH, 10 to 40 days for the Utah DOH, and 10 to 75
days for the Montana DEH. The one report submitted by the Wyoming DER was 11
days late. Similar delays also occurred in the reports submitted by the Maine
DEP and the Michigan DNR. To illustrate the type of confusion that exists with
the current guidance and limited Regional attention to LOG activities, the
Michigan DNR officials indicated they had misinterpreted the reporting require-
ments, and believed that they were exempt from filing the SF-272 report.
Regional Changes to SF-272 Reports. The audit report on Region 8's administra-
tion of the cooperative agreements disclosed that the Region followed a practice
of changing the recipients' certified SF-272 reports. While the recipients
were notified of the changes by telephone, an amended SF-272 report was not
submitted to SPA with the necessary certifications. In addition, there was no
documentation in the files indicating that the recipients concurred with the
changes made by the Region. Further, the project records did not indicate that
the original State certifying official was made aware of the changes. For
example, the SF-272 report submitted by the Montana DEH for the quarter ended
December 31, 1986, was originally certified by the Administrator of the
Centralized Services Division. The report was subsequently changed by the
Region without advising the certifying official. According to a handwritten
notation on the SF-272 report, a person other than the Administrator was
verbally notified of the change. In addition, there was no documentation
indicating that the recipient organization concurred with the adjustment. We
believe that the Region's practice of changing the SF-272 reports represented
a poor internal control procedure. A more effective procedure would require
that the SF-272 report be returned to the certifying official for correction
and recertification.
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LOG Drawdowns Were Inaccurate and Untimely
The audit reports identified several problems relating to LOG drawdowns under
cooperative agreements. These problems included: (i) incorrect calculations
of the LOG drawdown amounts; (ii) the use of the LOG drawdown amounts to
cover expenditures of other EPA programs; (iii) untimely LOG drawdowns, and
(iv) the payment of the LOG drawdown requests without adequate review and
approval. Improvements are needed in the above areas to assure the proper and
effective use of the LOG process. These areas are discussed below.
Drawdown Calculations. The audit reports for the Maine DEP, Florida DER,
Michigan DNR, Oklahoma DOH, Utah DOH, and the California SWRC3 South Bay sites
indicated problems with the calculation of LOG disbursements. We noted the - |
drawdown amounts were overstated because the recipients either inflated their
needs, or included an unauthorized factor for anticipated expenses. These im
calculations were not in accordance with the LOG Users Manual which states
that "The recipient organization should request funds based on immediate
disbursement requirements and disburse funds as soon as possible to minimize
Federal cash on hand." The above condition has allowed recipients to continue
to make drawdowns in excess of the amounts necessary to meet current disbursement
needs. The following examples illustrate some of the calculation problems
noted in our audits.
* The Maine DEP consistently exceeded the amounts necessary to meet its
current disbursement needs. The audit calculated that the excess disbursements M
made fco the recipient averaged $34,000. Similarly, the Oklahoma DOH and the
Michigan DNR audit reports indicated that the recipient had excess drawdowns
of $199,570 and $7,500, respectively, at the time of the audits. Also, the
California SWRCB audit report indicated that although the State made a draw-
down, it was aware that the total drawdowns under the cooperative agreement ,
had already exceeded their allowable costs by about $245,000.
* The drawdown amounts calculated by the Florida DER and the Utah DOH |
were incorrect. In this respect, the amounts calculated included an advance
of funds for future anticipated expenses. The LOG Users Manual precludes
including such estimates in the LOG calculation. The Utah DOH overstated its g
drawdown requests by $70,000 for the three-month period reviewed as a result
of its inclusion of the anticipated expenses. Likewise, the Florida DER _
overstated its drawdown by $33,000 due to the inclusion of the anticipated
expenses. To ensure that recipients do not drawdown excessive funds in future
periods, the recipients need to be instructed that LOG drawdown calculations
must be based only on incurred costs, and that anticipated expenditures must
be excluded from the calculations. I
Use of Drawdown For Other EPA Programs. The South Carolina DOHEC audit report «
disclosed that the state improperly drew down LOG funds from its EPA cooperative £
agreement to cover expenditures for its other EPA grant programs which had no
available funds. The audit report noted that cooperative agreement funds of
approximately $47,000 were utilized for this purpose. This action was contrary
to the special grant condition which stipulated that cash drawdowns would occur
only when needed for cooperative agreement disbursements. Without prior written
permission from the awarding official, a recipient may not drawdown from one
program to pay expenditures for another program. |
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Timeliness of LOG Drawdowns. The audit reports indicated that some cooperative
agreement recipients had not established effective procedures for drawing down
LOC funds on a timely basis. This caused them to lose the advantages of the
LOG process as a means of meeting their cash needs. In this regard, the Utah
DOH had not utilized its LOG to request funds for its cooperative agreement for
a period of approximately one year. As a result, the State was required to
finance about $270,000 in cooperative agreement costs with its own funds.
Similarly, the California SWRCB's initial drawdown under the South Bay
cooperative agreement occurred 11 months after it was authorized to begin to
utilize the LDC for reimbursements. The initial drawdown was made for an
amount slightly in excess of about $443,000. The existence of these conditions
over an extended period of time is an indication of weaknesses in the recipient's
system of internal accounting controls relating to cash management.
Review of Drawdown Requests. The California SWRCB South Bay audit report
disclosed that LOC drawdown requests were not reviewed or approved by either
the Remedial Project Manager (RPM) or the Region's Grants Administration
section before they were paid. Also, it was the Regional Comptroller's policy
to approve and pay drawdown requests in full, unless they exceeded the total
authorized amount. The Comptroller's policy did not consider whether the
individual task amounts were exceeded, or whether the RPM had reasons, such as
the inclusion of unallowable activities in the LOC request, for- reducing LOC
disbursements. Without these reviews there was no assurance that LOC disburse-
ments were proper.
Recommendat ions
We recommend that the Assistant Administrator for Administration and Resources
Management require the Regions to periodically monitor the recipients' compliance
with LOC requirements. The monitoring activities should stress: (i) the timely
submission of the Federal Cash Transaction Reports (SF-272); (ii) the policy
concerning Regional changes to the certified SF-272; (iii) the proper methods
of calculating the LOC drawdown amounts; (iv) timely recipient use of the LOC
drawdown method; and (v) the extent of Regional reviews of the drawdown requests.
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8 - MORE EFFECTIVE REPORTING PROCEDURES ARE NECESSARY
Superfund cooperative agreement reporting procedures were not complied with by
recipients or adequately monitored bv the Regions. The required reports, which
included Financial Status Reports and Quarterly Progress Reports, provide
important information to keep management appraised of the financial and technical
aspects of the agreements. We attributed the reporting problems to: (i) the
failure of recipients to implement procedures necessary to comply with the
requirements of their cooperative agreements; and (ii) a lack of priority to
the requirements by the Regions. Our audits also noted a problem with recipients
meeting cooperative agreement reporting requirements related to Letter of
Credit procedures. This problem, which related primarilv to the timeliness and
accuracy of the Federal Cash Transaction Reports is discussed in detail in our
Finding no. 7 titled "Inadequate Letter of Credit Procedures".
Nbncompliance With Financial Status Reporting Requirements
The audit reports noted instances where Financial Status Reports (FSR) had not
been submitted, were submitted late, or were incomplete. Since the FSR is an
important tool for managing the financial aspects of the cooperative agreement,
procedures should be established to assure that it is prepared and submitted
within the required timeframes.
The requirements, for the submission of FSRs are contained in 40 CFR 30.505(b)
which states that "You must submit a Financial Status Report (SF-269) within
90 days after each budget period and within 90 days after the end of your
project completion or termination". The EPA purple book also requires submission
of an FSR within 90 days of the completion of a subactivity. In addition.
Comptroller Policy Announcement No. 85-5, dated September 9, 1985, requires
that FSRs for cooperative agreements identify the costs by activity area, such
as a Remedial Investigation/Feasibility Study.
Some! examples of noncompliance with the FSR reporting requirements are provided
below:
* The review of EPA Region 8's administration of its cooperative agreements
indicated that both the Region and the recipients were negligent in assuring
that the FSR responsibilities had been fulfilled. We found that the Utah DOH,
Colorado DOH, and Montana DHES had not submitted any of the required FSRs.
While the other States in the Region had submitted FSRs, the submissions were
often late. For example, the initial FSR for the North Dakota DOH was not
submitted until November 22, 1985, although the State had a cooperative agreement
since 1983. This FSR covered all prior periods through August 30, 1985. A
subsequent FSR, covering the period ended October 30, 1985, was not submitted
until December 8, 1986. Due to their lateness, the FSRs were of little value
in providing the Region timely financial data on the cooperative agreements.
' The audit report on the Maine DEP disclosed, that as of October 1986,
no FSRs had been submitted for either the Saco Tannery Waste Pits site or for
the State's multi-site cooperative agreement. These agreements were awarded
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in April 1984 and Auaust 1985 respectively. The audit report indicated that
the State was unaware of the requirement for submission of an FSR. In this
instance, we believe that the Region was equallv at fault, since it failed to
request the FSR, or to otherwise inform the State of the requirement.
* The California SWRCB had not submitted any FSRs for its South Bay
cooperative agreement as of April 1987, although it was awarded in September
1985. Further, there was no evidence that the Region took any action to
require submission of the report.
* The FSR submitted by the Maryland DHMH did not include a breakout of
costs by site or activity, but instead reported only the total program costs.
Such a submission was of limited value to the Region, since it did not allow
for comparison of actual and budgeted costs. The State responded that it was
not their normal practice to submit detailed financial information to the
Region. The Region's response to the audit report reaffirmed its desire for
the detailed breakout of costs. This situation indicates a lack of communication
between the parties.
Quarterly Progress Reporting Deficiencies
Although the timely submission of Quarterly Progress Reports is an important
management tool, the audit reports noted that recipients were consistently
delinquent in providing these reports to the Regions. Cur review disclosed
that progress reporting deficiencies were noted in 12 audit reports covering 47
cooperative agreements. The Regions had not received the required reports for
40 of those agreements. The recipients were late in submitting the reports
under the remaining seven agreements. We noted that for 6 of the 7 agreements,
the recipients had also submitted incomplete quarterly reports. In some
instances, the Regions were aware of the deficiencies but took no action to
obtain the late reports. In some cases, the Regions maintained that the reports
were not necessary or were redundant.
Cooperative agreement recipients are required by the special conditions of
their agreements to submit timely Quarterly Progress Reports to the EPA
Regional Project Officer. These reports are to include: (i) a narrative and
total expenditure information for each task in the statement of work; (ii)
expenditures by object class category for the subactivity; (iii) estimates of
work completed for each activity or subactivity in the statement of work,
including a description of the basis for the estimates; and (iv) estimated
variances expected at project completion.
Some examples of the progress reporting deficiencies noted in our audits are
provided in the paragraphs below.
" The cooperative agreement awarded to the New Jersey DEP required
submission of quarterly reports to the Region. However, our audit found that
the required reports were not submitted for the Burnt Fly Bog Superfund site,
although it represented the State's most significant funded site at $13.3 mil-
lion. The site had a history of problems, and we considered the submission of
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timely progress reports critical to the Region's effective monitoring of
progress at the site. In addition to this site, the State had not submitted
progress reports for any of its other cooperative agreements.
" The audit of the Louisiana DEQ disclosed that it had not submitted
progress reports within the required timeframes for any of its cooperative
agreements. The State program manager stated that, due to DEQ's limited staff,
it was difficult to comply with all the administrative duties of the cooperative
agreement. In this regard, the audit report noted that 11 of the 20 quarterly
reports, due for the quarterly periods ending June 30, 1984 through March 31,
1986, were either submitted late or were incomplete.
* The Pennsylvania DER audit report disclosed that the quarterly reports
for its multi-site cooperative agreement were not submitted within the required
timeframes. Additionally, no progress reports for the Enterprise Avenue site
cooperative agreement were submitted to EPA, although the site was in the
process of being closed out. The State gave no reason for its noncompliance
with the reporting requirements.
Recommendations
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We recommend that the Assistant Administrator for Administration and Resources
Management:
a. Instruct each Region to establish a system to track report due dates and
report receipt dates, the system should include the generation of "tickler"
reports at regular intervals to indicate overdue reports for Regional staff
follow-up. It should also indicate whether submitted reports were complete,
and if incomplete, when corrected reports were submitted.
b. Instruct the Regions to include, in the performance agreements of all
personnel responsible for monitoring compliance with cooperative agreement
requirements, standards related to the follow-up of overdue and incomplete
reports.
We recommend that the Assistant Administrator for Solid Waste and Emergency
Response:
a. Review the standard quarterly progress report requirement to determine if
any changes in it are needed.
b. Issue a directive outlining in greater detail and with more clarity the
contents of an adeonate quarterly progress report.
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9 - LACK OP COMPLIANCE WITH COOPERATIVE AGREEMENT SPECIAL CONDITIONS
Regional procedures need to be improved to assure that recipients comply with
the special conditions included in cooperative agreements. Our audits
disclosed that many recipients had not complied with one or more of their
cooperative agreement special conditions, including those applicable to: (i)
Quarterly Progress Reports; (ii) use of the letter of credit; (iii) Federal
procurement standards; (iv) conflict of interest statements; (v) site safety
plans? (vi) National Contingency Plan; and (vii) timekeeping systems. To
assure that the objectives of the cooperative agreements are satisfied, it is
important that all special conditions be met.
Background
Cooperative agreements include a narrative statement explaining the hazardous
waste problems, a history of the site, and a statement of work planned. The
work statement describes the purpose and scope of the activities and tasks to
be carried out under the proposed project. A project budget provides the
financial information relating to the cooperative agreement. In addition,
cooperative agreements provide for certain assurances on the recipient's part,
and often include applicable special conditions. According to 40 CFR 30.309
(b) the recipient, after signing and accepting the cooperative agreement
becomes "...responsible for complying with all terms and conditions of the
assistance agreement, including the special conditions..."
The Handbook describes the actions that the Region may take if it determines
that a recipient is not complying with the specific terms of a cooperative
agreement. The actions include issuing a Stop Vfork Order, withholding payment,
terminating the cooperative agreement, debarring the recipient, and taking
other judicial or administrative measures.
Special Conditions Requiring Attention
Fifteen of the cooperative agreement audit reports issued during the period FYs
1985 through 1987 discussed deficiencies with the recipients' compliance with
the special conditions. Deficiencies in the seven special condition areas
noted in the audit reports are discussed in the balance of this finding.
Quarterly Progress Reports. Problems associated with the submission of the
quarterly progress reports were the most common special condition deficiency
noted during our audits. The special conditions required that progress
reports be submitted at the end of each quarter. However, the audit reports
noted that some of the required reports had not been submitted, others were
submitted late, and some were incomplete. Since these reports represent a
valuable management tool, we believe that additional Regional attention is
required to assure compliance with this special condition. The problems with
submission of the quarterly reports were noted in 12 of the audit reports
included in this review.
Letter of Credit System. The special conditions established several require-
ments concerning the use of the Letter of Credit (LOC) system, and also spec-
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ified the applicable LOG reporting requirements. The audit reports indicated
that sane recipients had problems complyinq with this special condition. In _
this respect, the Utah DOH had not complied with the special conditions in I
obtaining LOG reimbursements under its $1.2 million multi-site cooperative
agreement. Similarly, the California SWRCB had not followed the LOG special
conditions under its South Bay cooperative agreement. The reports also noted
that the Florida DER and the Maine DEP exceeded the amount of drawdowns necessary
to meet current disbursement needs.
Federal Procurement Standards. The cooperative agreements contained a special |
condition applicable to the recipients' procurement area, which stated that
"This agreement is subject to the procurement standards of Title 40 of the Code _
of Federal Regulations Part 33." Procurement system deficiencies were noted in
22 of the audit reports included in this review. Some of the deficiencies
noted in the audits included: (i) the failure to provide for free and open
competition; (ii) the absence of effective affirmative action plans; (iii) the
lack of adequate documentation; { iv) the use of prohibited forms of contracting
in awarding subaqreements ; (v) an absence of adequate cost and price consider-
ations; (vi) failure to give adequate public notice on competitive procurements;
(vii) the lack of EPA's standard clauses in the subagreements; and (viii) the |
omission of any reference to the applicable Federal cost principles in the
subagreements. Compliance with this special condition is ijnportant to assure
that high quality contractors and subcontractors are obtained in a timely manner,
and at a reasonable price.
Conflict Of Interest Statements. The audit reports indicated that some recipi-
ents had not adhered to the special condition requiring a conflict of interest
statement from prospective contractors. The special condition provides that:
EPA has determined that participation in a response action at . |
a site by a potentially responsible party could create an
organizational conflict of interest (i.e., the contractor _
would be placed in a position where its interests as a potential
responsible party would conflict with its ability to properly
perform the work or would otherwise adversely affect State or
Federal enforcement action) . Therefore, the State shall require
a bidder or offeror on any contract funded under this cooperative
agreement to provide, with its bid or proposal: {1} information
on its status and the status of parent companies, subsidiaries,
affiliates, and subcontractors as potential responsible |
parties at the site; (2) certification that, to the best of
its knowledge and belief, it has disclosed such information M
or no such information exists; (3) a statement that it shall
immediately disclose any such information discovered after
submission of its bid or proposal or after award. The State
shall evaluate such information and shall exclude any bidder
or offeror who is a potential responsible party at the site
if the State determines the bidder's or offerer's conflict
of interest is significant and cannot be avoided or otherwise
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The problem in compliance with this special condition was found in the audits
of the Arizona DOES and the California DOHS. For example, Arizona DOHS did not
require any of its prospective contractors under cooperative agreements to
provide the conflict of interest information. Since the above special condition
is intended to protect the Federal government, it is important that the required
statements be obtained for all contracts and subcontracts awarded under cooperative
agreements.
Site Safety Plans. The audit reports identified that some site investigations
were conducted without preparing the required site safety plans. The special
condition concerning the plans provides that:
A final safety plan shall be prepared for activities performed
pursuant to this Cooperative Agreement. The State shall submit
a safety plan prior to the initiation of site preparation
activities. The EPA Regional Site Project Officer will approve
the plan prior to the initiation of the clean-up contract. The
plan shall be consistent with the requirements of CERCLA Section
104(f), EPA's Occupational Health and Safety Manual, and other
applicable EPA safety guidance provided by the EPA Project
Officer. As a condition of awarding contracts to any person to
engage in response actions, the State shall require contractors
and subcontractors to comply with the developed safety plan and
all relevant Federal health and safety standards. No field work
at a site shall occur until a safety plan for that site has been
approved by EPA.
The audit report for the Maryland DHMH disclosed that the State had conducted
two site investigations and four preliminary assessments without a safety plan
in effect at these sites. The report concluded that the lack of State action
precluded SPA from assuring that the health and safety of the public vould be
adequately safeguarded before the assessments and investigations were conducted.
National Contingency Plan. The cooperative agreements stated that: "All
activities conducted under this Cooperative Agreement shall be consistent with
the revised National Contingency Plan (NCP), 40 CFR 300." While most recipients
have complied with this requirement, we found that the Rhode Island DEM had
not complied with the NCP. In this regard, the State failed to require a
contractor to prepare its RI/FS report in accordance with NCP standards. This
condition resulted in rejection of the RI/FS report by EPA, and delayed the
completion of the RI/FS by about 18 months.
The audit report also discussed the fact that hazardous waste samples were not
analyzed as required by the NCP. instead, the samples were stored in a 40-foot
trailer at the Picillo hazardous waste site. The samples were collected as
evidence for use in litigation by the State against potentially responsible
parties. Other samples collected by EPA were stored in unsealed barrels
adjacent to the sample storage trailer. According to State staff members, the*
samples stored in the trailer could collectively present a health and environ-
mental risk if vandalism or a fire were to occur.
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Timekeeping Systems. Another special condition, which some cooperative
agreement recipients failed to comply with, was the requirement that an adequate
timekeeping system be developed and maintained to document time expended by
staff and management on specific hazardous waste sites. In this regard, the
audit of the California SWRCB South Bay cooperative agreement disclosed that the
recipient's timekeeping system was deficient. Hie system was not approved by
EPA prior to implementation as required, and did not require Intergovernmental
Personnel Act (IPA) employees to prepare required timesheets. The Utah DOH audit
report also noted that an adequate timekeeping system had not been developed.
The employees had not been adequately instructed in proper timekeeping procedures
to be utilized under the Superfund cooperative agreement. In addition, super-
visory reviews and approvals of employee time charges were not satisfactorily
performed. Since all costs associated with the clean up of the hazardous waste
sites are potentially recoverable from the responsible parties, it is essential
that the recipients maintain acceptable timekeeping systems.
Recommendations
We recommend that the Assistant Administrator for Administration and Resources
Management:
a. Instruct the Regional Offices to formally identify, promptly after each
cooperative agreement award, the person responsible for monitoring
compliance with the special conditions. This identification list should be
updated whenever new special conditions are added, or when the responsible
persons change.
b. Advise the Regional Offices to periodically document compliance with each
special condition. In the case of continuing requirements, the compliance
status should be documented anually.
c. Instruct the Regional Offices to include, in the performance agreements of
all personnel responsible for monitoring compliance with special conditions,
standards related to their performance of this responsibility.
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10 - MANAGEMENT OF SUPERFUND PERSONAL PROPERTY NEEDS TO BE STRENGTHENED
Personal property and equipment purchased under Superfund cooperative
agreements were not managed -in accordance with the requirements of the Federal
property regulations. Our audits disclosed that the Federal government's
interest in the property and equipment was not properly protected since: (i)
items were not always recorded in recipient's property management records, and
the Federal interest was not recorded; (ii) some items could not be located by
the recipient; and (iii) lost or stolen items were not reported to EPA. Although
property and equipment purchases under the Superfund cooperative agreements have
generally been nominal to date, such purchases are expected to become more
significant as the program moves from the planning to remedial action stages.
Therefore it is important that EPA emphasize the need to comply with the
applicable Federal property regulations to both its Regional personnel and the
cooperative agreement recipients.
Background
40 CFR 30.531 and 30.532 are EPA's regulations relating to personal property.
The EPA Property Management Standards for Nonexpendable Personal Property are
included in 40 CFR 30.531. In accordance with these standards, recipients are
required to maintain accurate records that reflect: (i) a description of the
property? (ii) the applicable serial and model numbers: (iii) the acquisition
cost and date; and (iv) a provision for .the ultimate disposition of the
property. The standards further require recipients to: (a) conduct a physical
inventory of the property and reconcile the results with property records at
least once every two years; (b) maintain a control system to prevent loss,
damage, or theft; (c) follow adequate maintenance procedures that ensure the
property is in good condition; and (d) adequately identify Federally-owned
property. 40 CFR 30.530(b)(2) also requires that EPA's interest in property
with a unit acquisition cost of $10,000 or more be adequately reflected and
protected in accordance with appropriate recordation or registration require-
ments.
Seven of the audit reports issued during the period FYs 1985 through 1987
contained findings and recommendations in the property management area. The
majority of the other audit reports issued during this audit period did not
include a review of the property management area. In most of these instances,
the property management area was not considered material due to the insignificant
volume of property on hand.
Equipment Not Properly Recorded
Equipment items purchased under the cooperative agreements were not always
entered into the recipient's property management records or identified as a
Federally procured item. To illustrate, the audit report for the Minnesota
PCA cooperative agreement identified $42,000 worth of laboratory equipment
that was not included on the State property list or identified as procured
with Federal funds. In another instance, the audit at the Pennsylvania DER
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disclosed that the State had not listed all cooperative agreement property
on its records. The State identified a truck scale purchased by the state's
construction contractor that met the OMB Circular No. A-102 definition of
nonexpendable, tangible personal property. Thus, it should have been included
in the recipient's property control listing, the State incorrectly believed
that the property should be classified as a site structure, rather than as
nonexpendable personal property, and as such, did not believe that it had to
be recorded in the property records.
A third example related to the audit at Maryland DHMH which also disclosed
that the State's equipment purchases were not recorded in the property records.
In this instance, the State indicated that the deficiency occurred because the
equipment was delivered to another State office, and therefore was inadvertently
omitted from the property records.
Inability to Locate Equipment
The lade of accurate property records has also resulted in problems locating
some equipment. In this regard, the Illinois EPA could not locate several
items of property acquired under its cooperative agreenvent. The items included
air cylinders and air masks. This condition was attributable to the fact that
(i) State personnel did not follow existing procedures governing the transfer
of propertyr (ii) established property sign-out procedures were not followed;
and (iii) the property records omitted information concerning the location of
the property. We believe that seme of the above deficiencies could have been
avoided, if the State had assured that its employees were familiar with the
existing property management procedures.
Failure to Report the Theft of Government Property
While the audits performed to date have not indicated a widespread problem
with the theft of property and equipment purchased with cooperative agreement
funds, the internal control weaknesses noted in the property management area
indicate that additional safeguards need to be developed to adequately protect
the Federal government's investment. This is particularly true in view of the
increased volume of property which may be procured under the cooperative
agreements in future periods. In order to assure that property and equipment
are properly safeguarded and protected, it is important that an effective
property management system be established and maintained. In the event that
an item is lost or stolen, EPA should be appropriatelv advised of this
situation. Notification could be made at the time of the submission of the
recipient's physical inventory to EPA, or in the final inventory submitted by
the recipient at the end of the project period per 40 CFR 30.505(d).
The audit report on the Michigan DNR commented that the theft of a Federally
funded steam generator, purchased under the cooperative agreement, was not
reported to EPA. In this case, the final inventory list submitted to EPA, did
not reflect the theft of this item.
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Reconroendations
m recommend that the Assistant Administrator for Administration and Resources
Management ensure that adequate training is provided to all appropriate Regional
Superfund coooerative agreement personnel in the areas of equipment purchasing,
property management, and property disposition procedures.
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Mtrii if faifit Sriwti Aivt
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Exhibit B
Capping Report
Schedule o< Costs Claiied
and Results of Audit
Under Cooperative Agreements Audited
Costs
Audit?*
Reaion t
Kline OEP
Rhode Island BEN
Region 2
Neii Jersey DEP
NtH York SEC
Region 3
Delaware KffiEC
Pennsylvania DER
Region 4
Florida DER
South Carolina DQHEC
Region 5
Illinois EPA
Nictiigan DNR
Minnesota PEA
Deo ion 6
Louisiana DNR
Louisiana DEB
Oklahota DOH
Tfias HC - French United Site
Texas DC - Sites Disposal Pit Site
Teias NC - Bio Ecology Site
Tenas MC - Triangle Cheiical Co. Site
feias MC - Highlands Acid Pit Site
Region 8
Nontana DHES
North Dakota DOH
Utah DOH
Region 9
Arizona DOttS
California DOHS
Region 10
Washington - Cowenceient Bay Nearshore/
TldefUts Site
Audit Report No.
P5b66- 11 -0029-70902
E5bH6-01-Q15l-6l453
E5bHS-02-Ol40-41373
P5b64-l 1-0030-71190
P3b63-l 1-0055-61307
P5bH5-l 1-0034-70338
P5b66-ll-0031-70772
E3c64-04-0100-70747
P5b67-05-0536-7l225
P3b61-03-0537-7M93
E5bH7-05-0210-70«59
£5M4-04-OI4I-5I)011
P5b66-l 1-0032-71 159
E3b67-06-0030-79*-99
E5b5t-04-OI2(.-41144
E5b64-04-0l27-6l257
E3b67-06-003l-7l3M
E5b67-06-OOJ3-713l2
E5b67-04-0032-?U62
E5b65-08-0045-60413
E5b64-0fl-004fl-61437
E5bS6-08-OObZ-71906
E5b65-09-01 40-60437
E5bH4-09-0 152-5 1287
E3bH4-iO-0040-50104
Cllt led
f 444,281
2,570,928
483,974
8,954,854
229,918
3,394,124
3,940,089
1,605,544
1,713,343
3,910,320
2,148,152
272.939
878.044
2,835.954
420,435
1,000,766
425,734
318,401
424,538
1,739,391
331.531
394,047
663.044
6,244,733
741,794
Accepted
» 274,427
2,338.049
403,324
7,381,389
4,142
3,265.183
2.445,246
1,341,714
1,132.149
3,437,217
791,702
272,939
450.317
843.044
403,141
691.597
388, 184
147,780
537,539
504.335
283.124
82,572
610,532
4,357,392
50,779
Questioned
« 1,251
55,782
12.902
34,352
129,941
547,943
243,830
2.048
63.480
34.557
6,497
7,443
113.782
18.407
95.077
52.512
255,549
115,551
Set Aside
« 168.401
177,D77
47,949
1,539,113
223,736
947,000
579.164
209,623
1,339.993
421.052
1,992.908
217.494
309.169
237,552
170.821
79,554
1,121.244
206.398
1,451,792
595.44*
Totals t 44.757,314 t 32,959.981 t 1.941,906 « 12.035,527
tsssa=sis«
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Exhibit C
Capping Report
Schedule at Funds ftitarded Under the
Cooperative Agreements Audited
Audi tee
Region 1
Hiine OEP
Rhode Island KH
Reqjon 2
Hi* Jersey DEP
Hen York DEC
Region 2 - Monitoring of Nm Jersey DEP
Region 3
Del Kir* DNREC
Penniylvania DER
Reqion 3 - floflitorinq of Pennsylvania OER
Reaian 3 - Jlonitorinp at Pennsylvania DER
Region 3 - Nonitonnq o< Maryland OHNH
Reqian 4
Floridi HER
South Carolini DOHEC
Region 5
Illinoii £Pft
Michigan ONR
Itinnesoti PC*
Region 6
Louisiana DNR
Louisiana DEB
Qklihoii DQH
T«as KC - French Liiited Site
Titit K - SiVej Dispoci! P>> Site
Tens DC * Bio Ecology Site
NC - Trianqle Cheiical Co. Site
DC * Highlands Acid Pit Site
Reqion 9
nontatia DEK
North Dakota DDK
HeigioA 8 - Adiiflistration ot Cooperative
Utah DDK
Region 9
Arizona DDKS
CalHornn 00H5
Region ? - Malnutrition of California DOHS
Reqion 1 - Adiinutration of California SHRC8
South Biv Site
Upper SM Gabriel Valley Bunicipal Hater District
Reqion 10
Mashinqton - Conenceient Biy Kearshare/Tideflats Site
Audit Report No.
P5b64-11-0029-70^2
E5UH6-01-015I-4H53
E5bH5-02-0140-61573
P3bfi4-l1-0030-71170
E5BH4-02-OI69-41544
P5fc63-ll-0055-il507
P!bH5-ll-M34-70538
E3eH6-03-022B-7l9fl3
P5t64-ll-0031-70772
E3C64-04-0109-70747
P3bB7-05-0336-7l223
P3bSJ-03-0537-7HB3
E3bH7-03-02l(h7043?
E3b«4-04-01U-30011
P5hSi-ll-0«32-7113?
E3b67-04-0030-70W
E5b66-06-0127-il237
E3b67-04-003l-713lt
E3b6J-04-0033-713I2
E3bS7-04-M32-7l742
E3b63-08-0043-40tl3
E3bE4-OB-0«4B-4i437
E5eH7-Ofl-0005-71992
E3b64-OS-0042-7l904
E5bB3-09-0140-40437
ESbH4-09-0132-5i:87
ESeHS-O1?^ 19-51280
E3eH4-0?-«224-71928
E5bBt-09-0081-40924
E3bH4-10-«040-SOI04
lotali
Atount of
Fund]
» 1.S93.147
3,221,448
476.313
IB.8(3.279
4,747.434
971,104
7,927,704
537,200
4,902,034
2,044,344
3,070.242
7,222.999
4,448.454
347.000
1,042.980
4,593,918
784.496
1.093.830
8,013.144
944.384
7,195.272
3.240.761
J34.033
1.342.337
1,282,044
1,059.114
37,877,511
1,000.000
402,205
1.557.751
tl34.323.044
S3SS83MCVSWS
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UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON. D.C. 20460
OFFICE OF
ADMINISTRATION
AND RESOURCES
MANAGEMENT
MEMORANDUM
SUBJECT
Response to Draft Audit Report No. E5eE8-09-0018
"Capping" Report on EPA, Office of the Inspector
General Audits of Superfund Cooperatiye
Agreements
FROM:
TO:
Charles L. Grizzle
Assistant Administrator
Ernest E. Bradley III
Assistant Inspector General for Audit
In response to your memorandum of February 12, 1988, this
memo transmits EPA's response to the subject "Capping" draft
audit report.
Initially, I would like to point out that I believe EPA has
made significant strides in improving the overall management of
our Superfund cooperative agreements program. The Office of
Administration and Resources Management and the Office of Solid
Waste and Emergency Response have together already taken action
to respond to the problems identified in the audits of Regional
cooperative agreements. The final "Capping" report should reflect
these actions.
I have highlighted .below some of the actions already taken
or underway in the Agency.
o We have reviewed the management of every Region's
cooperative agreements. Between August and December
1987, OARM and OSWER staff visited every regional office.
They met with senior regional officials, including program,
finance, and grants staffs to determine how each Region
manages cooperative agreements, how the program, finance
and grants staffs interact, and what regional cooperative
agreement activities need improvement.
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We are conducting Management Assistance Program (MAP)
reviews of State management systems. These reviews
emphasize procurement, property, general administration,
and finance. Headquarters has led this effort but we
will delegate the MAP reviews to the Regions this fiscal
year in order to expand the reviews into more States. We
expect the Regions to incorporate these reviews into their
regular oversight of Superfund cooperative agreements.
EPA is revising the Superfund "Guide for Preparing and
Reviewing Superfund Cooperative Agreements." This guide
defines roles and responsibilities of regional reviewers
and explains the process reviewers should follow when they
review and award a cooperative agreement. We are developing
a companion guide for State use as well.
We are developing and implementing two training courses.
One is a Superfund procurement training course. We have
given this course in five Regions and are scheduling the
training in the remaining Regions. The second is a
cooperative agreement administration training course to
inform Regional Superfund project officers of their
responsibilities for managing Superfund cooperative
agreements.
EPA is helping the States improve their administrative
management of Superfund cooperative agreements by
implementing the Core cooperative agreement program.
Core cooperative agreements will fund a "core" of State
staff to carry out basic non-site specific administrative
activities, such as developing and maintaining accounting
and property management systems.
EPA has strengthened the technical assistance we offer
to States by shifting the responsibility for adminis-
trative oversight of cooperative agreements from
Remedial Project Managers (RPMs) to specialists in'
Administrative Assistance Units (AAUs).
We are developing a regulation covering requirements of
Superfund cooperative agreements. The regulation will
clarify property, procurement, cost recovery, and
documentation requirements of cooperative agreements.
We plan for this to be effective October l, 1988.
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We have carefully reviewed each of the recommendations
contained in the draft report. In developing this response, we
have not duplicated earlier Regional responses to individual
audits nor have we addressed followup actions the regions may
have committed to or completed. Rather, this response addresses
the consolidated audit which focused primarily on Headquarters
issues.
The attachment to this memorandum provides the comments and
responses to every finding and recommendation identified in the
report. Where we have already implemented improvements in the
program, we have noted these efforts. For those recommendations
where action is still pending or new action is planned, we have
provided milestone dates.
If you have any question on this draft audit response,
please contact John Sandy, Director of the Resource Management
Division at 382-4425.
Attachment
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cc: J. Winston Porter
C. Morgan Kinghorn
David Ryan
Rich Bashar
John Sandy
Harvey Pippen
Vincette Goerl
William Finister
Peter Nobert
Barry Bixler
Chron File/Official File
PM-225:BBixler:725WT:382-4160:3/16/88:Disk BarryPCl
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UNSATISFACTORY PROGRAM PERFORMANCE UNDER COOPERATIVE AGREEMENTS
RECOMMENDATION
The Office of the Inspector General recommends that the Assistant
Administrator for Administration and Resources Management: (i)
review the adequacy of the Regions' performance in awarding and
administering cooperative agreements, (ii) note any deficiencies
in the Regions' management, and (iii) monitor the Regions' actions
to ensure that the deficiencies are corrected. Particular attention
should be given to ensure that the recipients: have the technical
and administrative capabilities to perform; increase their public
participation efforts; give increased attention to accomplishment
of cooperative agreement goals and objectives; and establish
effective lines of communication and working relationships with
recipients.
RESPONSE
(i)
(ii)
(iii)
In response to the OIG audits of 15 States, the Acting
Assistant Administrator for OARM directed the Grants
Administration Division (GAD) to review the
administrative management of each of the Regions'
Superfund cooperative agreements. GAD performed those
reviews from August 1987 to December 1987. The reviews
focused on areas identified as problems in the audit
reports (i.e., procurement, cost documentation and cost
recovery, reporting, property management), as well as
organizational "checks and balances", audit resolution
and follow-up, information management, and communication.
These reviews identified specific management deficiencies
in each Region and the required corrective actions.
To assist the Regions in correcting deficiencies, GAD
is:
1) providing training courses in both procurement and
Management Assistance Program (MAP) reviews; and
OSWER is developing and presenting a Superfund
response agreement training course (Project Officer
training);
2) improving communication links between Headquarters and
Regions;
3) instituting yearly oversight reviews of Regions'
operations and monitoring the findings from the initial
reviews as well as those performed each following year;
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4) providing new guidance materials to Regions
including a "Guide for Preparing and Reviewing
Superfund Cooperative Agreements," a Superfund
Compendium which includes all documents which
govern administrative management of Superfund
cooperative agreements, and Superfund-specific
enhancements to the Grants manual; and |
5) recommending that Regions evaluate recipients' «
administration of cooperative agreements on a
regular basis. During FY 1988, GAD will develop
and implement the Superfund Administrative Management
System (SAMS) which will automate the tracking of
corrective actions, cooperative agreement audits,
Regional oversight reviews, and MAP reviews.
RECOMMENDATION |
The Office of the Inspector General recommends that the Assistant
Administrator for Solid Waste and Emergency Response implement an
effective CERCLIS quality assurance program to ensure that the
Regions correct.inaccuracies and omissions in CERCLIS, and update
CERCLIS in an accurate and timely manner in the future.
RESPONSE
The Office of Emergency and Remedial Response (OERR) and the
Office of Waste Programs Enforcement (OWPE) recognized that the
multi-system management information process existing prior to .
1986 was cumbersome and inefficient as noted in the "Capping"
report. In 1986 these two offices began working with Regions and '
States to design an integrated program management system that
would serve the Regions', Headquarters', and possibly States'
needs; in late 1987 revisions to the CERCLA Information System
(CERCLIS) were implemented. CERCLIS will now provide the site/
incident and enforcement activity data required for the Superfund
Comprehensive Accomplishment Plan (SCAP), the Strategic Planning
and Management System (SPMS), and the Superfund Progress Report
(SPR). In addition, the system is sufficiently easy to use and -
has the functional capability to support Regional requirements.
The new system serves as a central repository accessible to all
participants in the Superfund information management process.
The revised CERCLIS now provides the following features which
OERR believes address the concerns expressed in the "Capping"
report:
- The ability to transfer certain required data from the
Regions to central data storage for Headquarters and
Regional access and processing? H
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- Support for Region-specific program management and
operations ?
The ability for Regions to "own" their data data
entry and quality assurance is the Region's
respons ib i1ity;
User-friendly data entry, update, and report generation
procedures;
Capability to support multiple users simultaneously;
Automated support for the integration of remedial,
removal, and enforcement data relating to a site;
and
Protection of sensitive data.
Because Regions will be able to use CERCLIS as their own primary
management information system, Regions are correcting inadequacies
of the existing data base and will continue to administer an
effective quality assurance program because CERCLIS is now a
management tool for them instead of being another administrative
burden placed on them by Headquarters which only benefits
Headquarters.
Changes to CERCLIS have now been implemented and OERR is now
providing support to all Regional and Headquarters offices in
setting up report formats and revising the data base to include
the fields needed by all offices. OERR is still working with
States to explore the possibility of State input and access to
the system, which would further insure the adequacy and accuracy
of the data entered into the system since States would also feel
"ownership" if they also could use CERCLIS as their primary
management information system for Superfund activities.
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PROBLEMS WITH PERFORMANCE OF REMEDIALINVESTIGATIONS AND FEASIBILITY
STUDIES
RECOMMENDATION
The Office of the Inspector General recommends that the Assistant
Administrator for Solid Waste and Emergency Response:
a.
b.
RESPONSE
Emphasize the importance of regional monitoring of
recipients' RI/FS activities, as a means of assuring
that completion schedules are met.
Oversee the Regions' actions to expedite the recipients'
RI/FS activities when they have fallen behind schedule
in the completion of their RI/FS work.
The revised National Contingency Plan (NCP) which will
be proposed by the Agency around June 1988, will
emphasize a Federal-State partnership as mandated by the
1986 amendments to CERCLA. This partnership will ensure
that EPA and States work together on both State- and
Federal-lead actions to ensure that schedules are met and
all response work is performed in accordance with the
NCP. This partnership equates to a different type of
oversight than was the case during the period the
audits of State cooperative agreements were conducted by
the Office of the Inspector General. The partnership
will call for more communication between Regions and
States, more upfront agreement and clarification on
expectations, and less unilateral EPA demands and
decisions. Regional oversight guidance must be changed
to reflect this new approach. OERR plans to have such
guidance in place by the time the final revised NCP is
published in 1989.
The key mechanism for establishing an effective
partnership will be the EPA/State Superfund Memorandum
of Agreement (SMOA), which will delineate roles and
responsibilities for each agency when it serves as the
lead or the support agency in a CERCLA response action.
The SMOA will establish timeframes for reviews and
essential review points in the process. In addition,
the SMOA will establish an annual consultation process
for determining which entity will take the lead for an
action and for setting priorities and funding targets
for the fiscal year. EPA will only designate a State
as lead for a response action when the State has proven
its ability to stick to established timeframes and has
demonstrated its capability to perform the work in
question. This process addresses the auditors' concerns
that cooperative agreements were awarded to States
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b.
before they had the staff or expertise to perform the
work required under the agreement. The capability
assessment will include consideration of staffing,
procurement, financial systems, past experience, and
statutory authority to determine if a State can most
effectively take the lead for response. In addition to
establishing timeframes for reviews, the SMOA will
address oversight and establish the nature of EPA's
oversight role with the particular State. States with
poor past performance or less experience will require
more EPA oversight and technical assistance. Even
though the proposed revisions to the NCP have not yet
been published, EPA has encouraged States and Regions to
begin negotiating SMOAs. Interim guidance on SMOAs
will be finalized by the time the proposed NCP is
published in the Federal Register in the summer of 1988.
Two SMOAs have already been negotiated and are now in
place. One of these agreements is between EPA and one
of the States discussed in the "Capping" report. This
agreement is part of the Region's and State's efforts to
correct the deficiencies noted in the audit.
The revised NCP will also address requirements for State
involvement in the absence of a SMOA for Federal-lead
activities. However, .the NCP will not address EPA
oversight requirements for a State-lead response. Regions
will have to establish oversight criteria using Agency
guidance. The State Lead Remedial Project Managers
manual referenced in the report does outline, in general
terms, the Remedial Project Manager's (RPM's) oversight
responsibilities as well.
In an effort to improve the RI/FS process and to insure
that mandatory schedules are met, the Agency is
currently streamlining the process and is offering
training to States and Regions from February through
June 1988 on managing the RI/FS process. These
activities also address the deficiencies noted in the
"Capping" report' and should improve States' and Regions'
abilities to plan RI/FS schedules more realistically and
to meet schedules established in cooperative agreements.
The improved CERCLIS will improve Headquarters' ability
to identify problems in completing response activities,
whether State- or Federal-lead and will enable
Headquarters to work with Regions to assist States
experiencing delays or problems in meeting established
schedules. All Regional reviews include an evaluation
of Regional oversight of State involvement as mandated
by CERCLA, as amended. The Superfund Program Evaluation
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Handbook. which sets forth criteria for Headquarters'
assessment of Regional capabilities, will be modified to
reflect changes imposed by the amendments to CERCLA and
the revised NCP with respect to State involvement and
Regional oversight. The shift in emphasis to a
Federal/State partnership will require new parameters
for Regional oversight of State-lead activities and
Headquarters' evaluation of Regional oversight should
reflect this emphasis. The manual will be revised when
the revised NCP is published.
Both of the preceding recommendations will also be
addressed further in the Office of Emergency and
Remedial Response (OERR) RI/FS improvement initiative
which is a priority task in the FY88 work plan. Initial
recommendations from this initiative are anticipated by
October 1988.
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MONITORING OF PRE-REMEDIAL IS INADEQUATE
RECOMMENDATION
The Office of the Inspector General recommends that the Assistant
Administrator for Solid Waste and Emergency Response:
a.
Issue a directive to require the Regions to: (i) include
delivery schedules for the completion of specific PAs
and Sis in the cooperative agreements; (ii) establish
guidelines for timely regional reviews of the PAs and
Sis; and (iii) require careful regional monitoring of PA
and SI delivery schedules and the initiation of appropriate
actions when the recipients fall behind schedule.
Review the HRS scoring quality assurance process to
ascertain what additional controls are necessary to
improve the consistency and accuracy of HRS scoring
packages.
RESPONSE
a. Appendix A to the State Participation in the Superfund
Program manual does contain guidance directing Regions
and States to require site-specific delivery schedules
for Preliminary Assessments (PA) and Site Investigations
(SI) in the cooperative agreement application. This
appendix is currently being revised for reissuance with
the revised State Participation manual, and this point
is being clarified and emphasized. This manual will be
issued in coordination with the publication of the pro-
posed revisions to the NCP.
As discussed in the response to the previous recommendation,
the SMOA will establish a timeframe for Regional reviews
of State-lead PA/SIs. In the absence of a SMOA, the
revised NCP will establish requirements for Regional
review of all State-prepared documents.
Revised guidance on the pre-remedial program will
address Regional monitoring responsibilities including
PA/SI delivery schedules. In addition, Headquarters
will emphasize monitoring of delivery schedules,
technical assistance and corrective action in Regional
reviews and will revise criteria in the Superfund
Program Evaluation Handbook to reflect this emphasis.
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b. The "Capping" report found that neither the recipients
nor the Regions were consistently applying the Hazard
Ranking System (HRS) process.
Please note the following comments are meant to
clarify misconceptions and inaccuracies in the report
which OSWER believes led the auditors to the wrong
conclusions. The current quality assurance process
for HRS scoring does provide adequate controls to
ensure valid scores. In addition, Congress mandated
that EPA revise the HRS and that revision is being
proposed in the Federal Register in Spring, 1988.
The draft report incorrectly states that the HRS
considers direct human contact. The HRS considers
three potential contaminant migration pathways of
human or environmental exposure: (1) ground water,
(2) surface water, and (3) air. Within each of
these three pathways of exposure, the HRS considers
three sets of factors that are designed to encompass
most aspects of the likelihood of exposure to a
hazardous substance through a release and the
magnitude or degree of harm from such exposure.
Although direct contact can be considered when
evaluating a site, it is not included in the
calculation of the overall HRS score for a site.
Comments made in the report concerning inconsistent
application of the HRS may be addressed by clearer
explanation of the process used by the Agency to
develop the NPL.
In many instances, an initial, draft HRS evaluation
is prepared by a State. This draft HRS evaluation
is then subject to Quality Control (QC) by the EPA
Regional office. The purpose of QC review is to
ensure factual accuracy, correct application of the
HRS model, and mathematical accuracy. Because of
the deliberative nature of the HRS, it is not at all
unusual for there to be modifications to the draft
HRS evaluation.
Sites receiving an HRS score of 25.00 or greater are
submitted to EPA HQ for Quality Assurance (QA) review.
This review ensures the same basic review criteria as
QC, but in addition, ensures consistent application
of the HRS nationwide. As in the instance of QC
review, it is not unusual for there to be modifications
to the draft HRS. Sites receiving an HRS score of
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28.50 may be proposed to the NPL. The goal of
QC/QA is to ensure that sites which are proposed
for inclusion on the NPL are both technically
correct and legally defensible.
EPA considers HRS evaluations to be draft until
the sites are proposed in the Federal Register.
Proposal is followed by a comment period. EPA
considers comments received, and if necessary,
makes modifications to the HRS evaluation based
upon new information received. EPA then makes
final rulemaking decisions which are announced
in the Federal Register.
Thus, it is easy to see that the development of the
HRS is a deliberative, rulemaking process in which
modifications are a normal and expected result of
technical peer review and consideration of public
comments.
Site Specific Corrections
The reason for the removal of the Silver Creek
Tailings site in Park City, Utah was incorrectly
stated.
This site was removed from the NPL as specified
at Section 118 (p) of SARA which states:
Effective with the date of enactment of
this Act, the facility listed in Group 7
in EPA National Priorities List Update
#4 (50 FR 37956, 9/18/85), the site in
Park City, Utah, which is located on
tailings from noncoal mining operations,
shall be deemed removed from the list
of sites recommended for inclusion on
the NPL, unless the President determines
upon site specific data not used in
proposed listing of such facility, that
the facility meets requirements for the
HRS or any revised HRS.
As specified, this site was removed from the NPL
effective 10/16/86. The Region is currently
obtaining information necessary to determine
if this site should be reproposed to the NPL.
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Although it may be the position of the State of
California not to list sites located in the South
Bay area on the NPL, it is important to note that
EPA has initiated NPL actions at a number of
these sites. In 1984, Region 9 requested QA
review of 25 sites located in the South Bay area.
Of these, 20 were proposed to the NPL on 10/14/84,
and of these 4 have been promulgated to the NPL.
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REGIONAL OVERSIGHT ACTIVITIES NEED IMPROVEMENT
RECOMMENDATION
The Office of the Inspector General recommends that the Assistant
Administrator for Administration and Resources Management:
a. Instruct the Regions to issue written directives clearly
delineating the responsibilities of the Remedial Project
Manager (RPM), the Assistance Administration Unit, the
Financial Management Office, and the other regional
units involved in the award, oversight, and management
of Superfund cooperative agreements.
b. Ensure that regional administrative personnel involved
in managing the Superfund cooperative agreements receive
adequate training to fulfill their responsibilities.
RESPONSE
Information obtained in the oversight reviews of the
Regions, as discussed previously, convinced GAD of the
necessity to more clearly define the appropriate
functional assignments of regional personnel. Based on
this information, GAD is developing an Administrative
Order which will define the roles and responsibilities
for regional management of Superfund cooperative
agreements. The order will be completed by the end of
the fiscal year and signed by the Administrator.
The Financial Management Division has included in the
Agency's annual Operating Year Guidance financial manage-
ment priority activities and key initiatives relating
to Superfund for implementation by regional finance
personnel.
Since March 1984, GAD has provided procurement
management training to the various Regions. Last fiscal
year, GAD gave the Procurement Under Assistance Agreements
training course to Region 2, 3, 4, 5, and 6 staff; the
remaining five Regions will receive training during
FY88. Procurement topics covered include: the
procurement process, State procurement certification, pre-
solicitation, cost analysis, awards, change orders,
claims, and procurement checklists.
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OSWER is developing, in conjunction with GAD, a Superfund
Response Agreement Course for Project Officers. A pilot
of the course is scheduled for April 5 - 7 in Washington,
D.C. The class will cover the administration of the
Superfund cooperative agreements and Superfund state
contracts. A schedule is being developed to present the
course to all Regions.
In addition, GAD is working with the Training Institute
to develop an Assistance Management Master Training
Program. This program provides a long-term comprehensive
approach to educating all grants staff in their
responsibilities and developing cooperative agreement
management experts.
The Financial Management Division has worked to ensure
that all Superfund training courses include financial
management modules. For example, this has occurred with
training for Grants Project Officers and training for
On-Scene Coordinators and Remedial Project Managers.
The inclusion of financial management modules in all
Superfund training will continue routinely in the
future.
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RECOMMENDATION
The Office of the Inspector General recommends that the Assistant
Administrator for Solid Waste and Emergency Response:
a. Review existing guidance to RPMs in light of the areas
discussed in this "Capping" report and develop additional
guidance on the RPM function.
b. Consider the establishment of the RPM certification
program, requiring the completion of specified standard
courses, along with subsequent annual refresher training.
The training should emphasize the oversight of recipient
performance under cooperative agreements and procedures
for maintaining effective communications with recipients.
It should also cover RPM procurement responsibilities,
and project file documentation requirements.
RESPONSE
a.
It is important to note that the Remedial Project
Manager is defined in the proposed revisions to the NCP
as the technical overseer of any remedial response
activity. The RPM will not be responsible for
overseeing procurement, financial management, property
management or other administrative areas required by the
cooperative agreement.
In addition to the RI/FS training mentioned in response
to the previous recommendation, EPA has revised the
RI/FS guidance and will reissue the guidance in late
1988. EPA has developed guidance on Records of Decision
(RODs) which will be distributed in April 1988.
Training also has been offered on RODs and training
continues to be offered to Regions and States on
construction management. The Agency is developing
training on managing cooperative agreements for States
and has been holding conferences for Regions on this
topic. In addition to numerous changes to CERCLA, OERR
issued the RPM Primer in September 1987 to provide
additional guidance and training for RPMs. The State
Participation manual, as discussed earlier, has now been
supplemented by manuals from the Grants Administration
and Financial Management Divisions and will be reissued
as interim in conjunction with publication of the proposed
NCP. The EPA and the Association of State and Territorial
Solid Waste Management Officials (ASTSWMO) will be holding
conferences around the country over the next year and a
half (August 1988-August 1989) for States on managing
response agreements. OSWER has been concentrating on
comprehensive guidance and training for RPMs in all
their functional areas since the reauthorization of
CERCLA.
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b. Again it must be pointed out that the revised NCP will
designate the RPM as the individual responsible for
technically guiding the response activities. We are
working with the Regions to establish Superfund project
- officers {or equivalent positions) to oversee the
administration and management of State cooperative
agreements.
OERR has developed a proposal for an RPM certification
program in response to the following studies or
factors:
GAO Superfund workforce report to Congress
OSWER Superfund workforce report
Senate Hearing Superfund workforce issue
Some of the best/brightest on-scene
coordinators (OSC)/RPMS going to private
or State sector
Limited skills/experiences of OSC/RPMs
Limited development opportunities
Limited retention activities by EPA
OSC/RPMs with one discipline (degree) working multi-
media programs, i.e., chemical engineer working on
groundwater problems
The proposal was presented to the Director, OERR the
first week in March and will be presented to the
Assistant Administrator for Solid Waste and Emergency
Response in late March 1988. If the proposal is
adopted, the certification program would be established
within a year, sometime in mid to late 1989.
The certification program would be organized in the
following manner:
4 career tracks for OSC/RPMs
Required training curriculum for each track
- Rotational assignments and sabbaticals for OSC/RPMs
Continuing education for OSC/RPMs 2nd degree
or multi-discipline training
Promotion potential sufficient to attract and
retain highly qualified OSC/RPMs at complex sites
Awards/bonuses and professional recognition for
OSC/RPMs.
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The program would establish the following career tracks:
OSC/RPM Project Manager
Subsets - Fund/State lead
- Enforcement
- OSC/RPM Technology Officer
Subsets - Groundwater/Fate and Transport
- Engineering/Treatment
- Monitoring
- Risk
Title III/OSC Emergency Response Project Managers
OSC/RPM Supervisor/Management
The RPM/OSC grade structure proposed for the certification
program is shown below:
Apprentice
Junior
Senior
Expert
GS 5/6/7/9
GS 11/12
GS 13/14
GS 15/16
Training for the certification program will encompass
on-the-job training, formal classroom/workshop training,
rotational assignments and annual refresher training to
retain certification. OERR has developed registration .
and training requirements for each RPM grade series.
This proposal addresses all aspects of the report
recommendation that are appropriate to the NCP definition
of the role of the RPM.
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PROCUREMENT SYSTEM DEFICIENCIES
RECOMMENDATION
The Office of the Inspector General recommends that the Assistant
Administrator for Administration and Resources Management:
a.
b.
c.
d.
Instruct each Region to maintain sufficient procurement
expertise in-house to adequately review State procurement
systems and assist States in complying with Federal
procurement requirements.
Provide for comprehensive procurement training of
regional personnel working on assistance agreements.
«
Instruct the Regions to undertake a comprehensive review
of those States where procurement system deficiencies
have been noted in management reviews or audit reports
to determine if the deficiencies have been corrected.
Instruct the Regions to undertake a detailed review of
the State procurement systems that have not been sub-
jected to prior management reviews or audits. Appropriate
corrective actions should be initiated to correct all
deficiencies noted in these reviews.
RESPONSE
During GAD's oversight reviews, GAD recognized the need
for procurement expertise in the Regions. The GAD
oversight review reports recommend that each Region
develop such expertise and take the initiative to ensure
State compliance with procurement requirements.
OARM and the Superfund program identified the need for
procurement training in 1985. Since then GAD has
developed a two-day procurement training course which
addresses the problems identified in the "Capping" report.
As previously mentioned, GAD has already conducted this
training in five Regions. GAD is currently scheduling
similar presentations in the other five Regions.
We point out that in addition to revising the Procurement
Under Superfund Response Agreements manual, which will
be issued by summer 1988, OERR continues to develop and
issue detailed guidance on construction management which
encompass procurement issues for response agreements.
In addition, OSWER offers training in the area of
construction management as discussed earlier. Also as
mentioned earlier, EPA will co-sponsor State conferences
on the administration of Superfund response agreements
with the Association of State and Territorial Solid
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Waste Management Officials (ASTSWMO). This conference
will include optional procurement training for States in
addition to working sessions on grants administration
and procurement. OARM and OSWER are working together on
these conferences. Three conferences will be held in
1988 and 1989.
c. From March 1984 to the present, GAD and OSWER staff have
jointly conducted Management Assistance Program (MAP)
reviews of the administration of cooperative agreements
by various states. The reviews first focused on providing
recommendations/corrective actions for eliminating procure-
ment and general management problems. GAD, in cooperation
with FMD and OSWER staff, then broadened the reviews to
include financial and property management. Since 1985,
GAD has conducted MAP reviews in California, Missouri,
Michigan, New York, New Jersey, Florida, Pennsylvania,
Massachusetts, Colorado, Delaware, New Hampshire, Texas,
and Washington. In addition, GAD conducted MAP reviews
in the Florida political subdivisions of Miami/Dade
Water and Sewer Authority and Broward County Utilities
this year.
GAD is transferring the responsibility for MAP reviews
to the Regions. GAD has substantially improved the MAP
review materials and, in cooperation with several
Regions, is conducting pilot reviews with the new
material; corrections to any problems in the materials
will be completed by June 30, 1988. Subsequently, GAD
will provide the Regions all materials necessary to
conduct MAP reviews of their respective States with the
understanding these are to be done at least every other
year. GAD will track the reviews to assure they occur
and that corrective actions are taken.
d. The action taken in (c) will cover State systems which
have not been reviewed, as well as those which have.
COMMENT
On page 47 of the "Capping" report, in the background section,
the report states:
"EPA's" implementing guidance for the above regulation [40
CRF Part 33.110] is found in its Manual entitled State
Participation in the Superfund Remedial Program..."
This Manual does not implement EPA's regulation on
procurement under assistance agreements for the entire Agency.
Instead, the Manual addresses specifics associated with the
implementation of 40 CFR Part 33 with respect to Superfund
assistance only.
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FINANCIAL MANAGEMENT OVERSIGHT FUNCTIONS REQUIRE IMPROVEMENT
RECOMMENDATION
The Office of the Inspector General recommends that the Assistant
Administrator for Administration and Resources Management:
a. Instruct the regional offices to distribute the
publication titled "State Superfund Financial Management
and Recordkeeping Guidance" (November 1987} to all
appropriate State personnel and provide the States with
a list of Regional contact persons who can answer any
questions regarding its content.
b. Instruct the Regional offices to undertake systematic
reviews of the financial management systems of recipients
whose systems have not received complete EPA management
reviews or audits. In addition, the Regions should be
required to ensure that the deficiencies noted in prior
EPA reviews have been corrected.
c. Ensure that adequate training is available to regional
financial management personnel in Superfund financial
management policies and procedures applicable to State
Superfund assistance recipients.
RESPONSE
The Financial Management Division (FMD), via a memorandum
dated January 15, 1988 from the Director, FMD to all
Regional Financial Management Officers, instructed all
Regional offices to distribute the "State Superfund
Financial Management and Recordkeeping Guidance" to the
appropriate State personnel. There has been extensive
interaction between the Regional offices and the States.
For example, Superfund training was provided in every
Region between September and December of 1987. This
training was attended not only by Regional personnel,
but also by personnel from all the states within the
Regions.
The Regional offices have been instructed in the
Agency's annual Operating Year Guidance to undertake
reviews of the financial management systems of
recipients. A part of these reviews will include the
analysis of actions taken by recipients to correct
deficiencies noted in prior EPA reviews.
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c. The Financial Management Division (FMD) has taken an
active role to ensure that adequate training is
available to Regional financial management personnel
involved in Superfund financial management. FMD has
conducted various Superfund workshops for financial
personnel. Also, FMD has worked with the Grants
Administration Division and program offices to ensure
that all Superfund training courses include financial
management modules. This has occurred, for example,
with training for Grants Project Officers, On-Scene
Coordinators, and Remedial Project Managers. Also,
as described above, Superfund training was provided in
every Region between September and December of 1987.
These were attended not only by Regional personnel, but
also by personnel from the States within the Regions.
Further training has been provided in a three-day Super-
fund Cost Recovery Conference in March 1988. Superfund
training will continue on an on-going basis. For
example, final steps are now being completed for a one-
day technical workshop for Superfund financial personnel
to be held at the Agencywide annual Office of. the
Controller's Conference in May 1988.
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INADEQUATE LETTER OF CREDIT PROCEDURES
RECOMMENDATION
The Office of the Inspector General recommends that the
Assistant Administrator for Administration and Resources
Management:
a. Prepare and distribute a summary of LOG operating
procedures for use by the Regions and cooperative
agreement recipients. The procedures should, as a
minimum, discuss: (i) the timely submission of the
Federal Cash Transaction Reports (SF-272); (ii) the
policy concerning Regional changes to the certified
SF-272; (iii) the proper methods of calculating the
LOG draw down amounts; (iv) timely recipient use of
the LOG draw down method; and (v) the extent of
Regional reviews of the draw down requests.
b. Require the Regions to periodically monitor the
recipients' compliance with LOG requirements.
RESPONSE
(OMITTED PORTION OF THE RESPONSE DISCUSSES MATTERS
NO LONGER PERTINENT TO THIS REPORT).
Most of the problems cited in the "Capping" report were
a result of non-compliance with current policies and
procedures. To this end, the Comptroller's P.A. No. 88-06
was recently issued to reemphasize existing requirements
and implement additional reconciliation controls. This
particular P.A., which implemented findings contained in
the OIG's 1983/1984 CERCLA Audit Report, was transmitted
to the OIG on February 10, 1988. However, this "Capping"
report did not disclose our efforts in this area, we will
continue stressing adherence to all financial operating
procedures, including LOG procedures by Regions and
cooperative agreement recipients.
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MORE EFFECTIVE REPORTING PROCEDURES ARE NECESSARY
RECOMMENDATION
The Office of the Inspector General recommends that the
Assistant Administrator for Administration and Resources
Management:
a.
b.
Instruct each Region to establish a system to track
both report due dates and report receipt dates. The
system should include the generation of "tickler"
reports at regular intervals to indicate overdue
reports for Regional staff followup. It should also
indicate whether submitted reports were complete, and
if incomplete, when corrected reports were submitted.
Instruct the Regions to include in the performance
agreements of all personnel responsible for monitoring
compliance with cooperative agreement requirements,
standards related to the follow-up of overdue and
incomplete reports.
RESPONSE
a. One finding of GAD's oversight reviews was that
Regions' systems to track and assure recipient
compliance with special conditions were inadequate. In
each oversight review report, GAD recommends that
Regions establish a system to alert them when reports
are due (or overdue) or when other action is necessary
to comply with special conditions.
b. The draft FY 89 Administrator's Guidance provides for
inclusion of cooperative agreement management
performance standards in all appropriate performance
agreements. This draft Guidance is currently under
review.
RECOMMENDATION
The Office of the Inspector General recommends that the
Assistant Administrator for Solid Waste and Emergency
Response:
a. Review the standard quarterly progress report require-
ment to determine if any changes in it are needed.
b. Issue a directive outlining in greater detail and
with more clarity the contents of an adequate quarterly
progress report.
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COMMENT
(OMITTED PORTION OF THE RESPONSE DISCUSSES MATTERS
NO LONGER PERTINENT TO THIS REPORT).
RESPONSE
In an effort to address State and Regional concerns
that quarterly reports are burdensome, inadequate
or not used, EPA is reviewing report requirements
in an effort to establish what information EPA
management really needs on remedial projects, what
is already available to management in existing data
bases (CERLIS, financial management or grants adminis-
tration systems), and the best means to obtain
additional data. Then EPA will revise report require-
ments, as appropriate, as recommended in the "Capping"
report. Changes will be incorporated into the
revisions to the State Participation manual which
is expected to be revised in late FY 88.
Based on the reports review described in (a) above,
EPA will incorporate a" description or a sample of an
adequate quarterly report reflecting all requirements
in the revisions to the State Participation manual.
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LACK OF COMPLIANCE WITH COOPERATIVE AGREEMENT SPECIAL
CONDITIONS
RECOMMENDATION
The Office of the Inspector General recommends that the
Assistant Administrator for Administration and Resources
Management:
a. Instruct the Regional offices to formally identify,
promptly after each cooperative agreement award,
the person responsible for monitoring compliance
with the special conditions. This identification
list should be updated whenever new special con-
ditions are added, or when the responsible persons
change.
b. Advise the Regional offices to periodically document
compliance with each special condition. In the case
of continuing requirements, the compliance status
should be documented annually.
c. Instruct the Regional offices to include in the
performance agreements of all personnel responsible
for monitoring compliance with special conditions,
standards related to their performance of this
responsibility.
RESPONSE
GAD recommended during the oversight reviews that
award letters include the names of contacts for
administrative management, finance, and technical
program questions. In addition, it was recommended
that an appropriate organization be named as
responsible for assuring recipient compliance with
special conditions. We do not agree that an
individual be named in an agreement. This could lead
to confusion when staff changes occur. GAD is
developing an Administrative Order which will define
the responsibilities of the Assistance Administration
Unit, as discussed previously. In addition, each
cooperative agreement identifies the EPA Project
Officer's responsibilities.
As previously stated, the GAD oversight review reports
recommend that the Regions establish systems for
tracking compliance with all special conditions of
Superfund cooperative agreements. Secondly, we are
recommending that the Regions evaluate special
conditions to assure that they are up-to-date and
currently appropriate. When unnecessary or incorrect
special conditions are identified, the Regions will
amend the agreements.
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c. As previously stated, the draft Administrator's
Guidance for FY 89 requires inclusion of cooperative
agreement management performance standards in all
appropriate performance agreements.
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MANAGEMENT OF SUPERFUND PERSONAL PROPERTY NEEDS TO BE
STRENGTHENED
RECOMMENDATION
The Office of the Inspector General recommends that the
Assistant Administrator for Administration and Resources
Management ensure that adequate training is provided to all
appropriate Regional Superfund cooperative agreement personnel
in the areas of equipment purchasing, property management,
and property disposition procedures.
RESPONSE
OARM has developed training and guidance materials for use by
Regional staff in conducting the management assistance reviews
for oversite of cooperative agreements.
Additionally, we have initiated a review of the existing
property management procedures in view of our responsibilities
to manage the Superfund program. This will lead to a property
management policy manual. We are planning to develop a chapter
in this manual which will focus on property management for
cooperative agreements. According to our current schedule,
this manual should be finalized in June 1988.
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DISTRIBUTION
Office of the Inspector General
Headquarters Office
Inspector General {1}
Deputy Inspector General (1)
Director, Audit Operations (3)
Chief, Program Assistance Unit
Divisional Office
Other DIGA's (1 each)
Headquarters Office
Assistant Administrator for Administration
and Resources Management (PM-208)
Assistant Administrator for Solid Waste
and Emergency Response (WH-562A)
Associate Administrator for
Regional Operations (A-101)
Director, Financial Management Division (PM-226)
Comptroller (PM-225)
Director, Office of Administration (PM-217)
Agency Follow-up Official (PM-208)
Attn: Resource Systems Staff
Director, Grants Administration Division (PM-216F)
Director, Facilities Management and
Services Division (PM-215)
Director, Office of Emergency and
Remedial Response (WH-548)
Director, Hazardous Site Control Division (WH-548E)
Regional Office
Regional Administrators (Regions 1-10) (1)
Copies
3
5
3
3
1
1
1
1
1
1
1
1
10
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