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UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
OFFICE OF THE INSPECTOR GENERAL
EASTERN AUDIT DIVISION
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J F
KENNEDY FEDERAL BUILDING
Room 1911
Boston, Massachusetts 02203-2211
(61 7 1 565-31 60
FTS 6-835-3160
NEW YORK OFFICE
90Churcn Street
Suite 802
New York NY 1QOO"
.2'2) 264-5730
March 29, 1989
MEMORANDUM
New Jersey Department of Environmental Protection
Interim Audit, Cooperative Agreement V-002550-84
Burnt Fly Bog Site
Audit Report No. P5bG*7-02-0084-9100226
SUBJECT;
FROM: Paul D. McKechniij_
Divisional Inspector General
Eastern Audit Division
TO: Herbert Barrack
Assistant Regional Administrator
for Policy and Management
Region 2
SCOPE AND OBJECTIVES
We have completed an interim audit of Cooperative Agreement
Number V-002550-84 awarded to the New Jersey Department of
Environmental Protection under the Comprehensive Environmental
Response, Compensation and Liability Act of 1980 (CERCLA) for
remedial design and initial remedial action for the removal of
hazardous waste from the Burnt Fly Bog Site, Marlboro Township,
New Jersey. The audit was performed by the contract auditors,
Samuel M. Fisher Company, CPAs. The audit field work began on
August 11, 1987 and was completed on March 9, 1988.
The primary objectives of our audit were as follows:
1.
2.
3.
To determine the adequacy, effectiveness and reliability of
procurement, accounting and management controls exercised by
the State in administering the cooperative agreement.
To ascertain the State's compliance with provisions of the
cooperative agreement and applicable Federal regulations and
instructions.
To determine the reasonableness, allocability and
allowability of costs claimed under the cooperative
agreement.
in
CM
ENVIRONMENT*! P
WASHINGTON !>(
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The audit covered the grantee's claim for the period December 7,
1983 through June 30, 1986.
Our examination was made in accordance with generally accepted
auditing standards and the "Standards for Audit of Governmental
Organizations, Programs, Activities, and Functions" issued by the
Comptroller General of the United States. The audit included
tests of the accounting records and other auditing procedures we
considered necessary under the circumstances. The Environmental
Protection Agency's Audit Guide for CERCLA Cooperative
Agreements, issued on August 13, 1985, was also used as a guide
in our examination.
SUMMARY OF FINDINGS
Based upon the results of audit tests conducted on the grantee's
claim for the period December 7, 1983 to June 30, 1986, we have
concluded that generally the procurement, accounting and manage-
ment controls were adequate and effective and the grantee was in
compliance with the provisions of the cooperative agreement and
applicable Federal regulations and instructions. The costs
claimed were reasonable, allocable and allowable under the
cooperative agreement, except as noted in Schedules A-l and A-2,
Exhibit B and the supporting notes.
We have set-aside grantee claimed contractual services of $13,632
for Remedial Design which were not supported by an appropriate
change order and costs analysis. We have also set-aside
$1,126,044 claimed for Initial Remedial Action pending EPA review
of the grantee's compliance with applicable procurement regula-
tions. The grantee did not adhere to conditions imposed by EPA
in approving deviations from standard procurement practices. We
also found that the grantee was not in strict compliance with
certain EPA regulations, details of which are shown in Exhibit B,
including the fact that certain costs have inappropriately not
been charged as direct costs.
Details of our audit results are contained in Schedules A-l and
A-2, and the respective supporting notes. The contents of the
report have been discussed with the grantee, who responded in a
letter dated October 14, 1988.
We recommend that the action official evaluate the appropriate-
ness of funding the total set aside costs of $1,139,676 in light
of the comments contained in Schedules A-l and A-2 and the
related notes.
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ACTION REQUIRED
In accordance with EPA Order 2750, the action official is
required to issue a final determination and any other recommenda-
tions in this report within 150 days of the transmittal of the
audit report. Where the action official considers a position on
the audit findings that differs from our recommendations, we
would appreciate the opportunity to discuss management's position
before the determination is issued to the auditee. A copy of the
final determination should be provided to our office when issued.
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UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
i
*
;/
OFFICE OF THE INSPECTOR GENERAL
EASTERN AUDIT DIVISION
J.F. KENNEDY FEDERAL BUILDING
Room 1911
Boston Massachusetts 022C3-2211
(617,565-3160
FTS 8-835-3160
NEW YORK OFFICE
Sj'1? 602
New v"'« \ v
March 29, 1989
MEMORANDUM
SUBJECT:
Report on Audit of New Jersey Department of
Environmental Protection
Cooperative Agreement No. V002550-84
Burnt Fly Bog Site
Audit Report No. p5bG*7-02-0084-9100226
FROM:
TO:
Paul D. ^_ ^ ^
Divisional In spec tor" General'
Eastern Audit Division
Ronald S. Taminski
Director, Division of Financial Management,
Planning and General Services
New Jersey Department of Environmental Protection
Attached is an informational copy of the subject audit
report on the Burnt Fly Bog Site. The corrective actions
necessary to resolve the findings and recommendations in this
report will be determined by Herbert Barrack, Assistant Regional
Administrator for Policy and Management.
Attachment
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DISTRIBUTION
OIG (A-109)
Lisa Karpf - Director, Audit Operations
Frances Tafer, Chief,
Financial and Compliance Unit
HAD - Boston Master File
NY Followup File
REGION 2
Herbert Barrack, Assistant Regional Administrator
for Policy and Management
Stephen Luftig, Director,
Emergency and Remedial Response Division
Helen Beggun, Chief Grants Administration Branch
(ATTN: Elliott Sanderwitz)
HQ
Director, Grants Administrative Division (PM-216)
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AUDIT RtPQRT ANALYSESWORKSHEET
l) Audit Report Title New Jersey Department of Environmental Protection-Burnt Fly Bog
(2) Audit Report Number p5bG7-02-008A-9100226 (3) issue Date3/29/89
(<} A1C Samuel M. Fisher Co. (5) Supervisor H. Maletz
(6) Signatory Official palll n MrtterhnieT Divisional Inspector General for Audit
(7) Staff Days Used:
Less Trainee Time; —
less Grid Computer Credit: --
Total Staff Days 72
(8) Cost of Audit $15,596
£7 INTERNAL
£7 National
£7 Pilot
£7 Follow-on "
£7 Single Location
Other (Identify)
(9) Type of Audit:
£J EXTERNAL
£J Request by EPA Staff
*
/"7 Hotline Citizen Complaint
£7 Request by U.S. Attorney
£7 Congressional Request
£7 Initiated by OIG
£7 Interim Audit
£7 Follow-up Work
£J Other (Identify)
(10) Other Audit Results:
£7 Referrals to DIGI
f~J Referrals for additional external audits
. fj Suggestions for Annual Audit Plan (internal)
£7 Deficiencies 1n EPA performance/programs also reported to
program officials (for external audits only)
£J Recommendations to program staff for administrative actions
and/or legal action against program participants
£7 Other (identify)
(11) Audit Problems and Additional Information (briefly explain any circumstances
having a significant effect upon timely completion of the audit).
See attached explanation
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II- AUDIT PROBLEMS AND ADDITIONS INFORMATION
Several factors contributed to the delay in issuing this Superfund cooperative
agreement audit report. During the compliance review, the contract audit firm
determined that the auditee utilized innovative procurement procedures to
obtain contractual services utilized in the remedial work performed at the
site. In this regard, the audit firm raised issues concerning the
appropriateness and eligibility of the contracts and related change orders.
The auditee asserted that it had received approval from the EPA Region 2
office for the procurement methods used, but did not produce the necessary
supporting documentation during the audit field work. The auditors initial
attempts to obtain this documentation from the Region were also unsuccessful.
Due to the issues raised, we held several meetings with the contract audit
firm to gain a better understanding of the issues. We also performed a
quality control review of the firm's workpapers.
At the March 9, 1908 exit conference the auditee disputed the audit findings
contained in the preliminary draft report and we agreed to allow additional
time for them to provide documentation to support their position. Documen-
tation was received, reviewed, and the contract audit firm submitted a revised
draft for our review on April 7, 1988. We suggested revisions to the draft
report (which were made), and the draft report was issued on June 6, 1988. A
copy was provided to DIG Headquarters. The OIG Headquarters reviewer had a
number of questions concerning the report which, along with the auditee
response, required additional work by the contract audit firm as well as a
legal review from the Region 2 Regional Counsel's office. A revised draft
report was issued on September 16, 1986. The auditee responded to this
revised draft report on October 14, 1988. The contract auditor provided the
final report to us on February 14, 1989.
We had delayed preparation of the final report awaiting the Region's response.
Due to an apparent inability of the Region 2 staff to reach a consensus on
what the Region's official position is on the findings contained in this
report, the Region subsequently advised there would be no official response
to the draft report.
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ENVIRONMENTAL PROTECTION AGENCY
COOPERATIVE AGREEMENT
REPORT OF INTERIM AUDIT
OF
NEW JERSEY DEPARTMENT OF ENVIRONMENTAL PROTECTION
BURNT FLY BOG SITE
MARLBORO TOWNSHIP, NEW JERSEY
COOPERATIVE AGREEMENT NUMBER V002550-84
FOR THE PERIOD DECEMBER 7, 1983 TO JUNE 30, 1986
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NEW JERSEY DEPARTMENT OF ENVIRONMENTAL PROTECTION
BURNT FLY BOG SITE
MARLBORO TOWNSHIP, NEW JERSEY
Cooperative Agreement Number V002550-84
INTERIM AUDIT
CONTENTS
Page
AUDITORS' REPORT 1 and 2
Summary of Costs Claimed, Accepted, Questioned and
Set Aside - Exhibit A 3
Schedule of Costs Claimed, Accepted, Questioned and
Set Aside, Remedial Design - Schedule A-1 4.
Notes to Schedule A-l 5
Schedule of Costs Claimed, Accepted, Questioned and
Set Aside, Initial Remedial Measures - Schedule A-2 6
Notes to Schedule A-2 7 and 8
Auditors' Comments on Compliance, Performance and
Internal Control - Exhibit B 9-12
Grantee Comments and Auditor Response to Comments 13-16
Grantee Additional Comments and Auditor Response to Comments 17-22
Deviation Letter dated October 7, 1966 - Appendix A
Deviation Letter dated December 24, 1986 - Appendix B
Letter Requesting NJDEP to allow Incremental billing
for bonding purposes - Appendix C
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SAMUEL M. FISHER COMPANY
CERTIFIED PUBLIC ACCOUNTANTS
401 PARKWAY
BROOMALL, PENNSYLVANIA leooa
328-39OO
Environmental Protection Agency
Divisional Inspector General for Audit
Eastern Audit Division
New York, New York 10007
We have performed an interim audit of the New Jersey Department of
Environmental Protection's (NJDEP), Burnt Fly Bog Site, Cooperative Agreement
Number V002550-84 with Environmental Protection Agency (EPA) under the
Comprehensive, Environmental Response, Compensation, and Liability Act of 1980
(CERCLA). The primary objectives of our examination were as follows:
1. To determine the adequacy, effectiveness and reliability of
procurement, accounting and management controls exercised by the
State in administering the cooperative agreement.
2. To ascertain the State's compliance with provisions of the
cooperative agreement and applicable Federal regulations and
instructions.
3. To determine the reasonableness, allocablllty and allowability of
costs claimed under the cooperative agreement.
Our examination covered costs claimed from December 7, 1983 to June 30,
1986, for the removal of hazardous wastes from the Burnt Fly Bog site, as
presented in the summary of expenditures from the State's accounting records.
Our audit was performed In accordance with generally accepted auditing
standards and the "Standards for Audit of Governmental Organizations,
Programs, Activities and Functions" issued by the Comptroller General of the
United States. The Environmental Protection Agency's "Audit Guide for CERCLA
Cooperative Agreements", issued August 13, 1985, was also used as a guide In
our examination. Accordingly, the audit included such tests of the accounting
records and such other auditing procedures as we considered necessary in the
circumstances.
Exhibit A sets forth the costs claimed by the State and the costs which
we questioned or set aside, including an explanation of the reasons such costs
were questioned or set aside.
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Environmental Protection Agency
Divisional Inspector General for Audit
Eastern Audit Division
Page 2
In our opinion, subject to the effects on Exhibit A of EPA'a ultimate
resolution of the questionable expenditures referred to in the preceding
paragraph, and subject to the results of litigation in progress, If any, which
may lead to recovery of costs of site clean-up, Exhibit A presents the
financial information in accordance with generally accepted accounting
principles and financial provisions of the agreement.
In addition, Exhibit B shows our report on the review of the State's (1)
procurement, account and management controls (based on criteria established by
EPA and set forth in the aforementioned audit guide) and (2) compliance with
provisions of the agreement and applicable Federal regulations and
instructions.
This report is intended for use in connection with the agreement to which
it refers and should not be used for any other purpose.
Broomall, Pennsylvania
March 9, 1988
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EXHIBIT A
NEW JERSEY DEPARTMENT OF ENVIRONMENTAL PROTECTION
BURNT FLY BOG SITE
Marlboro Township, New Jersey
Cooperative Agreement Number V002550-84
Summary of Costs Claimed, Accepted, Questioned and Set Aside
For the Period December 7, 1983 to June 30, 1986
INTERIM AUDIT
Claimed Accepted Questioned Set Aside Schedule
Remedial Design $ 825,364 $ 811,732 $ - $ 13,632 A-l
Initial Remedial Measures 4.557.026 3.430.982 z 1,126,044 A-2
Total $5.382.390 $4.242.714 $ - $1.139.676
Cooperative Agreement Number V002550-84, originally Numbered CX81147-01 and awarded
on December 7, 1983 to the NJDEP under Public Law 96-510, provides for 100% Fede'ral
participation in remedial design and 90% Federal participation in remedial action for
the clean-up of the Burnt Fly Bog Site, Marlboro Township, New Jersey. The maximum
Federal participation is as follows:
Original Award
Amendment Number 1
Amendment Number 2
Amendment Number 4
* Including $61,248 credit to NJDEP for "window period" costs from January 1, 1978
to December 11, 1980. The Comprehensive Environmental Response, Compensation,
and Liability Act provides for reimbursement to the Federal Government funds
expended by It, from those subsequently identified as responsible for the
condition requiring clean-up.
Date
12-07-83
9-28-84
6-28-85
4-07-87
Remedial
Design
$ 497,313
548,661
998,661
2,218,661
Remedial
Action*
$ 1,686,132
12,005,258
12,005,258
27,986,258
Total
$ 2,183,445
12,553,919
13,003,919
30,204,919
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SCHEDULE A-l
NEW JERSEY DEPARTMENT OF ENVIRONMENTAL PROTECTION
BURNT FLY BOG SITE
Marlboro Township, New Jersey
Cooperative Agreement Number V002550-84
Remedial Design
Costs Claimed, Accepted, Questioned and Set Aside
For the Period December 7, 1983 to June 30, 1986
INTERIM AUDIT
Personnel costs
Fringe benefits
Indirect costs
Contractual services
Other costs
Total
Federal share (100%)
Claimed
$
$
$
28
6
8
780
825
825
,503
,920
,502
,587
852
.364
.364
Accepted Questioned** Set Aside***
$ 28
6
8
766
S 811
$ 811
,503 $ - $
,920
,502
,955 - 13,632
852 - -
.732 $ S 13.632
.732* $ 5 13.632
Notes
1
2
3
4
*This amount should not be construed as being the final determination of the
Federal share of accepted costs. The amount may vary depending upon the
resolution by EPA of the set aside costs of $13,632.
**Questioned:
A proposed or claimed amount which should not be reimbursed by the Government
because they are not allowable under the provisions of applicable laws,
regulations, policies, cost principles, or terms of the grant.
***Set Aside:
A proposed or claimed amount that does not require questioning but cannot be
given unqualified acceptance by the auditor at the time the audit report is
issued because of:
a) A need for additional documentary evidence which the auditor has reason to
believe will be forthcoming In a reasonable time; or
b) A need for program official assessment of the appropriateness of an
expenditure or profit factor applied.
See Notes to Schedule A-l.
—L—
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NEW JERSEY DEPARTMENT OF ENVIRONMENTAL PROTECTION
BURNT FLY BOG SITE
Marlboro Township, New Jersey
Cooperative Agreement Number V002550-84
Notes to Schedule A-l
INTERIM AUDIT
Note 1. Personnel
Personnel costs include additive factors for vacations, holidays, etc. of
21.09Z for FY 84, 20.66Z for FY 85 and 22.652 for FY 86.
Note 2. Fringe Benefits
Fringe benefits were calculated at a fixed percentage of salary cost
(including additive), approved annually by the U.S. Department of Health
and Human Services. These fixed percentages were 24.72 for FY 84, 24.82
for FY 85 and 24Z for FY 86.
Note 3. Indirect Costs
These were calculated at 242 of salary cost and fringe benefits. The
negotiated provisional rates were 24Z for FY 84, 28.332 for FY 85 and
30.312 for FY 86, but the State elected to use the 242 rate authorized by
the cooperative agreement.
Note 4. Contractual Services
No change order was made available to us for the following payment to
Ebasco Services, Inc.:
NJDEP
Invoice
Number
499323
Description
Additional out-of-scope services to
Task 5, Addenda to IRM-RFP, etc.
Amount
We, therefore, set aside these costs pending receipt of the appropriate
change orders. 40 CFR 33.290 requires that cost analysis be documented for
all change orders approved over $10,000.
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SCHEDULE A-2
NEW JERSEY DEPARTMENT OF ENVIRONMENTAL PROTECTION
BURNT FLY BOG SITE
Marlboro Township, New Jersey
Cooperative Agreement Number V002550-84
Initial Remedial Measures
Costs Claimed, Accepted, Questioned and Set Aside
For the Period December 7, 1983 to June 30, 1986
INTERIM AUDIT
Personnel costs
Fringe benefits
Indirect costs
Contractual services
Other costs
Total
Federal share (90%)
Claimed
$
4
$4
$4
138,465
32,741
41,089
,344,265
466
.557.026
.101.323
Accepted Questioned** Set Aside*** Notes
$ 138
32
41
3,218
$3.430
$3.087
.465 $
,741
,089
,221
466
.982 $
.883* 3
$ - 1. 4
- 2, 4
- 3, 4
1,126,044 5
_ _
$1.126.044
$1.013.440
*This amount should not be construed as being the final determination of the
Federal share of accepted costs. The amount may vary depending upon the
resolution by EPA of the set aside costs of $1,126,044.
**Questioned:
A proposed or claimed amount which should not be reimbursed by the Government
because they are not allowable under the provisions of applicable laws,
regulations, policies, cost principles, or terms of the grant.
***Set Aside:
A proposed or claimed amount that does not require questioning but cannot be
given unqualified acceptance by the auditor at the time the audit report is
issued because of:
a) A need for additional documentary evidence which the auditor has reason to
believe will be forthcoming in a reasonable time; or
b) A need for program official assessment of the appropriateness of an
expenditure or profit factor applied.
See Notes to Schedule A-2.
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NEW JERSEY DEPARTMENT OF ENVIRONMENTAL PROTECTION
BURNT FLY BOG SITE
Marlboro Township, New Jersey
Cooperative Agreement Number V002550-84
Notes to Schedule A-2
INTERIM AUDIT
Note 1. Personnel
Personnel costs include additive factors for vacations, holidays, etc. of
21.09% for FY 84, 20.66% for FY 85 and 22.65% for FY 86.
Note 2. Fringe Benefits
Fringe benefits were calculated at a fixed percentage of salary cost
(Including additive), approved annually by the U.S. Department of Health
and Human Services. These fixed percentages were 24.7% for FY 84, 24.8%
for FY 85 and 24% for FY 86.
Note 3. Indirect Costs
These were calculated at 24% of salary cost and fringe benefits. The
negotiated provisional rates were 24% for FY 84, 28.33% for FY 85 and
30.31% for FY 86, but the State elected to use the 24% rate authorized by
the cooperative agreement.
Note 4. Excess Over Administrative Budget
We noted that the State's claim for the foregoing costs exceeded the
administrative budget for Phases I and II under Amendment Number 2 as
follows:
Costs
Claimed
$138,465
32,741
41,089
Costs
Budgeted
$103,825
25,644
31,072
Excess
$ 34,640
7,097
10,017
$212.295 S160.541 $ 51.754
Personnel
Fringe benefits
Indirect costs
Total
However, since the budget items for these costs were later substantially
increased under Amendment Number 4, we have accepted all costs claimed.
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NEW JERSEY DEPARTMENT OF ENVIRONMENTAL PROTECTION
BURNT FLY BOG SITE
Marlboro Township, New Jersey
Cooperative Agreement Number V002550-84
Notes to Schedule A-2
INTERIM AUDIT
Note 5. Contractual Services
Under term contract X-350, NJDEP engaged Accutech Environmental Services
Inc. for transportation of hazardous wastes In an amount not to exceed
$250,000. Upon subsequent Issuance of additional purchase orders under
contract X-350, ultimate payments to Accutech totaled $1,126,044. Although
NJDEP subsequently obtained approval of deviation from 40 CFR 33.405 and 40
CFR 33.605 for contract X-350 as an innovative procurement method, such
deviation excluded transportation or disposal of hazardous substances, and
required EPA and NJ Department of Treasury approval if costs exceed
$100,000 and $250,000 for options one and two, respectively. A copy of the
deviation approval letter is enclosed as Appendix A. Since these costs
were specifically for transportation and disposal of hazardous' wastes, and
since EPA approval was not obtained, we set aside these costs pending NJDEP
request for clarification of the deviation approval letter, and EPA should
indicate their intent.
EPA Region II has been provided a copy of this Tentative Draft Report with
both sets of grantee comments and auditor responses, and are reviewing the
circumstances of NJDEP utilization of this contract. A final decision has
not been made at this time.
Set aside $1,126,044
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EXHIBIT B
NEW JERSEY DEPARTMENT OF ENVIRONMENTAL PROTECTION
BURNT FLY BOG SITE
Marlboro Township, New Jersey
Cooperative Agreement Number V002550-84
Comments on Compliance, Performance and Internal Controls
INTERIM AUDIT
As a part of our examination, we reviewed and tested the Grantee's system of internal
accounting controls to the extent we considered necessary to evaluate the system as
required by generally accepted auditing standards. This evaluation established a
basis for reliance on the Grantee's accounting control system in determining the
nature, timing and extent of other auditing procedures necessary for expressing an
opinion on the financial reports.
The objective of internal accounting control is to provide reasonable, but not
absolute, assurance that the (1) assets are safeguarded against loss from
unauthorized use or disposition and (2) financial records are reliable for preparing
financial statements and maintaining accountability for assets. The concept of
reasonable assurance recognizes that the cost of a system of Internal accounting
controls should not exceed the benefits derived and also recognizes that the
evaluation of these factors necessarily requires estimates and judgments by
management.
There are inherent limitations that should be recognized in considering the potential
effectiveness of any system of internal accounting controls. In the performance of
most control procedures, errors can result from misunderstanding of instructions,
mistakes of judgment, carelessness or other personal factors. Control procedures
whose effectiveness depends upon segregation of duties can be circumvented by
collision. Similarly, control procedures can be circumvented Intentionally by
management, either with respect to the execution and recording of transactions or
with respect to the estimates and judgments required In the preparation of financial
statements. Further, projection of any evaluation of internal accounting control to
future periods is subject to the risks that the procedures may become inadequate
because of changes In conditions and that the degree of compliance with the
procedures may deteriorate.
The EPA Audit Guide for CERCLA Cooperative Agreements, issued on August 13, 1985,
requires a review and evaluation of the adequacy of the controls exercised by the
State through its financial management, accounting, procurement, contract
administration, and property management systems to provide assurance that costs
claimed are reasonable, allowable and allocable to the sponsored project. We
understand that EPA considers procedures conforming to the criteria In its audit
guide to be adequate for EPA purposes. Procedures that are not in conformity with
the audit guide indicate some inadequacy for EPA purposes. Based on this
understanding and on our study, we believe that the Authority's procedures were
adequate for EPA purposes, except for the following conditions:
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New Jersey PEP Currently does not provide for certain coats to be charged as direct
costs.
Our review of NJDEP's computer run of expenditures disclosed that no travel, material
and equipment costs were allocated to and claimed for this cooperative agreement.
According to the Division of Financial Management, Planning and General Services, it
was difficult, time consuming and not cost effective to track down these costs under
the circumstances where for instance, employees were assigned to several sites and
must travel to and from these sites in a single working day. Rather than claim these
costs, which cannot be adequately documented, NJDEP considered them as included in
the indirect cost rate applied to personal service costs. The same problem was
mentioned in EPA Interim Audit Report Number E5bH5-02-Ol40-61573 dated
September 30, 1976 covering the project period through June 30, 1975. Chapter 33,
paragraph 4 of the EPA Assistance Administration Manual, requires that clean up costs
must be accounted for by site and activity to support Federal Enforcement cases
against responsible parties and to determine State cost shares for those activities
that require cost sharing.
Recommendation: We recommend that, In accordance with Chapter 33 Paragraph 4 of
the EPA Assistance Administration Manual, cleanup costs, Including
travel, material and equipment, be accounted for by site .and
activity to support Federal Enforcement cases against responsible
parties and to determine State cost shares for those activities
that require cost sharing. Financial management and reporting
under Superfund, therefore, require more detailed accounting
policies and procedures than other EPA programs.
We further recommend that NJDEP indicate which costs are Included
in the Indirect cost rate and to demonstrate to EPA how it was
determined that it is not cost effective to account for these
costs.
Contract Procurement Procedures
In our review of the contracts awarded under this cooperative we observed the
following:
a) Accutech Environmental Services, Inc..
This was an award for transportation of hazardous wastes under Term Contract
X-350 for "Non-Emergency Small Hazardous Substance Cleanup" for an original
amount not to exceed $250,000. Subsequently, the extension of the award above
the $250,000 ceiling was authorized and additional purchase orders in
increments of $249,744 each were Issued until the total payments to Accutech
reached $1,126,044 as of June 30, 1986. Subsequently at the request of NJDEP,
EPA approved a deviation from 40 CFR 33.405, 40 CFR 33.505 and 40 CFR 33.605
for Contract X-350 as an Innovative procurement method with the following
qualifications:
1) The contract does not include transportation or disposal of hazardous
substances.
2) Services procured pursuant to it may be used only for work which DEP
anticipates will cost less than $100,000 (for work assigned under
engagement option one) or $250,000 (for work assigned under engagement
option two).
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3) If there is to be Federal participation In the costs, approval of EPA as
well as the New Jersey Department of the Treasury will be required in any
cases in which the costs of the Job assignments will exceed the $100,000
and $250,000 limits for options one and two, respectively.
We have not been furnished EPA approval of a similar deviation for
transportation services. Neither have we been shown EPA approval for costs in
excess of the $100,000 limit for option one. In addition, according to NJDEP
the original estimate for this job was more than $1,000,000, which far exceeds
the option one limit of $100,000. The foregoing facts clearly indicate a
failure to comply with the conditions under which EPA approved the deviation.
b. Waiver of^ _Adve rt is ing
The State Treasurer approved the following request for waiver of advertising:
Waiver
Number Explanation Amount
C-572 Blanket waiver for supplemental change
orders within the general scope of exist-
ing hazardous waste contracts for which
pricing was not provided by the contract
but deemed necessary for completion of the
project $2,000,000
Per information from NJDEP, State procurement statutes require a waiver of
public advertising when there is no open competitive bidding. The blanket
waiver was a procurement mechanism, approved by the State Treasurer, which in
effect delegated authority to DEF for certain kinds of contract modifications
(for all hazardous waste cleanup projects, not just Burnt Fly Bog) without
having to submit individual Waiver of Advertising Requests to Treasury. There
was no required limitation on the dollar amounts In using this waiver
authority. We believe that the absence of any restriction other than
supplemental costs was Inappropriate and not in accordance with 40 CFR 33.405
or 40 CFR 33.505.
Recommendation: We recommend that EPA instruct NJDEP
1) To refrain from using contracts such as X-350, with a
small cost ceiling, for jobs originally estimated to
cost more than $1,000,000.
2) To comply with conditions required in EPA approval of
deviations from procurement requirements.
3) To comply with 40 CFR 33.405 or 40 CFR 33.505 for
significant changes in scope or price of the original
contract.
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Monthly Progress Reports Submitted Directly to EPA Project Officer
In response to our inquiry on monthly progress reports, we were informed that
in order to avoid delay, these reports were submitted by the contractors
directly to the EPA Project Officer without prior review and approval by the
NJDEP Site Manager. A quarterly reporting problem was mentioned in EPA
Interim Audit Report E5bH5-0140-61573 dated September 30, 1986 covering the
project period through June 30, 1985. The EPA Project Manager agreed to this
procedure since he wanted to keep close track of the progress of work at Burnt
Fly Bog. However, this procedure shifts the primary responsibility of
monitoring contractors' work at the site from NJDEP to EPA, which is not the
intent of the cooperative agreement.
Recommendation: We recommend that monthly progress reports of contracts be
reviewed and approved by the NJDEP Site Manager before
transmittal to the EPA Project Officer.
Late Filing of Financial Status Report
We noted that the Financial Status Report for the fiscal year ended June 30,
1987 has not yet been filed as of the date of our audit report. This report
was due on September 30, 1987. According to NJDEP the delay was caused by
numerous adjustments relating to advance matching. However, we believe there
was sufficient time for these adjustments to be made before the due date.
Recommendation: We recommend that EPA instruct NJDEP to submit financial
status reports on a timely basis.
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NEW JERSEY DEPARTMENT OF ENVIRONMENTAL PROTECTION
BURNT FLY BOG SITE
Marlboro Township, New Jersey
Cooperative Agreement Number V002550-84
Grantee Comments and Auditor Response to Comments
INTERIM AUDIT
The preliminary contents of the draft report were discussed with the Grantee
prior to Issuance of the report in an exit conference held on March 9, 1988.
The Grantee commented on the Report in a letter dated July 6, 1988, a copy of
which is attached.
Schedule A-l
Contractual Services (Note 4)
We set aside $13,632 because we were not provided a change order for
invoice number 499323 from Ebasco Services, Inc.
Grantee Comment:
Auditor response;
This invoice precedes the formal change order process
and purchase was made using a waiver as authority in
accordance with New Jersey Statutes.
Invoice Number 499323 was dated August 16, 1985 while
the earliest formal change order for Ebasco Services
(Number 85-003A) was dated April 24, 1985. Also, 40
CFR 33.290 requires that cost analysis be documented
for all Change Orders over $10,000. We therefore
continue to set aside these costs.
Schedule A-2
Contractual Services (Note 5a)
We questioned $3,812 billed for
contaminated drums at a unit price
disposal of 60.51 tons of
in excess of bid proposal.
crushed
Grantee Comment:
Auditors response:
Crushed Contaminated drums are classified as trash
and debris for which the correct unit price is $250,
not $180.
Based upon consultation with EPA, Region II, we find
that crushed contaminated drums are classified as
trash and debris for which the correct price is $250
per ton. Our report has been revised to reflect this
change.
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Contractual Services (Note 5 a)
We set aside $8,350 because we were not provided change orders for 2
invoices from D'Annunzio Brothers.
Grantee Comment: This invoice precedes the formal change order process
and purchase was made using a waiver as authority in
accordance with New Jersey Statutes.
Auditors Response: These invoices stated they were covered by Contract
(Purchase Order) Number S84096. Reference to this
contract showed that the invoiced items were not
included in the award to D'Annunzio Brothers.
Neither did the invoices Indicate any waiver.
However, 40 CFR 33.290 requires that cost analysis be
documented for all change orders over $10,000. We
therefore now accept these costs.
Exhibit B
New Jersey PEP currently does not provide for^certaln costs to be charged
as direct costs.
We stated that no travel, material and equipment costs were charged to
and claimed for this cooperative agreement. Rather, since these costs
cannot be adequately documented, they are Included in the indirect cost
rate applied to personal service costs.
Grantee Comment: The NJDEP maintains that all costs chargeable to
Superfund sites are charged by site and activity.
Auditor Response: Since no travel, material and equipment was charged
to this cooperative agreement, and since we were told
by the Division of Management, Planning and General
Services that such costs were Included in the
indirect cost rate, we stand by our comments.
Contract Procurement Procedures - A_ccute_ch_Environmental Services, Inc.
We stated that NJDEP had engaged, under term contract X-3SO, Accutech
Environmental Services, Inc. for transportation and disposal of hazardous
wastes in an amount not to exceed $250,000, that they subsequently issued
purchase orders until the amount paid to Accutech totaled $1,126,044.
Although EPA ultimately approved deviation from 40 CFR 33.405 and 40 CFR
33.605 as an innovative procurement method, the deviation, more fully
described in the enclosed Appendix A, excluded transportation and
disposal of hazardous wastes, and required EPA approval if costs exceed
$100,000 and $250,000 for options one and two respectively.
Grantee Comment: The initial award to Accutech was based on an
estimated cost of $789,000, while the issuance of the
original purchase order for $250,000, and subsequent
Incremental purchase orders, was due to bonding
limitations for transportation services.
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Auditor Response: Since the Grantee states they intentionally issued
incremental purchase orders, even if for bonding purposes,
we feel we must set aside these costs pending EPA approval
of a deviation for transportation and disposal of
hazardous wastes, and EPA approval of costs in excess of
$100,000 for option one. In addition, we believe that the
use of a contract such as X-350, which by its own terms
was limited to $100,000, for work initially known to
exceed $1,000,000 was Inappropriate.
Contract Procurement Procedures - Waiver of Advertising
We stated that the blanket waiver of public advertisement used as a
procurement mechanism in effect delegated to DEP authority for certain kinds
of contract modifications (for all hazardous waste cleanup projects, not Just
Burnt Fly Bog) without having to submit individual waiver of advertising
requests to Treasury, is not in accordance with 40 CFR 33.405 and 40 CFR
33.505.
Grantee Comment: The blanket waiver of advertising referenced by the
audit has no relevance to the Burnt Fly Bog project. Its
use was restricted by limitations contained in DEP's
written change order procedures.
Auditor Response: The blanket waiver of advertising covers all
hazardous waste sites in the state of Mew Jersey, and is
thus relevant to the Burnt Fly Bog project. Also, written
change order procedures submitted for review are dated
November 7, 1987, after the June 30, 1987 audit date.
Monthly Progress Reports Submitted Directly to EPA Project Of_fice_r,
We stated that the Grantee should submit monthly progress reports to the NJDEP
site manager for review and approval prior to their being forwarded to the EPA
Project Officer.
Grantee Comment: A copy of the monthly progress report is forwarded to
USEPA as a courtesy for informational purposes. NJDEP
remains responsible for administering the contractor's
work.
Auditor Response: We still recommend that monthly progress reports be
reviewed and approved by the NJDEP site manager before
transmlttal to the EPA project officer, in order to ensure
that the Information submitted is accurate. A quarterly
reporting problem was mentioned in EPA Interim Audit
Report E5bH5-0140-61573 dated September 30, 1986 covering
the project period through June 30, 1985.
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LateFiling of Financial Status Report (FSR)
We stated that the FSR for the fiscal year ending June 30, 1987, due September
30, 1987, had not been filed by the date of our audit report.
Grantee Comment: DEP concedes that the FSR for the fiscal year ending June
30, 1987 was not filed on time, but was filed on March 15,
1988 prior to the date of the draft audit report. Delay
was caused by the lengthy process of identifying all
grant-eligible costs from other NJDEP accounts prior to
the re-authorization of Superfund.
Auditor Response: This FSR was filed March 15, 1988, after the March 9, 1988
date of the draft audit report. We still believe there
was adequate time to make all the necessary adjustments
prior to the due date of the report.
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NEW JERSEY DEPARTMENT OF ENVIRONMENTAL PROTECTION
BURNT FLY BOG SITE
Marlboro Township, New Jersey
Cooperative Agreement Number V002550-84
Grantee Comments and Auditor Response to Comments
on Revised Draft Audit Report
INTERIM AUDIT
The preliminary contents of the original draft audit report were discussed
with the Grantee in an exit conference held on March 9, 1988. The grantee
commented on this report in a letter dated July 6, 1988, a copy of which was
attached as part of the report, which we revised In accordance with our
response to their comments.
In a letter dated October 14, 1988, a copy of which is attached, the grantee
submitted a second set of comments of the Grantee on the revised draft audit
report.
EPA Region II has been provided a copy of this Tentative Draft Report with
both sets of grantee comments and auditor responses, and is reviewing the
circumstances of NJDEP utilization of the X-350 contract (see Initial Remedial
Measures - Contractual Services (Note 5) - Comments and Responses). A final
decision has not been made at this time.
The following is a summary of the second set of comments and our response
thereto.
Schedule A-l
Remedial Design - Contractual Services (Note 4)
We continued to set aside these costs due to lack of a change order for
invoice number 499323.
Grantee's Comment: The grantee reiterates its previous comment that this
invoice preceded the change order process, adding that
this process was fully implemented in November, 1985. To
make the process clearer, the Grantee submits a
chronological sequence of events as follows:
7/24/84 Waiver of advertising $111,017 requested
10/10/84 Requisition R29080 45,577 posted against C-166
3/19/85 Purchase Order P10131 45,577 posted against R29080
7/02/85 Invoice 499323 13,632 posted against P10131
Auditor Response: In Interim Audit Report Number E5bH5-02-0140-61573 dated
September 30, 1986 covering the project period through
June 30, 1985, EPA reported a lack of cost analysis in
support of change orders, resulting in change orders being
approved without adequate documentation. During our
audit, the grantee was unable to provide us with a change
order covering invoice number 499323 dated August 16, 1985
in the amount of $13,632. A review of the grantee's
invoices posted against Purchase Order P10131 shows the
following:
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Date Invoicet Amount
4/22/85 499277 $13,822
4/22/85 499278 10,073
8/16/85 499348 21.682
Total $45.577
Since these Invoices total $45,577, which agrees with the
grantee's figure, and Invoice number 499323 is not among
them, it is clear that the questioned invoice could not
have been Included in Purchase Order P10131 and the
related Requisition R29080 and waiver of advertising. In
addition, 40 CFR 33.290 requires that cost analysis be
documented for all change orders over $10,000. We
therefore, continue to set aside $13,632.
Schedule A-2
Initial Remedial Measures - Contractual Services (Note 5)
We continued to set aside $8,350 for Invoice numbers 499243 and 499244 under
Contract S84096 not covered by a change order and set aside in the revised
report $1,126,044 for payments under Contract X-350 which did not comply with
the conditions cited in the EPA approval of a deviation of this contract from
40 CFR 33.405 and 40 CFR 33.605.
Grantee Comment: a) The grantee reiterates its previous comment that
invoice numbers 499243 and 499244 preceded the
implementation of the current change order process
and in clarification of this matter submits a
chronological sequence of events as follows:
7/24/84 Waiver of advertising #C-166 $111,017 requested
10/10/84 Requisition R2911S 65,460 posted against C-166
3/19/85 Purchase Order P10131 65,460 posted against R29118
7/02/85 Invoice 499243 and 499244 8,350 posted against PI 1496
In addition, the Grantee states that It was not
necessary to reference the waiver since the purchase
order was processed against the waiver and the
invoices were processed against the purchase order.
Further, the Grantee states that the regulation cited
in our response, 40 CFR 35.938-500 is applicable
specifically to "Grants for Construction of Treatment
Works - Clean Water Act," not Superfund Program.
b) The grantee strongly disagrees with the set aside of
$1,126,044 for transportation services under Contract
X-350 and with our comment that the use of this
contract was inappropriate for the following reasons:
1) The X-350 contact specifically provides a
procedure to be followed for exceeding the
limits stated in the contract, which the State
chose to follow given the exceptional
circumstances detailed in the approval
correspondence.
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2) The correspondence cited in the audit that requires
EPA approval to exceed the limits in the X-350
contract occurred more than one year after the
fact; the State obtained all approvals required at
the time the action was taken.
3) The statement in EPA's letter that the X-350
contract"... does not include transportation or
disposal of such hazardous substances" is a
misstatetnent rather than a qualification placed on
its approval since the contract does contain
provisions for transportation services and if EPA
meant to approve only a portion of the contract,
Its approval would have been qualified in that way.
4) The State's use of the X-350 term contract was
discussed with EPA prior to initiation of the work
and was detailed in a letter to EPA dated September
25, 1985 and acted on EPA's advice to seek approval
for the contract as an innovative procurement
method rather than specifically for the Burnt Fly
Bog project. EPA gave its approval more than one
year later by which time it was not possible for
the State to comply with any special provisions or
qualifications imposed by EPA.
Auditor Response:
a) In Interim Audit Report Number E5bH5-02-Ol40~61573
dated September 30, 1986 covering the project
period through June 30, 1985, EPA reported a lack
of cost analysis In support of change orders,
resulting In change orders being approved without
adequate documentation. During our audit, the
grantee was unable to provide us with a change
order covering invoices Number 499243 and 499244
dated February 22, 1985 In the amounts of $6,550
and $1,800 respectively. There appears to be an
interruption in chronological sequence of events as
Indicated by the Grantee's statement that invoices
number 499243 and 499244, for $8,350, were posted
against PI 1496 when the preceding purchase order
cited was P10131. Secondly, per the Grantee's own
statement (Attachment II) submitted to us after the
exit conference but prior to the issuance of the
original draft report so that we would allow
$66,165 in payments to D'Anunzio Brothers, the
following invoices were applied against Purchase
Order 11496:
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Invoice 0 Amount
499250 $13,221
499256 5,597
499257 9,814
499258 9,466
499288 9,652
499341 9,575
499276 8,840
Total $66.165
• I^M I ^
As the invoices totaling $66,165 exceed the
amount of Purchase Order 11496 for $65,460, it
is evident that invoice numbers 499243 and
499244 could not have been processed under the
aforesaid purchase order. However, 40 CFR
33.290 requires that cost analysis be documented
for all change orders over $10,000. Hence, we
now accept $8,350.
We agree that the regulation cited in our
previous response, 40 CFR 35.938-5 (b), was
Incorrect. It should have been 40 CFR 33.290. "
b) Our response to the reasons for the grantee's
strong disagreement to the setting aside of
$1,126,044 under Contract X-350 is as follows:
1) Granting that the contract specified
procedures for exceeding the limits stated
therein, which the State chose to follow,
these procedures are not in conformity with
EPA procurement regulations as indicated by
the fact that the Grantee had to request a
deviation from EPA and further confirmed by
the imposition by EPA of conditions for
exceeding said limits.
2) The fact that EPA advised the Grantee to
seek a deviation from EPA procurement
regulations for the 1-350 contract was a
definite indication that the contract was
not in conformity with these regulations
and any consequent approval of the
requested deviation cannot be
unconditional. Therefore if the Grantee,
without waiting for EPA approval,
nonetheless proceeded with the execution of
the contract, it did so at its own risk and
cannot now complain that the conditions
imposed by EPA came more than one year
after the fact.
3) The supposed mlsstatement in EPA's approval
letter was based on the Purpose and Intent
mentioned in the request for proposal for
Contract X-350, quoted as follows:
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"1.0 Purpose and Intent
The purpose of this Request for Proposal
(RFP) is to establish a one year term
contract for Non-Emergency Cleanup
Services. Such services encompass staging,
sampling, loading, detection, inspection or
investigation of petroleum fuel, crude oil,
or other hazardous substances discharges to
ameliorate or prevent damage to the public
health or environment. A complete
description of services Involved is
included In the SOW."
The services enumerated do not include
transportation and disposal. However, If
indeed the contract does contain provisions
for transportation services, the Grantee
should have taken steps to request EPA to
correct the mlsstatement.
4) The Grantee's insistence that approval was
sought for Contract X-350 as an Innovative
procurement method, not specifically for
the Burnt Fly Bog project, Is not relevant
to the point at issue. The fact remains
that the Grantee incurred costs under this
contract for the Burnt Fly Bog project and
any deficiency of the contract necessarily
affects the eligibility of the costs
Incurred thereunder. As noted above, since
the Grantee, without waiting for EPA
approval of the requested deviation,
proceeded at Its own risk in the execution
of the contract, it cannot now complain
that it could not comply with conditions
imposed by EPA more than one year later.
The Grantee did not address directly the
issue of why Contract X-350, a contract for
"Non-Emergency Small Clean Up of Hazardous
Substances" with limits of $100,000 for
option one and $250,000 for option two, was
used for work with an initial estimated
cost of $789,000 and an ultimate cost of
$1,126,044. In addition, the Grantee's
statement that this contract does not apply
specifically to the Burnt Fly Bog project
Implies that the contract could be utilized
for any or all of the more than twenty
other hazardous waste sites in the State of
New Jersey. If used in the same way it was
for Burnt Fly Bog, the problem will be
proportionally compounded.
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EPA Region II has been provided a copy of
this Tentative Draft Report with both sets
of grantee comments and auditor responses,
and are reviewing the circumstances of
NJDEP utilization of this contract. A
final decision has not been made at this
time.
Accordingly, we continue to set aside
$1,126,044.
Exhibit B
Hew Jersey PEP currently does not provide for certain costs to be charged as
direct costs
We stated that no travel, material and equipment costs were charged to and
claimed for this cooperative agreement. Rather than claim these costs, which
cannot be adequately documented by site and activity under the present system,
NJDEP considered them as included in the indirect costs rate applied to
personal service costs.
Grantee Comment:
Auditor Response:
The NJDEP continues to maintain that all costs chargeable
to Superfund sites are charged by site and activity and
adds that since no costs were Incurred on this project for
items such as materials and equipment, no charges therefor
were claimed against these budget items, that the auditors
were unable to identify any specific items which should
have been charged to this project.
In the draft audit report we referred specifically to
travel costs to and from the sites. The point we seek to
emphasize is that in recovery actions, if the responsible
party establishes that indirect costs included certain
direct costs, such as travel, which should have been
allocated by site and activity, doubt may be cast on the
whole system of accumulating costs by site and activity.
We have been informed that this problem has been
encountered in several EPA recovery actions. Since the
current accounting system of NJDEP does not provide for
the allocation of travel costs by site and activity, we
stand by our previous comments.
Contract Procurement Procedures - Accutech Environmental Services, Inc.
We stated that NJDEP failed to comply with the conditions under which EPA
approved a deviation for Contract X-350 as an Innovative procurement method.
Grantee Comment:
The Grantee strongly disagrees for the reasons stated in
their comment to Note 5 (b), Schedule A-2, above.
Auditor Response: We reproduce our response to the Grantee's comment to Note
5 (b), Schedule A-2, above.
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GRANTEE COMMENTS
-------
of JJeto
DEPARTMENT OF ENVIRONMENTAL PROTKtTION
DIVISION OF FINANCIAL MANAGEMENT. PLANNING & r.rNEKAI.SF" VICES
CN402
TRENTON, NJ. OK625
Koo»ld S. Tuminski July6, 1988 E. David B4rth
Director Deputy Director
Paul D. McKechnie
Divisional Inspector General for Audit
Eastern Division
USEPA
150 Causeway Street, Room 715
Boston, Massachusetts 02114
Dear Mr. McKechnie:
We have reviewed the draft audit report #P5G7-02-0084 on the Burnt Fly Bog
Superfund Cooperative Agreement. We welcome this opportunity to clarify our
position regarding the findings contained in the draft audit. Our contents
relating to the individual findings are as follows:
1. Schedule A-l Remedial Design Set Aside Costs $13,632
The auditors set aside charges for Invoice 1499323 because no change order
was made available. Ihe invoice preceded the formal change order process
and forms that were implemented in November 1985. Accordingly, the purchase
was made utilizing a waiver as the procurement authority in accordance with
New Jersey Statutes Annotated (N.J.S.A.) 52:34-9 and 52:34-10. Waiver C-166
was approved in the amount of $111,037. A copy of Waiver C-166 and the
subsequent Requisition 29080, Purchase Order P10131 and Invoice 499323 are
attached with the corresponding waiver authority highlighted (See Attachment
i/»
Please note that the set aside costs in Schedule A-2 were also charged prior
to the implementation of the formal change order process and form. Waiver
C-166 also provided the procurement authority for those costs as follows:
Waiver C-166 $lllfQ37
Requisition R29080 $45,577
Ebasoo Services
Purchase Order PI0131 45,577 45,577
Requisition R29118 $65,460
D*Annunzio Brothers
Purchase Order P11496 65,460 65,460
$111,037
Copies of the D'Annunzio documents are included in Attachment III.
New Jersey is an Equal Opportunity Employer
Recycled Taper
-------
ail D. McKechnie
ly 6, 1988
Page Tvo
2. Schedule A-2 Initial Remedial Measures Questioned Costs $3,812
These costs were questioned by the auditors because the price paid for
disposal of contaminated crushed drums was $250 per ton rather than $180 per
ton. A copy of the invoice and the pertinent excerpt from the bid proposal
are attached. The auditors mistakenly identified the invoiced items as drum
wastes or the contents of the drums which have a unit disposal price of $180
per ton. Invoice 1499711 is for disposal of the contaminated crushed drums
themselves which are classified as contaminated trash and debris. The
correct unit price, therefore, is $250 per ton as was charged. (See
Attachment II).
3. Schedule A-2 Initial Remedial Measures Set Aside Costs $8,350
The auditors set aside charges for invoice 4499243 ($6,550) and 1499244
($1,800) because no change orders were made available. These invoices also
preceded the formal change order process and forms and utilized a waiver for
procurement authority. Waiver C-166 was approved for these charges as
explained in our comments for Schedule A-l. Copies of the documents are
attached with the corresponding waiver authority highlighted. (See
Attachment III).
Exhibit B
4. flew Jersey PEP currently does not provide for certain costs to be charged as
direct costs.
The NJDEP maintains that all costs chargeable to Superfund sites are being
charged by site and activity. The Department recognizes that financial
management and reporting under the Superfund Program requires more detailed
accounting policies. The Cost Accounting System allocates salary and
non-salary charges by site and activity or phase. This information is
available to support both Federal and State Enforcement cases against
responsible parties and to document State cost shares.
5. Contract Procurement Procedures - Accutech Environmental Services, Inc.
We take issue with the findings concerning the award of transportation
services to Accutech Environmental Services under the X-350 term contract.
The initial award to Accutech was based on an estimated cost of $789,000
based on the lowest unit price bid under the transportation section of the
X-350. Purchase orders were issued in $250,000 increments due to bonding
limitations for the transportation services. (See Attachment IV).
-------
Paul D. McKechnie
tJuly 6, 1988
Page Three
While we recognize the qualifications imposed by EPA in its approval of the
X-350 contract, this approval took place approximately one year after this
work was done. It is therefore not reasonable that NJDEP would be expected
to comply with conditions that did not yet exist. We feel that NJDEP did
comply with the terms and conditions of the contract in that awards were
made to the lowest price contractors, the Director of Purchase and Property
approval was obtained to exceed the dollar limits in the contract and the
contract did include transportation services bids.
6. Contract Procurement Procedures - Waiver of Advertising
The blanket waiver of advertising referenced by the audit has no relevance
to the Burnt Fly Bog project. This blanket waiver was used as an
administrative mechanism to allow for a structured change order approval
procedure. All contract changes are approved through a written change order
signed by both the contractor and the DEP with the approval of EPA and the
Department of Treasury where appropriate. Use of this waiver was restricted
by limitations contained in DEP's written change order procedures and
requires higher level approvals as the cumulative dollar amount of change
orders increases. (See Attachment V).
Monthly Progress Reports^ Submitted Directly to EPA Project Officer
The Departjnent disagrees with the auditors with regard to the monthly
progress report transmittals. A copy of the monthly progress report is
forwarded to USEPA as a courtesy for informational purposes. This procedure
does not shift the responsibility of monitoring the contractors work from
NJDEP to EPA. NJDEP remains responsible for administering the contractor's
work.
8. Late Filing of Financial Status Report (FSR)
While the Department concedes that the FSR for the fiscal year ending
June 30, 1987 was not submitted on time, it was filed on March 15, 1988
prior to the date of this draft audit report. The delay in filing of the
FSR was caused by the lengthy process of identifying all grant-eligible
costs made from other NJDEP accounts prior to the reauthorization of Super-
fund. Rather than submitting an inaccurate FSR and subsequent revision,
NJDEP spent the additional time to prepare an accurate FSR. With the
reauthorization of Superfund as SARA, delays for this reason will not occur.
NJDEP intends to submit all future FSR's by the established deadline. (See
Attachment VI).
-------
Paul D. McKechnie
(July 6, 1988
Page Four
We feel that this information addresses the audit findings, however, if
further information is needed please do not hesitate to qaj*»ct try office at
(609) 292-9230.
Ronald S. Tuminski, Director
Division of Financial Management,
Planning and General Services
RST/maf
c Zelda Wnotzlovsky, USEPA
Samuel M. Fisher Company
Assistant Commissioner Gaston
Assistant Commissioner White
Director Farro
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GRANTEE ADDITIONAL COMMENTS
-------
Ronild S. Tuminib
Director
$laU of JJcto Jersey
DEPARTMENT OF ENVIRONMENTAL PROTECTION
DIVISION OF FINANCIAL MANAGEMENT, PLANNING & GENERAL SERVICES
CN402
TRENTON. NJ. 08625-0402
October 14, 1988
E. David Earth
Deputy Director
Mr. Paul D. McKechnie
Divisional Inspector General for Audit
Eastern Division
USEPA
150 Causeway Street, Room 715
Boston, Massachusetts 02114
Dear Mr. McKechnie:
We have reviewed the second draft audit report #P5bG7-02-0084 on the Burnt Fly
Bog Superfund Cooperative Agreement. We would like to express our deep concern
that the Set Aside Costs have increased from a total of $21,982 in the first
draft to $1,148,026 in this most recent draft. Despite our continuous efforts to
provide appropriate explanations for all of the set aside costs, the costs listed
as set aside Increased dramatically between the first and second drafts without
any prior indication or notification to the NJDEP. In addition, we continue to
disagree with the auditors on several issues as noted below:
1. Schedule A-l Remedial Design Set Aside Costs $13,632
The auditors continue to set aside charges for Invoice number 499323 because
no change order was made available. As stated in our earlier comments, the
invoice preceded the change order process that was fully implemented in
November 1985. The Chang* Order Form (DWM-042) was developed in March 1985
and implemented In April 1985 with Change Order No. 85-003A being the first
formal change order form processed on April 24, 1985 as noted in the
Auditors' response on page 13. Prior to that time, the waiver process was
the official mechanism to modify a contract. The Waiver of Advertising is
an official form that is approved by the Commissioner of NJDEP as well as
the Director of the N.J. Department of Treasury's Purchase Bureau and the
State Treasurer prior to the obligation of funds. The auditors' lack of
understanding of the State of New Jersey System for the expenditure of funds
results in these costs continuing to be set aside. Copies of all the
following documents which were provided previously are attached, but perhaps
a chronological sequence of the documents would make the process clearer.
7/24/84 Waiver of Advertising IC-166
10/10/84 Requisition R29080
3/19/85 Purchase Order P10131
7/02/85 Invoice 499323
$ 111,017 requested
45,577 posted against C-166
45,577 posted against R29080
13,632 posted against P10131
New Jersey is an Equal Opportunity Employer
Recycled Paper
-------
As noted above, invoice number 499323 was ultimately paid on 7/2/85, however
the actual process was initiated ouch earlier on 7/24/84 with the request
for waiver. As we stated in our earlier comments, the waiver process was
the appropriate procurement authority at the time in accordance with New
Jersey Statutes Annotated (N.J.S.A.) 52:34-9 and 52:34-10. Since the
procurement authority was obtained and the funds obligated, there was no
need to process a change order form for invoice number 499323. We therefore
feel that these costs should be accepted.
2.A- Note 5a - Schedule A-2 Initial Remedial Measures Set Aside Costs $8,350
The procurement aothority for invoice numbers 499243 and 499244 was also the
Waiver of Advertising (Number C-166) which was approved prior to the
implementation of the current change order form. The sequence of events for
these invoices follows:
7/24/84 Waiver of Advertising 0C-166
10/10/84 Requisition R29118
3/19/85 Purchase Order P10131
7/02/85 Invoice 499243 & 499244
$111,017 requested
65.460 posted against C-166
65,460 posted against R29118
8,350 posted against PI 1496
In addition, in the Auditors' response to our earlier comments, the auditors
stated that the invoices did not Indicate the waiver. It was not necessary
to reference the waiver since the purchase order was processed against the
waiver and the invoices were processed against the purchase order.
The auditors also referenced 40 CFR 35.938-5(b) as the basis for continuing
to set aside these costs. Regulations contained in 40 CFR Part 35 Subpart E
including Part 35.938-5(b) are applicable specifically to "Grants for
Construction of Treatment Works - Clean Water Act" not the Superfund
Program. We feel that we have adequately proven that we obtained proper
approval for the payment of these invoices and therefore, request that they
be accepted.
B- Note 5b - Schedule A-2 Initial Remedial Measures Set Aside Costs $1,126,044
The DEP strongly disagrees with the audit set aside of $1,126,044 for
transportation services related to Phase I surface cleanup at the Burnt Fly
Bog site. We also strongly disagree that the use of the X-350 contract
for this work was inappropriate. The X-350 contract specifically provides a
procedure to be followed for exceeding the limits stated in the contract.
The State chose to follow these procedures given the exceptional
circumstances which were detailed in the approval correspondence and have
been submitted in response to the audit.
The correspondence cited in the audit that requires EPA approval to exceed
the limits in the X-350 contract occurred more than one year after the fact;
the State obtained all approvals required at the time the action was taken.
-------
-3-
We also feel that the statement in EPA's letter that the X-350 contract
"...does not include transportation or disposal of such hazardous
substances" is a misstatement rather than a qualification placed on its
approval. If EPA meant to approve only a portion of the contract, its
approval would have been qualified in that wav.
The X-350 contract does contain provisions for transportation services and
bidders submitted unit price bids on a per-ton-mile basis as a part of the
term contract bid. Disposal is not included in the contract. The audit
statement that costs set aside are for transport and disposal services is
incorrect. These costs are for transport only; the work was awarded to
Accutech as the lowest bidder for these services. Disposal services for the
project were awarded through a formally advertised site-specific contract.
The State's use of the X-350 term contract was discussed with EPA prior to
Initiation of the work and was detailed in a letter to EPA dated 9/25/85
(copy attached). EPA advised the State to seek approval for the contract as
an innovative procurement method rather than specifically for the Burnt Fly
Bog project. The State proceeded on this advice. EPA gave this approval
more than one year later by which time it was not possible for the State to
comply with any special provisions or qualification imposed by EPA.
Exhibit B
3. New Jersey PEP currently does not provide for certain costs to be chajrged
as direct costs
The NJDEP maintains that all costs chargeable to Superfund sites are being
charged by site and activity. The Department's Cost Accounting System
allocates salary and non-salary charges by site and activity or phase. This
information is available to support both Federal and State Enforcement cases
against responsible parties and to document State cost shares.
It was pointed out to the auditors, that since no costs were incurred on
this project for items such as materials and equipment that there were no
charges claimed against these budget items. In addition, the auditors were
unable to identify any specific items which should have been charged to this
phase of the Burnt Fly Bog Project. We therefore feel that this should be
deleted from the audit since it would be improper to claim costs against the
Burnt Fly Project for which the NJDEP did not incur any expenditures.
4. Contract Procurement Procedures - Accutech Environmental Services, Inc.
The NJDEP strongly disagrees with this audit comment as we explained above
in our response under Item 2.B.
-------
-4-
5. The blanket Waiver of Advertising referenced by the audit has no relevance
to the Burnt Fly Bog project. This blanket waiver was used as an
administrative mechanism to allow for a structured change order approval
procedure in accordance with the State Procurement Circular PC-34B (copy
attached). All contract changes are approved through a written change order
signed by both the contractor and the DEP with the approval of EPA and the
Department of Treasury where appropriate. Use of this waiver was restricted
by limitations contained in DEP's written change order procedures and
requires higher level approvals as the cumulative dollar amount of change
orders increases.
6. Monthly Progress Reports Submitted Directly to EPA Project Officer
The Department disagrees with the auditors with regard to the monthly
progress report transmittals. A copy of the monthly progress report Is
forwarded to USEPA as a courtesy for informational purposes. This procedure
does not shift the responsibility of monitoring the contractor's work from
NJDEP to EPA. NJDEP remains responsible for administering the contractor's
work.
7. Late Filing of Financial Status Report (FSR)
In our earlier comments we conceded that the FSR for the fiscal year ending
June 30, 1987 was submitted late on March 15, 1988. The delay in filing of
the FSR was caused by the lengthv process of identifying all grant-eligible
costs made from other NJDEP accounts prior to the reauthorization of
Superfund. Rather than submitting an inaccurate FSR and subsequent
revision, NJDEP spent the additional time to prepare an accurate FSR. We
maintain that the required analysis and adjustments necessitated that the
report be withheld pending resolution of all Items.
We feel that this information, In conjunction with the information and comments
previously submitted, addresses the audit findings; however, if further
information Is needed, please do not hesitate to contact my office at (609)
292-9230.
Ronald S. Tuminski, Director
Division of Financial Management,
Planning and General Services
RSTims
Attachment
-------
w
. SADAT.
OtWECTOR
i*latr nf ^*
DEPARTMENT OF ENVIRONMENTAL PROTECTION
DIVISION OF WASTE MANAGEMENT
32 E Hanover St.. CN 028. Trenton. N J 08625
2 5 SEP 1985
LINO F.
» E.
DIRECTOR
Willian Librizzi
Director
Office of Emergency and Remedial Response Div.
USEPA Region II
26 Federal Plaza
Sew York, NY 10278
RE: Burnt Fly Bog - Phase I of Remedial Action
Dear Mr. Librizzi:
The NJDEP is requesting an Award Official determination in accordance with
subparts 40 CFR 33.910 and 33.915. Subpart 33.910 requires a recipient of a
Cooperative Agreement to obtain the Award Official concurrence for the use of
a^^procurement method other than formal advertising for remedial actions.
S^Brt 33.915 stipulates that the Award Official's approval may not be granted
uirass the recipient has completed the planning and selected a cost effective
alternative. It should further be noted that subparc 40 CFR 33.110 (e) (5)
states that subpart 33.915 requires the Award Official to approve the use of a
procurement method other than formal advertising, even if the recipient has
certified its procurement system.
In accordance with the above cited regulations, the Department is requesting
approval of the use of our Non-Emergency Term Contract, Contract No. X-350 to
procure for the removal of certain contaminated materials for the Burnt Fly Bog
Phase I Remedial Action project.
As you know, the State of New Jersey originally bid the removal of the asphalt
pile, Lagoon II, and certain drums in a formally advertised contract (X-296)
awarded to Burnt Fly Associates on Hay 29, 1984. After portions of the asphalt
pile had been staged for loading and tested, problems arose in receiving
approval for waste disposal at the facilities available under a Term Disposal
contract. In the early fall of 1984 it was necessary to suspend operations
involving removal of the PCB contaminated asphalt pile. In the late fall of
1984, the Department readvertised the same basic project involving removal of
the asphalt pile, Lagoon II and certain drums. This contract known as X-436 was
advertised in January of 1985 and involved the cleanup activities and
transportation to an approved facility. At the same time, the Department
advertised (contract X-437) for the disposal of PCB contaminated materials from
Fly Bog site. This contract which was subsequently awarded to CECOS,
available for use.
The originally bid site specific cleanup contract, X-436 was not awarded due to
an inability of the lowest responsive, responsible bidder to obtain the
Jer/ Orrortunit\
-------
HS51:ST
cc: William J. White, Director
Michael Catania, Director
Guilio Kazzone, Supervisor
-------
DEPARTME NT Of THE TREASURY
DIVISION Of PURCHASE AND PROPERTY
PURCHASE SURIAU
PROCUREMENT CIRCULAR
CONTRACT DELEGATION TO DEP FOR
HAZARDOUS MATERIAL CLEANUPS
34B
1 <* 4
T«
Ap0»9»i
DEPARTMENT OF ENVIRONMENTAL PROTECTION
MICHAEL M. HORN, Treasurer, Department of the
ROBERT E. HUGHEY. Commissioner. Deomrtnent
BrTBBTVW DVIV
February 21, 1985
Treasury ^^^fffjf^
of Environagntaflffifct^tioti
I. PURPOSE
To establish policies and procedures to be utilized when awarding contracts
for the removal of hazardous materials administered by the Department of
Environmental Protection (DEP) for a) emergency cleanup projects posing
immediate endangerment to the public health or welfare or the environment.
Examples may include actions such as, but not limited, to the spilling,
leaking, pumping, pouring, emitting, emptying, discharging, injecting,
escaping, leaching, dumping or disposing of toxic substances into the
environment, and b) non-emergency cleanup projects for which adequate time
is available to allow for project planning and the utilization of public
bidding.
II. POLICY
A. All contracts exceeding $250,000 for emergency cleanup operations will
be awarded by the General Services Administration, Director of the
Division of Purchase and Property.
B. All contracts that do not exceed $250,000 for emergency cleanup
operations will be issued by DEP using the term contracts established
by the Department of Treasury, General Services Administration,
Division of Purchase and Property, and Purchase Bureau through the
competitive bidding process or use of waiver of advertising procedure
for services not covered by term contract.
C. All non-emergency projects regardless of the dollar amount will be bid
competitively by the Purchase Bureau or awarded utilizing a term
contract through the submission of a requisition/encumbrance, Form
PB6. In those cases where a project is bid, DEP will provide a
detailed specification which identifies the scope of work and will
submit a Form PB6 for encumbrance of necessary funding.
D. DEP and Purchase Bureau staff will jointly review and evaluate response
proposals to engage firms holding term contracts for feasibility
studies and/or project design. The award recommendation shall be
submitted in accordance with the guidelines contained in the original
Request for Proposal (RFP) document.
-------
PC 34
2 of
III. PROCEDURES & RESPONSIBILITIES
A. Establishment and Replacement of Contracts
DEP will submit to the Purchase Bureau specifications (henceforth
referred to as the RFP document) containing tacks for various services,
equipment, materials and supplies required for the cleanup of a job
site. Each task shall contain all the necessary elements needed to
enable vendors to submit bid proposals containing unit costs for
equipment, labor, materials and supplies. The RFP document shall
include terms, conditions and special provisions required by federal
and/or state statutes and regulations. Payment procedures, retainage
and auditing requirements will be incorporated in the RFP document by
DEP.
The Purchase Bureau will review and, if necessary, modify the
specifications in order to develop the final RFP document which will be
used for bidding purposes. After receiving written approval of the
final RFP document from the Commissioner of DEP or his designee, the
Purchase Bureau will advertise for bids, establish the bid due date and
the project schedule. The Purchase Bureau and DEP will develop
evaluation criteria, score sheets and the methodology which will be
followed by a committee formed for the purpose of bid evaluation.
The Purchase Bureau Supervisor has the responsibility to formulate a
three-member Standing Evaluation Committee for the purpose of
evaluating all non-term contracts and the creation of term contracts.
This committee will be composed of two (2) representatives from DEP
(one of which will be from the Division of Financial Management,
Planning and General Services and one representative from the affected
program area), and one representative from the Purchase Bureau. A
fourth non-voting member from an outside government agency may be
invited to participate. The Purchase Bureau member will chair the
Standing Evaluation Committee. The committee will submit an award
recommendation through the Office of the Commissioner of DEP, or his
designee, for review, approval/disapproval and transmittal to the
Director of the Division of Purchase and Property.
The Standing Evaluation Committee will also be used for award re-
commendation against term contracts. When serving this purpose the
committee may be increased to a five-member unit. When this option
is exercised, the two additional members will be from the affected
program area. All award recommendations from this committee for
engagements against term contracts will be submitted to the Admin-
istrator of the Hazardous Site Mitigation Administration or the Divi-
sion- Director having responsibility for the work to be performed.
The Administrator or Division Director will review, approve/dis-
approve and transmit his recommendations to the Director of the
Division of Purchase and Property.
The Director of the Division of Purchase and Property will
review the committee recommendations and make the final decision
regarding contract awards.
-------
3 of
The Purchase Bureau will notify all vendors who submitted a response
proposal concerning the disposition of their bid. Notices of Contract
Award will be prepared which will incorporate vendor response proposals
and the necessary instructions which describe the method of operation
the State of New Jersey will utilize in dealing with term contract
vendors.
B. Contract Award Responsibilities for Emergency and Non-Emergency Cleanups
1. Emergency Conditions (Not to Exceed $250,000)
The Commissioner of the Department of Environmental Protection or
his designee has the authority during emergency situations as
defined in Section I, to authorize a maximum of $250,000 for an
emergency cleanup project utilizing term contract vendors. The
contractor(s) will be selected based on their ability to perform
the required task(s) in a tiaely manner. Other factors which will
be considered include the availability of adequate vendor manpower
and equipment resources, experience of the vendor in similar
projects and vendor reliability in prior contract performances.
Once the emergency situation is contained, DEP will shift to a
non-emergency contract either by submitting to the Purchase Bureau
the necessary specifications needed to initiate the bidding
process or by selecting a suitable approved contract or a ten
contract currently in force.
NOTE; IF ANT EMERGENCY EXCEEDS THE ESTABLISHED LIMIT OF $250,000,
DEP WILL CONTACT THE DIRECTOR OF THE DIVISION OF PURCHASE AND
PROPERTY OR HIS DESIGNEE AND OBTAIN THE NECESSARY APPROVAL TO
EITHER START OR CONTINUE THE PROJECT.
2- Non-Emergency Conditions (All Amounts)
DEP will submit to the Purchase Bureau a Fora PB6 with the
necessary specifications delineating all elements of the cleanup
requirement or a PB3/PB2 utilizing the tens contracts in effect
for services, required. Unit costs for materials, equipment, labor
and supplies will be requested for each task of the RFP. The RFP
document will require the vendor to propose a "not to exceed"
amount for the project and will include an "additional work
clause." All proposals received will be evaluated by a committee
established in a manner similar to that outlined in Section IIIA.
DEP will administer contract performance and will act as the
certifying agent for all invoices processed pursuant to the
provisions of the contract.
All "change orders" will be classified as either a) extras
involving the same work as that already bid for by unit price in
the original contract, or b) supplemental covering work for which
the State has no unit price because it was not contemplated in
the original request for proposal.
-------
4 Of
a) For "change orders" classified as extras, DEP will
authorization to proceed for an amount of 10 percent or $100,000
per contract, whichever is greater. Authorization* for "Change
Orders" classified as extras which exceed these limits must be
approved by the Director of the Division of Purchase and Property.
b) Supplemental "change orders" will be authorized by DEP
against a blanket waiver approved by Treasury for all Hazardous
Waste Cleanup projects. DEP will have authorization to proceed
for an amount of 10 percent or $100,000 per contract, whichever is
greater. The DEP shall submit a monthly report to the Director,
Division of Purchase and Property detailing the use of the blanket
waiver and explaining the need for usage of each "change order."
DEP will be responsible for establishment of dollar limit authori-
zations assigned to personnel within the Department. DEP is
responsible to ensure that the costs for services and materials to
be supplied are reasonable. However, for emergency conditions DEP
will have the authority to negotiate a reasonable price after-
wards .
When a "change order" is required, DEP shall submit a Fom P66 or
a request for the issuance of a PBS for "change orders"
accompanied by a vendor proposal. detailing the unit cost. The
contractor will not initiate work covered by a "change order"
until he receives written approval to proceed from the authorized
DEP official. Consistent with the above requirements on "change
orders," DEP shall establish fiscal controls assuring that "change
orders" are processed in a timely and fiscally sound manner.
3. Emergency "Change Orders" (All Types)
When a construction site emergency occurs requiring immediate
corrective action, and the above limits have been exceeded, the
Commissioner may authorize the Site Manager to engage the con-
tractor(s) to proceed with the necessary work. The Commissioner
shall report such action with supportive information within 48
hours to the Director, Division of Purchase and Property.
-------
ATTACHMENT I
Schedule A-l Remedial Design Set Aside Costs$13,632
e Waiver O166
0 Requisition R29080
e Purchase Order PI0131 - Qasco Services, Inc.
0 Invoice #499323 $13,632.00
-------
if QUEST fOR WA
or f >
tWk
OF ADVERTISING
0? »U«CHASi
USI
1Y REQUESTING AGENCY
I. Oati n«"vS«rr<» *M
S. Statutory c>uti«i<»
7. ^gft«lrtf Mure*
It. a.»« »oo» tioianalion 'or *i'»
foe koti eoatracoin e*
far
far raaorml of
aaa. of |43a.410. flo* la
*wrd«
-------
r
II
REQUISmON-PURCHASE BUREAU
run
203
190013
36
MET
*»OJC{T
9EP
45,577
C9M
""Sept. of Environmental Protection
Division of Waste Management
CI028
8 East Hanover Street
Trenton, NJ 08625
• ILLTO: '*a|MCTl
Same as above
Charles Strano - 984-7743
COMf ACT WO» QII..IVC** 1-lfTByC'•'ON*
-------
PURCHASE ORDER
I • i»c*r>» <0fll
4 * ntW «C<*OH 4«« l«C**'*«
t • >t«*t» •• C»MI<"0«
»(*oc* NAMI, trutir. CITY, ITATI. ii» coot
Ebasco Sdrvlcts, Inc.
Two World Trad* Center
N«w York, NY 10048
ALL TCKMI AND CONDITIONS IN «iO POO^OSAL OATCO *«ove
Alte »AMr 0^ r"JS OAOCt, AS if ruuLV ac»*
*Efr»OOUC€0 *ti»e H
!'"3*te o* f »».*i~
Lt TO: CNTC*
D«pt. of Environmental Protection
«v» Division of Waste Management
wr CN 028
8 Cast Hanover Street
Tnnton, NJ 08625 .
SMIFTOt
ICOHTACT
Mr. Berlov
JU«C«M • 0. Ml
SAKE
~*^"*"T"* "" ••V—
MI CM at «ui»t*ii iiT7
Uli
-an
rod Oftl¥Ctt IMSTAWCTIOMI. (KAMI. T(LI»xOM
-------
i certify that the wivm !£2^8d&*Wft^'l&f&®
that me described goods or services^have been furnished or
'efldered^rflJf fiat nc'fSowus' nfcy^fccn given ot receded on
account of said invoice **•' ' *'- ' * '* •'<'
PATH OfMTMCAnQN KUMKH
nun nf FEWNCI - (LIMIT »4 OUMCTI
• PATH - SCE INSTRUCTIONS ON REVERSE SIDE •
-------
ATTACHMENT III
Schedule A-2 Initial Remedial Measures Set Aside Costs $8,350
0 Waiver C-166
0 Requisition R29118
0 Purchase Order PI 1496 - D'Annunzio Brothers
• Invoice #499243 $6,550.00
0 Invoice #499244 $1,800.00
-------
r (> I«S«Y
IKQUEST FOR WA!V*k OF ADVERTISING
uu o»u
l.fr11-TfriC COMPilTID §Y RtQUISTlMC AGENCY
I. StMulOry C>t*t>Qft(i>
SII34 *
•f ekt r»j«ct.
u* daatca *etlrielM at taa Bwnc Fly
for «uufttlciMC*4 a?«aa«a aa«aaaar7 far
L»aa a J«i»c wmtu* far
aarf ia^lfit aarrleaa •acMiiry Car raawvl af
««trdc4 for a laaa* mm
ii.
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«f*
-------
DC NOT REMOVE CARBONS
r»«B«««Tt** "*?/„
C«*C t'f t»T£« KUMtO W.teK
r^"
•
i i i * i i
na
141
STATE Of NEW JCRSCY " i'**1
.OtMrtflWt Of IM TrtMiry
Division of ~
an*
fl i»:
f*Tt
0.7 2 7 8 4.
499004
QUISITION-PURCHASE BUREAU
run*
203
190013
36
C»1T
MBC
•eTt»iT»
9EP
•ITIHOIO
ii ji
TOTAi AMOUNT
65,460
00
TTiT
• f«
f»»
IW*tt
TTT
*
st. of Snviroranental Protection
./ision of Waste Managanent
-J028
•3ast Hanover Street
»ntm. H7 08625
as above
C»HT*CT
•• If *•«•-) Li '«» *
-------
45 2
of tf»
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I»et3u"»* NUM»f»
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VENDOR NAME AMD AOOKISI
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THIS BID BI*CPCS*L **s •'jfuiCLTi
OPENED AND BEAD AT 2 00 P M ON I
:*-£ jf s
ALL
»NO CONDITIONS :
AS
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-------
§7S
• M '
0
INVOICE
NEW JERSEY
tut aa STRUT ffticrrv S»STATJ
x'Annunzio Brothers Constructors Corp.
tguilar Assoc. & Level A
!82 South Avenue
i, New Jersey 07023
J.J. D.E.P.
fezardous Site Mitigation Administration
* East Hanover
ientcn, HJ 08625
® PAYEE DECLARATION:
I cadify that th« within invoc« is correct in all its particulars.
tnal tn« described goods or services have been furnisned or
rendered, and that no bonus has been given or received on
account of said invoice.
Stq
Project Engineer
10-10-84
Burnt Ply Associates
• PAYEE - SEE INSTRUCTIONS ON REVEASE SIOC •
'OtourrMMmQ rot
D I S C HI P T I 0 N
$4,000.o $4,000.00 "
BY RECEIVING AGENCY
TH£
.ABOVE ARTICLES HAVE SEEN RECEIVED
RED AS STATED HEREIN.
0*rt
CERTIFICATION BY APPROVAL OFFICER
l CERTIFY THAT THIS INVOICE IS CORRECT AND JUST. AND
PAYMENT IS APPROVED.
-------
INVOICE
NEW JERSEY
ACCOUNT MUM**
(til ca
JCTV"
BrlMXO WMfA
t «
•^•••••••^••••iJ*"* "^ °°*
5^ i7
ior«i«>amt ^ i «ouo»
*/&M> laftfar oo I
anorv
ADQHC5S
D'Annunzio Brothers Constructors Corp.
Aguilar Assoc. & Level A
282 South Avenue
Fanwood, New Jersey 07023
».J. D.E.P.
Hazardous Site Mitigation Administration
8 East Hanover
Trenton, New Jersey 08625
® PAYEE DECLARATION:
I certify trial m« within invoice is correct m all its particulars.
that tn« described goods or services nave been furnished or
rendered, and that no bonus has been given or received on
account of said invoice.
Stephen D'AnrnmziS
Project Engineer
10-31-84
OMI
ood/
CAfQ*
Burnt Flv Associates
an
22-335-070
Net
10
31
84
15
(-*)
Days
lECEiVE )
PAYEE - SEE INSTRUCTIONS ON REVERSE SIDE •
mjHvn • Q rot offiMknoi Q *o« MI
0 E S C R I » T I O N
Supply & Operation of O.V.A. with G.C. and recorder
for ambient air monitoring (October)
ecorder
e
«
$150.00
TOTM.
•MXMf
$2, 230.00 1"
-------
ATTACHMENT IV
Request fran Waste Management for approval to exceed the limits on
the X-350 Term Contract
Award reocnmendation for Accutech - cost analysis.
Correspondence regarding $250,000 bonding increments.
Division of Purchase & Property approval to utilize the X-350 Term
Contract and to exceed the $250,000 cap.
Excerts from X-350 Term Contract that identify that transportation
services were included.
-------
State o( 3Crui
DEPARTMENT OF ENVIRONMENTAL PROTECTION
DIVISION OF WASTE M*N*GEM6N* ,e
32 E. Hanovtr St.. CN 021. Trenlon, N.J. 0«2S
OR MARWAN M SAOAT.
OiRICTOR
MEMO R A N D U M
TO: James Rosenberg. Director
Department of Purchase and Property
FROM: Dr. Marvan M. Sadat, Director
Division of Vaste Management
SUBJECT: Burnt Fly Bog Surface Cleanup
This is to formally request your approval to allow the Department of
Environmental Protection to exceed the $100.000 ceiling in the X-350 contract in
order to initiate remediation at the Burnt Fly Bog site. This request is
prompted by our decision to reject all bids for the ID X-436 Burnt Fly Bog
cleanup contractor.
Ve would proposed to use the X-350 contract to perform the following tasks:
(a) removal and disposal of the asphalt ptlt
(b) disposal of the bulked drum vast*
(c) enforcement of the lagoon dike as veil as removal and disposal of
aqueous lagoon vastc
I am requesting that ve proceed in this manner for the following reasons:
1. Analysis of the asphalt pile material Indicates high level of PCB
contamination (50-500ppm). This material Is exposed to the atmosphere and
PCB contamination is continuing to impact the vesterly wetlands through
sediment transport during rainfall events.
2. The bulk drum vaste also contains high concentrations of PCBs and arc
stored in a large pile and subject to the saae weathering and sediment
transport effects.
A>M Jersey It AH Equal Opportunity
-------
It 1* imperative chat we remove and contain these two continuous sources of
pollution. The excavation of a portion of the asphalt pile as veil as the
disposal of vaste in the drums and the bulking in the open air by the
previous contract©- in the anticipation of quick removal has destabilized
the site. Conditions can be expected to continue to deteriorate rapidly,
expanding the area of contamination In the westerly wetlands and
complicating further remediation. It must be noted that PCB levels at the
surface of the asphalt pile prior to its disturbance were relatively low in
the order of 5-30. The disturbance and excavation of the pile has exposed
much higher concentiatious of PC?,.; fc -:t -he destabiltxation of the
westerly wetlands.
3. We presently Rave approximately 6 to 8 inches of freeboard in Lagoon 1. As
we approach the hurricane season, we must take the appropriate steps to
protect against the potential overflow of the lagoon by a combination of
lowering the waste level through pumping and reinforcements of the lagoon
dikes.
In order to expedite this immediate removal action which I have outlined above, I
would propose that we proceed by using the Option II Engagement Provisions of
the X-350 contract In that we engage a cleanup contractor on a time and material
basis. The contractor selected will be the lowest cost contractor based on OUT
engineering estimate of the level of effort required to accomplish work at Burnt
Fly Bog. Only the waste preparation and loading will be done In this manner.
Transportation of the waste off-site would be paid on a lowest unit price basis
as provided in the X-350 contract with disposal provided by CECOS under the
X-435 contract.
Based on DEP's estimate of the manpower and equipment necessary to accomplish
the site work (waste prep and loading), we have compared bid prices for all
contractors on the X-350 and found Vaste Conversion of Hatfield. PA to be lowest
at an estimated cost of $240,000. For the transportation Accutech is lowest at
$2.58 per load ail*.
Assuming disposal at the CECOS New York facility, the total estimated cost would
by $790,000 for transportation. The disposal cost under the previously awarded
X-435 contract would be $2,800,000. Attached are tables summarizing the bid
analysis and estimated project costs.
Because these estimates exceed the $100.000 limit for using option 1 engagement
procedures, I aa requesting your authorization to proceed in this manner.
c. C. Tyler
V. White
-------
ESTIMATED COST SUMMARY
lowest Bidder**
SITE WORK
(T i M)
Transportation
(Unit Price)
WASTE CONVERSION
$240,312
ACCUTECH
$ 789,480
AQUILAR
$254.623
ACES
$948,600
HAZTECH
$285,958
WASTE
CONVERSION
$994,500
X-435 Disposal
Contract v/CECOS
(Unit Prici)
Term Disposal
(Aqueous Wast*)
Subtotal
10Z Contingency
Total Est. Cost
$2,754,000
300,000
$4,083.792
408,000
$4,491,792
*Clean Venture failed to provide prices for all necessary equipment and was
therefore not considered.
-------
DEPARTMENT OF ENVIRONMENTAL PROTECTION
DIVISION OF FINANCIAL MANAGEMENT. PLANNING ft GENERAL SCMVICCS
CN 401
TRENTON. N.J. OM2S
September 13, 1985
MEMORANDUM
TO: Jorge Berkowitz, Administrator
THRU: Anthony Farro, Deputy Admini s
FRCH: Date Berber-son, if&ptfj&rzfeld, Scott Sutherland
SUBJECT: Burnt Fly Bog
X-350 Non-Emergency Small Cleanup
Option I Engagement
Attached is a site specific cost analysis for the Burnt Fly Bog project.
Under the Non-Emergency Snail Cleanup Tern Contract (Option I), the State has
estimated the contoination of labor and equipment required for this project.
Based on the prices bid by each contractor under their Term Contract Category 2
- Transportation, Accutecb has been determined to be the low bidder and is
nded for engageroent*
If Accutech should decline this engagement due to conflict of interest,
inability to perform, ineligible for engagement, etc., the next lowest priced
contractor will be engaged.
The following list represents the total project cost estimate and ranking for
each contractor who was eligible to bid.
Finn
Accutech
ACES
Waste Conversion
HAZTBCH
Clean Venture
AFTECH
Aguilar
CB006
Resource Tech.
S i D Engineering
O.H. Materials
Cost
2.58/Load Mile
3.10/Load Mile
3.25/Load Mile
3.35/Load Mile
3.50/Load Mile
3.50/Load Mile
3.85/Load Mile
4.10/Load Mile
4.35/Load Mile
7.50/Load Mile
10.50/Load Mile
Rank
f 789,
948,
994,
1,025,
1,071,
1,071,
1,178,
1,254,
1,331,
2,295,
3,060,
480.00
600.00
500.00
100.00
000.00
000.00
100.00
600.00
100.00
000.00
000.00
NewJeney it on Equal Opportunity Employ*
-------
3.
.
"
5. A
','
,
-------
2- %%, 3
T cc
-------
Appendix C
A
M
GREENSTONE AND SOKOL
COUNSELLORS AT LAW
39 HUDSON STREET
HACKENSACK. NEW JERSEY 07601
<20!> 4S8-3930
I*?
JAY* GREENSTONE
LEON J SORCL <* i «xo
KENNETH H MACK
STEVEN J F1CCO
JOSEPH F 8EHOT. JR.
JOSEPH 8 F1OJUNZO i
j »«> n* tuu
w J »»e * t
i AWB-W T
PLEASE RESPOND TO:
7RESTON. V j 05608
[609) 393-C62!
October
1985
LINDA J SAMAY
PATWCH D KENNEDY <* j wen
NEILYOSICtNwj AKO M MU
MICHAEL C URCIUOU
TELEX. 219212
INTERSTATE PLA2A SL'ITE 124
4?S *EST PALMETTO PARK R.CAD
BOCA RATON, FLORIDA 33432
(305) 391-4900
MARSHALL? KRL'PS'ICIC
-------
GREENSTONE AND SOKOL
COUNSELLORS AT LAW
39 HUDSON STREET
H AC KEN SACK. NEW JERSEY 07601
(201) 488-3930
HERMAN GREENSTONE «MM*MI
JAYW GREENSTONE an »»BIUI w
LEON J SOKOL IN t MO HA »•»>
KENNETH H MACK
STEVEN JWCCO
JOSEPH F IEHOT, JR CKJ AM-T
JOSEPH 1 NORENZO IN J **« ' ft
LINDA JSAMAY
PATRICK D KENNEDY «i wo M t,
NEIL YOSKrN m j AMD M *AU
MICHAEL C. URCIUOU
TELEX 219212
226 * STATE STREET
PLEASE RESPOND TOi TRENTON. N j oeeos
<609) 393-0621
October 11, 1985
INTERSTATE PLAZA SUITE 124
1499 WEST PALMETTO PARK ROAD
IOCA RATON. HORIDA 33432
(305) 391-4900
MARSHALL P KRUPNICK
(N J AND FLA BAR)
OF COUNSEL
Mr. Thomas J. Allen, Assistant Chief
Bureau of Site Operations
NJDEP
65 Prospect Street
Trenton, New Jersey 08625
Res Accutech Environmental Services, Inc.
X-3SU
Dear Mr. Alleni
Confirming our telephone conversation of yesterday
morning, this letter will formally request tnat the DfiP permit
Accutech to meet its obligations for a full performance and
payment bond under Contract X-350 with the State of New Jersey by
providing said bonds in the face amount of $250,000.00, with the
provision that said $250,000.00 bonds will be released at the
completion of each $250,000.00 value phase of the project, and
reinstituted for the ensuing $250,000.00 phase.
He believe that this proposal meets the legal
requirements of the State, in light of the fact that the
transportation contract which has been awarded to Accutech is a
project which is easily definable into transportation phases and,
therefore, constitutes a project whose work.is completed after
the transportation itself is completed. I also point out as
background for this request that the State of New Jersey nas
recently determined that it is appropriate to limit liability
under performance and payment bonds to actual performance under
the contract, and to limit any insurance liability under these
-------
GREENSTONE AND SOKOL
Mr. Thomas J. Allen, Assistant Chief
Page Two
October 11, 1985
bonds. In other words, the performance ana payment bonds are
only meant to insure that Accutech performs under the contract.
We submit in that regard that such peformance win have been
completed (and the State of New Jersey will be able to ascertain
whether said performance has been completed) for eacn $250.00U.OO
phase at the conclusion of that phase, ana that it would be
appropriate at-that point to release any bond which is
outstanding and to reinstitute a new bond in the same face amount
for the next phase.
As I indicated to you, I naa informally aiscussed this
issue with the Division of Purcnase and Property, who tentatively
agree that this proposal would oe adequate to meet their needs.
They have requested that the DEP formally request this
arrangement, and I am forwarding tnis letter in order to expedite
that process.
I have discussed the matter with Accutech's insurer and
have forwarded him a copy of the State's language for limitation
of liability under tnese bonds, as provided me by Henry Saveili.
To summarize, we request that Accutech be aliowea to
provide you with performance and payment oonds in the face amount
of $250,000.00 in order to meet its obligations under X-350.
Accutech also requests that a provision be made that said bonds
will be released upon full performance of $250,000.00 value of
services under the contract, and tnat said bonds will be
reinstated upon the request of tne State of New Jersey, Division
of Purchase and Property, we would also request that a provision
be placed in these contracts to tne extent that failure oy the
State to request said extension will not impose liability upon
Accutech.
we thank you for your cooperation and attention to this
matter. We recognize the State's urgency in finalizing thi*
matter, and wish to work with you to implement that oojectwe.
_ (THICK D.
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State of
3e r«g
DEPARTMENT OF THE TREASURY
GENERAL SERVICES ADMINISTRATION
DIVISION Of PROCUREMENT AND CENTRAL SERVICES
TRENTON. NEW JERSEY OM2S
Sept. 4, 1985
MEMORANDUM
TO:
FROM:
Marwan Sadat
Director
Div. of Waste Management
Director
Divisio
Centra IS a rv leas
and
SDBJ
Based on the administrative hearings for Burnt Fly Bog, RFP X-436,
the Purchase Bureau has rejected all bids which vtre subaitted.
Although all bids have been rejected, the environmental concerns
at this site have not been ainimized. Therefore, I an directing
that the remedial work proceed immediately to clean up drums, asphalt,
and liquids in the lagoon utilising our existing term contract for
Non-Emergency Staging and Removal Services, X-350.
Due to the extenuating circumstances and delays by the contractors
in the Burnt Fly Bog clean up, I am authorising NJDEP to utilise
Option I under JC-350 even though a clearly defined scope of work
does exist. I am alao authorising an extension of this contract
over the $250,000 cap.
An estimate has been performed by HSMA for the combination of labor
and equipment resources required for this project and the associated
hourly rate* submitted by the contractor.
. •• .
Based on this estimate Aguilar Associates has been determined to
be the overall lov bidder and should be engaged to perform the remedial
work at this site. It should alao b* stated the Aguilar Associates
has previously worked on this site and is aware of prevailing site
conditions.
Accordingly, you are authorised to proceed with the Burnt Fly clean
up utilising the procedures outlined in X-350.
ce: Contract File
New Jeruy Is An Equal Opportunity Employtr
-------
Exploratory excavation shall be conducted with a backhoe or trackhoe
(depending on the depth of excavation required). The contractor shall
have an explosimeter and photo ioniiation detector (PID) operating at
all times during the excavation. The contractor shall have available,
upon request of the OSC, 17 H drums or DOT 37C 85 gallon size overpacks
on-site to containerize or recontainerize waste materials.
The contractor shall also have available all ancillary items, such as
shovels, stalks, rakes, picks, etc. to assist with the excavation.
All areas^ excavated shall be restored to their previous condition.
Resources shall include expertise in identification, segregation, and
repacking of incompatible chemical materials. Contain the leaks and
prepare for removal and containment of any escaped substance.
Transportation of Hazardous Wastes
Services will include transportation of hazardous waste by licensed
transporter to a destination designated by the NJDEP. Contractor is
expected to be capable of transporting bulk solids, drummed wastes, and
bulk liquids as part of this category. Upon notification by NJDEP of
the need for transportation services, the Contractor oust initiate
pickup and transportation services within 10 working days or on a
mutually agreed upon schedule.
Prior to initiation of transportation services the Contractor shall
submit a transportation route plan which conforms with Federal, State,
and local regulations and specifies all roads that loaded trucks will
use when transporting waste from the site to the certified weigh scales
and ultimate disposal facility. All trucks should be routed on major
highways whenever possible and avoid passage through small towns and
villages. The transportation route plan shall include the mileage from
the pick up to the delivery point and la subject to approval by the
OSC.
The Transportation Contractor must have all applicable current waste
transportation permits for each state through which waste is
transported. The permits shall be presented in an orderly manner to
the OSC prior to loading. Any vehicle without the proper current
permits and vehicle registrations (cab and trailer) will be denied
access to the site. No emergency New Jersey Waste Hauling permits will
be Issued on site. Also, to gain access to the site, truck drivers may
be required to exhibit a valid driver's licenses.
Any vehicle used for transporting bulk hazardous substances must be
weighed at a certified weigh scale prior to loading in order to
determine empty weight and, after loading, to determine loaded weight.
The driver will present the certified empty weight slips to the OSC
prior to receiving the waste. The driver will be given the wast*
manifest Including the estimated volume of wastes picked up (cubic
yards) for transportation to the certified weigh scales. Actual
weights will bs included on the manifest following loaded weighing at
the certified weigh scale. The NJDEP representative at the certified
49
-------
weigh scale will complete the manifest forms and retain a copy of the
weight slip receipt. Transportation weights for the manifest will be
determined from the weight slips and will be used as the basis for
payment.
NOTE: Bid prices should include costs associated with transportation
to~"and from weigh scales and any costs associated with weighings.
All placarding must be supplied by the transporter.
All trailer dump trucks transporting bulk-solid hazardous substances
must be equipped with a tarpaulin, free of rips or tears, and of
adequate size, prior to loading.
No driver will be permitted to leave his truck while on site without
the approval of the OSC. Any driver permitted to leave his truck on
site will be required to follow the requirements of the approved site
safety plan, including the use the approved level of protective
clothing. The appropriate protective equipment will be supplied by the
Phase 1 Contractor.
Drivers hauling hazardous substances must have their own respirator
with organic vapor cartridges. This respirator must be worn during
loading and decontamination. All windows in the truck cab must be shut
during entrances to the loading area, during loading and
decontamination. The Phase I contractor will bt responsible to direct
the loading of all trucks. Drivers who are required to operate tankers
and/or other devices outside of the cab will be supplied with any
additional safety equipment required on site by the Phase I Contractor.
Drivers are required to be knowledgeable of proper methods for handling
hazardous waste and the procedures to follow In cast a spill occurs or
other emergency arises.
All trucks must be washed down (decontaminated) prior to leaving the
site. Decontamination will be performed by the Phase I Contractor.
All trucks hauling waste must not exceed the maximum weight loads as
specified by state lav, for each state through which waste is
transported.
Truck* may be required to re-enter the loading area if the NJDEP
Representative at the certified weigh scale deems that the truck is
underloaded or overloaded. Trucks that must return to the site to have
material added or removed must be reweighed and redecontaminated.
Costs associated with additional weighing (including transportation)
will be the responsibility of the Transportation Contractor. The Stat*
reserves the right for its authorized representative to Inspect all
vehicles entering the site for safety and/or present load conditions of
vehicles.
50
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2-13
Revised 2-4-85
Non-Emergency Cleanup Services
Schedule C
Unit Prices , . »
Tranaportation (for Category 2 only)
Category 2: Transportation of Hazardous Wa.t., to Disposal F.ciliti.s
'Distance*
less than or aqual
eo 300 miles
Distance
greater than
300 miles
Dump Trailers (minimum
40.000 Ibs. or 20 tons)
Tank Trailers (mini*
40,000 Ibs. or 20 tons)
Vacuum Trailers (less than 2500
gallon capacity, minimum 20*000
Ibs. or 10 tons)
Box Vans (minimum 40,000 Ibs.
or 20 tons)
Flat Bed Trailers (minimum
40,000 Ibs. or* 20 tons)
Roll OffBoxes (minimum
40,000 Ibs. or 20 tons)
Vacuum Trucks
3,000 - 4,000 gal. cap.
4,001 - 6,000 gal. cap.
6,001 gal. cap. or greater
Tank Trucks
3,000 - 4,600 gal. cap.
4,001 - 6,000 gal. cap.
6,001 gal. cap. or greatar
$_
*_
$
i.
i.
S
/load mila
/load mile
/load mile
/load mils
/load mils
/load mils
/load mile
/load mils
/load mils
/load mils
/load mils
/load mils
/load mile
/load mile
/load mila
/load mile
$
$
$
/load mila
/load mila
/load mile
* /load mile
t
1
1
1
1
I
/load mile
/load mile
/load mile
/load mile
/load mila
/load mile
* Distancs -
The distance in miles aa par the approved routs plan, from the site
where wastes are picked up to tha disposal destination. This
distance does not include any additional mileage for traveling to
certified weigh scales if weighing is required.
-------
2-134
Rtvlscd 2-4-85
Son-Emergency Cleanup Services
Schedule C
Unit Prices
Transportation (for Category 2 only)
Category 2: Transportation of Hazardous Wastti to Disposal Facilitltt
Dump Trucks*
S cu. yards
5 - 10 cu. yards
10 - 20 cu. yards
20 - 30 cu. yards
30 cu. yards or greater
Pickup /liflht utility vehicle
4 whttl drive
Stake Body Truck
Other:
less
to
$
1
1
$
1
f
1
1
$
1
1
$
$
Distance*
than or equal
300 miles
/load mile
/load mile
/load mile
/load mil*
/load ail*
/load mile
/load mile
/load mile
/load mile
/load mil*
/load mile
/load mile
/load mil*
Distance
grtatcr than
300 miles
$
$
$
S
$
$
$
$
$
1
I
1
$
/lead mile
/load mile
/load mile
/load mile
/load mile
/load mile
/load mile
/load mile
/load mile
/load mile
/load mile
/load mile
/load mile
* 2£££! ****** volumes overlap on tvo bid lines, the less of the two bid prices
apply.
-------
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if
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I
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Appendix A
DOT 7 1386
Richard T. Dewling, Ph.D., P.E.
Commissioner
New Jersey Department of
Environmental Protection
CM 402 - Room 602
tabor and Industry Building
Trenton, New Jersey 08C25
Re: Procurement of Services for work at Hazardous Waste Sites:
Non-Emergency Terrc Contract (X-350) and Term Contract for
Performance of Feasibility Studies (X-312 )
Dear Comreisaioner Dewling:
This letter responds to Comniseloner Hughey'a January 2, 1986, letter
requesting that I grant a deviation from this agency's assistance
regulations approving New Jersey's past, present, and future use
of its Non-Emergency Term Contract (the "Non-Emergency Term
Contract*) and its Term Contract for Performance of Feasibility
Studiee (the "Feasibility Study Contract"). (These contracts
will be referred to collectively ar the "Contracts"). As you
know, nit fibers of the staffs of both the Department of Environmental
Protection ("DEP") and the Environmental Protection Agency ("EPA")
conferred and exchanged correspondence and documents regarding
the Contracts beginning in September of 1985 and continuing
through this April.
As members of CEP have been informed verbally, I do not have the
authority to grant a deviation from EPA's assistance regulations.
That power is reserved by regulations to the Director of Crants
Administration at EPA's Headquarters in Washington. See, 40 C.F.R.
$30.1002. Members of the Region TI staff, as well as representatives
of DEP, have discussed your request with representatives of EPA's
program and legal offices in Washington. After careful consideration
of the Question, we have determined that it is best to consider
the matter of the procurement methods used by PEP in awarding the
Contracts in terms of whether or not they are "innovative* methods
or procedures,'the use of which I, the award official, nay approve
pursuant to 40 C.P.R. f33.210(h). As your staff has been informed,
we have decided to consider the Contracts in that context rather
than requesting a deviation from the Director of Grants Administration.
However, under 40 C.F.R. (33.21,0(h), my approval can extend only to
future procurement. Therefore, I an recommending that the Director
-------
-2-
of Grants Administration approve * deviation to allow retroactive
approval of auch innovative procurement. A copy of try recommendation
ia enclosed.
My deciaion to approve as innovative the methods and procedures
used by DEP in procuring the Contracta ia baaed upon th« following
underatanding of how thoae Contracta are procured/ aa explained
to EPA by representatives of DEP. Furthermore, purauant to 40
C.F.R. 533.105 et aeg., New Jersey has certified its procurement
ayatem as •meetTTna]the intent of all the requirements in this
[procurement] part." Finally, DEP representatives have repreaented
that these contracting methoda provide for maximum free and open
competition.
Ky approval shall be for a period of one year from the date of
this letter. At the conclusion of that period, EPA will evaluate
how the procurement methods have worked. Additionally, X reserve
the right to revoke this approval if, in my judgment, experience
indicates that it ia appropriate to do BO.
The Eon-EmergencyContract (X-350)
Non-Eirergency Contract is a one-year contract for cleanup services
such as 'staging, supplying, loading, detection, inspection or
investigation of petroleum, fuel, crude oil, or other hazardoua
substance discharges to ameliorate or prevent damage to the public
health or the environment.* It does notinclu de_tranapgrtion j»r
disposal of such_hagardous^^substances. Services procured pursuant
to it generally nay be used only for work which DEP anticipates
will cost less than $100,000 (for work assigned under engagement
option one) or $250,000 (for work assigned under engagement
option two). However, these limits nay be exceeded if the DEP
first obtains written authorization from the Director, Division
of Procurement and Central Services, New Jersey Department of the
Treasury.
A contractor obtains work under the Non-Emergency Contract in the
the following manner. First, the DEP issues a request for pro-
posals. The request for proposals advises the prospective contrac-
tors that aa many as ten contracts for each of six types of non-
emergency work nay be awarded. It specifies that proposals must
indicate compliance with many standard contract provisions (includ-
ing, inter alia, compliance with certain Federal regulatory
requirements) and that they rust commit the proposers to fixed
prices for various types of work. A committee reviews proposals
and awards contracts to up to ten responsible, responsive proposers.
The contracts require that the contractors remain ready, for one
year, to provide particular services at the rates specified in
their proposals. *[N]otlce of award and issuance of tsuch] a
term contract [by the DEP] does not guarantee an engagement." That
-------
-3-
is, despite receipt of a term contract, th« contractor nay not
get any work* and, hence, any payments, pursuant to that contract.
To receive a work assignment and the right to compensation, a
holder of a term contract must be engaged by DEP for the particular
work.
The Non-Emergency Contract provides two options for engagement of
services by the DEP. Under the first option/ the DEP *estimate[e]
the combination of labor and equipment reeourcea required for the
project and ... analytefs] all associated hourly rates submitted
by each contractor within the appropriate category of service.
The contractor who is determined to offer the overall lowest
hourly rates based on the estimated job scope will be engaged to
perform the work." If the contractor with the lowest overall
cost declines to accept the assignment, the DEP offers It to the
next-to-lowest cost contractor. Although the Non-Emergency Con-
tract does not appear to require it, DEP staff members have assured
us that a cap on coats for a particular project la established
when the contractor agrees to a specific price propoaal. The
other engagement option may be used if the DEP 'determines that a
particular cleanup project is biddable.* In such a case/ the PEP
solicits lump-sum bids from all holders of the Non-Emergency
Contract and gives the work assignment to the lowest bidder.
Only holders of the Non-Emergency Contract may bid on projects to
be assigned under this option.
This process for procuring Non-Emergency Contracts does not conform
exactly to the three procurement methods specified in ETA'a regu-
lations: 'formal advertising" (40 C.F.P. {33.405 et seq.),
•competitive negotiation" (40 C.P.R. $33.505 et seq.), or "non-
competitive negotiation* (40 C.F.R. $33.605 et sea. ). It is not
formal advertising because, urleso DFP uses option two to bid the
particular work assignment, it does not result in a fixed price
for a work assignment. It differs from both competitive and
non-competitive negotiation in that it involves no negotiation.
Award is based on prices either offered (ae time and material
pricec under option one) or bid (as a lump sum under option two)
by persons who have been found to be responsive and responsible
and who have agreed to be bound by certain standard contract
provisions. Furthermore, despite som* apparent similarities with
the type of prequalified list of contractore regulated pursuant
to 40 C.F.R. J33.230, the process differs substantially from the
way a prequalified list Generally is assembled and used. First,
the non-emergency contractors are aelected on the baals of bids
submitted after formal advertising. The bids include prices, and,
therefore, the selection of the contractors is based on price as
well as on technical qualifications. Second, based upon the
prices to which the non-emergency contractor committed and upon
DEP's own analysia of the work involved in a particular project,
an assignment is made to the contractor who is expected to do the
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work at the lowest total cost. There la no negotiating with
contractors for prica since that can be determined by the prices
which are already established in the TJon-F.rergency Conti:act.
DET has asserted that use of the Non-Feergency Contract has the
following advantages over other nethods of procuring clean up
work, Taek-by-task formal advertising for such relatively snail
work assignments is not effective since contractors are reluctant
to bitf on jobs of that size. Khile they are unwilling to put
together bids en individual *nall job*, they will bid generically
for scch work. The State believe* that it is better to nav«
prices set corp«titively than to have sinply to neootlate for the
beat possible price.
Z therefore conclude that the procurement rethods used by r*EP in
getting work done under the Ho n->£•»« roan cy Contract art innovative. *
They are innovative becauae they coebine «n eleaent of formal
price competition with an eJeoent of pro-qualification to estahSHsh
a ween* of oettlnc saall jobs which are not attractive if forrally
bid done ouickly. baaed on ny understanding that it is i«pr»ctic»l
for New Jercoy to procure all st-all cleanup jobs through forral
advertising and that use of the Ken-Emergency Contract provides
for greater competition than can be had in negotiation* I approve th<
use of thia innovative rethod of procurement for use on hazardous
waste site work a«gjqneents» provided that/ if there is tob»
Federal r-artieigatton in the coats« approvaI of_EPA aa weJl_ss
Uit_.Wew_Jersey._Depart»i>nt_of .the Treasury will be raquir«d_.in_any.
caaee in which Ihe costs of the job, aaeiqn^ents will exceed thj>
$1OO,QOP and §250^000 _liaiita_f or optiong one and two^ reapectlvely.
Further/ without prior EPA approvelf costs will not be eligible
unless the work anaignitent has heen given to one of the two terr
contract holders whose total rric* is e»tinatc>d by DFP to be
lowest.
The feasibility Study Contract
The Feasibility Study Contract ie aioilar to the Ucn-Ererqency
Contract in several aspects* It/ too« requires that contractors
bid corn*titively for a one-year terr- contract which doe* not
itself Guarantee any work or corporation. It alao reouires that
bidders COP*it tharnelvea to holding to fixed prices and to
observing various standard conditions. It differs in the oannar
in which actual work ansignoents are awarded.
In order to rake an assignment for a apeciflc project or site under
the Feasibility Study Contract, DF.P requests specific proposals
fror three persons who were awarded the Feasibility Study Contract.
Those three proposals are evaluated on the basis of the technical
approach* the organirational structure and qualifications* and a
cost analysis. The cost proposal does not establish the final total
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coet of the contract since compensation for moat of the detailed
sarpling and laboratory work will be made by paying certain coats
(of subcontracts, which must be competitively bid and awarded to
the lowest bidder) plus a fixed fee for the prime contractor.
Project specific proposals are submit ted by the holders of the
contracts for Feasibility Study contracts three at a time on a
rotational basis. Persons holding those contracts are all solicited
to subir.it project specific proposals* three firms at a tine/
until all contractors have had an opportunity to propose. The
unsuccessful bidders are then solicited, three at a tine/ until
all but two have received contract awards. The process then
continues with previously successful bidders to ensure that three
proposals are submitted for each specific project. DEP has
informed us that "[tjhi* system is specifically designed to provide
the greatest opportunity for all firms to obtain contracts*"
tEP'e submissions have indicated that there are three levels of
price competition as veil as two levels of competition with re-
gard to qualifications and technical proposals. There is price
competition at the time of award of the term contract. There is
price competition among three winners of the term contract when
they submit their cost proposals for each specific work assignment.
And, finally, the contractor which is selected to undertake the
specific work assignment is required to use a subcontractor for
sampling and analysis work (estimated by DEP to be 40%-60% the
value of the contract) and to procure that work through competitive,
sealed bids. Qualifications and technical proposals are reviewed
by DEP both at the time the term contracts are awarded and at the
time specific proposals for particular projects are considered.
DEP has informed us that, in its view, this method of procuring
engineering services for hazardous waste cleanups provide* superior
competition to the use of a level-of-«ffort contract for multiple
sites, a procedure suggested by Killian Hedenan in a February 22,
1983, memorandum on Guidance for State Contracting of Pemedial
Planning Activities.
I have determined that Hew Jersey's method of procuring engineering
services in connection with hazardous waste cleanups does not use
a prequalified lint in the sense suggested by 4O C.F.R. $33.230
and that it is an innovative procurement method. It is innovative
because it combines three levels of price competition in procuring
contracts which, in the Federal system, have no competition but
only negotiated prices. Based upon my understanding that other
methods of procurement either take unacceptably long periods of
time to procure engineering services (formal advertising)! violate
atate procurement law (negotiation), or provide a lesser degree
of competition than does New Jersey's method, pursuant to 40 C.F.P.
$33.210(h), I approve the use of the Feasibility Study Contract
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I
»
-6-
nethod for the procurement of engineerinq services for hazardous
waste cleanups.
Please note that my approval of the use of the procurement methods
and procedures associated with the Non-Emergency Contract and
Feasibility Study Contract does not constitute a decision that
the cost of any particular work procured pursuant to either of
those Contracts will be either eligible for Federal aid under
CBRCLA or allowable as reasonable and necessary* For example*
although the Non-Emergency Contract may be used for work cleaning
up petroleum/ EPA cannot provide sssiatance for such work due to
the petroleum exemption in CERCLA. For another, work outside the
scope of an EPA-approved remedy would not be allowable even if
procured in an acceptable manner. Furthermore/ this letter
should not be construed to approve or comment on any other aspect
of the Contracts.
Members of the EPA staff are reviewing the seven contracts you
submitted on August 12, 19P6 (X-464 Desion, X-027 General Engineering
end Professional Services, X-473 Emergency Cleanup Services* X-085
Lab Services, X-OC2 Field Sampling, X-152 Surface/Subsurface
Investigations and X-1^3 Security Services). Upon completion of
that review, I will advise you regarding those contracts.
Sincerely,
Christopher J. Daqgett
Regional Administrator
Enclosure
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Appendix B
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON. D.C. 20460 fr-
'
p?7f* *\ i "**• *•
!---• 24 'c: .*
OFFICE OF
ADMINISTRATION
AND RESOURCES
MANAGEMENT
MEMORANDUM
SUBJECT: Request for Deviation from 40 CFR 33.>30(h)
for the State of New Jersey
rf
FROM:
TO:
'riHarvey G. Pippen, Jr., Director ^
Grants Administration .Division (Pft-21
Christopher J. Daggett
Regional Administrator
Region II, New York
Action
X am granting your request that I approve a deviation from
40 CFR 33.210(h), "Recipient responsibility", that authorizes
you to approve the State of New Jersey's use of its "innovative*
procurement" net hods prior to October 7, 1986, the date of your
written approval of those methods.
Background
EPA's regulation for procurement under assistance agreements*
40 CFR 33.210(h), states that "a recipient nay use innovative
procurement methods or procedures only if it receives the award
official's prior written approval." The State of New Jersey
has developed and uses both a Non-Emergency Term Contract and a
Term Contract for Performance of Feasibility Studies, known as
the Feasibility Study Contract.The substance of the two methods
is set forth- in Region II's letter of October 7, 1986, to the
Commissioner of New Jersey's Department of Environmental Protection.
By that letter, the Regional Administrator approved future use of
these contract methods as innovative procurement methods as
authorized by $33.210(h).
The regulation does not permit the Regional Administrator
to approve use of innovative procedures retroactively. The State,
having commenced use of the innovative procurement methods prior
to obtaining the.Regional Administrator's written approval recom-
mends that I approve a deviation that will authorize that prior
use. Because the^St&tfe/s.,procurement system meets the intent of
o'Jr procurement regulation", "I am approving your deviation request.
•-.
4
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4AN 11 1537
JAN2S 1337 REGION II
Hr. William J. White, Director
Division of Financial Management, Planning
and General Services
New Jersey Department of Environmental
Protection
Carroll Building 4th floor
428 East State Street
CN-402
Trenton, New Jersev 08625
Dear Jin:
EPA has approved a deviation from its regulation, 40 CFR
33.210(h), which authorizes New Jersey's use of the non-
emergency term contract and term contract for performance
of feasibility studies. The deviation approves the use
of these contract methods prior to October 1, 1986, while
the Regional Administrator approved their use prospectively
after October 7f 1986 in a letter of that date.
Please distribute the deviation approval to other state
offices as appropriate.
Sincerely yours,
Helen S. Beqgun, Chief
Grants Administration Branch
Enclosure
CCS John Frisco (2-ERPD-NJRAjxX
Delmar Karlen (2-ORC) ^
bcc: Jo-Ann Velez
Carol Heminqton
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