Office of Inspector General
Report of Audit
MANAGEMENT OF COOPERATIVE AGREEMENTS
OFFICE OF RESEARCH AND DEVELOPMENT
ENVIRONMENTAL RESEARCH LABORATORY
GULF BREEZE, FLORIDA
Audit Report: E1JBF2-04-0386-4100237
March 31, 1994
Recydad/Recydabte
Printed on pap9f that contains
at least 50% recycled fiber
-------
Inspector General Division
Conducting the Audit: Southern Audit Division
Atlanta, GA
fc
Program Office Involved: Office of Research and Development
Environmental Research Laboratory,
Gulf Breeze, Florida
Grants Administration Division
Washington, D.C.
Office of Research and Development
Washington, D.C.
-------
3.SV i,
|T,V,/J
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D.C. 20460 :
h
March 31, 1994
OFFICE OF
THE INSPECTOR GENERAL
MEMORANDUM
SUBJECT: Report of Audit - Management of Cooperative Agreements:
Office of Research and Development, Environmental
Research Laboratory, Gulf Breeze, Florida
Audit Report No. E1JBF2-04-0386-4100237
c?/ • /? 4^_uf** A XT
Associate Assistant Inspector General for
Acquisition and Assistance Audits
TO: Gary J. Foley
Acting Assistant Administrator for
.Research and Development
Attached is the final report for our audit of assistance
agreement management and related internal controls at the
Environmental Research Laboratory, Gulf Breeze, Florida (ERL-GB).
.The report contains significant findings and recommended
corrective actions regarding assistance agreement operations at
ERL-GB.
We appreciate the effort and cooperation your staff extended in
assisting us in ensuring .the accuracy and propriety of the
report's findings and recommendations. We are also pleased with
your positive response concurring with the report's findings and
recommendations and promising implementation of appropriate
corrective actions to correct the problems identified in the
report.
This audit report represents the opinion of the Office of
Inspector General (OIG). Final determinations on matters in the
"audit report will be made by EPA managers in accordance wi-th
established EPA audit resolution procedures. Accordingly, the
findings described in--the audit report do not necessarily
represent the final EPA position.
EPA Headquarters Library
PrtnMd wRh Soy/Canota Ink OB paper that
eonwm m IMM 80% ncyctod «6«r
-------
Action Required
Your March 24, 1993, response to the draft report concurred with
the report's findings and recommendations; however,- a corrective
action plan with specific actions and milestones for completion
of these actions was not included. Therefore, in accordance with
EPA Order 2750, you as the action official, are required to
provide this office a written response to the audit report within
90 days of the final audit report date. For corrective actions
planned but not completed by your response date, a general
description of the plan for taking corrective action including
specific milestone dates will assist this office in deciding
whether to close this report. We have no objections to the
further release of this report to the public.
Should you or your staff have any questions or need additional
information, please contact Mary Boyer, Divisional Inspector
General, Southern Audit Division, at "(404) 347-3623.
-------
EXECUTIVE SUMMARY
PURPOSE
Increasing workloads and limited Federal staffs have contributed
to a heavy dependence by the Office of Research and Development
(ORD) on extramural support to accomplish its mission!.
Approximately 68 percent or $348'million of ORD's total 1992
allocation of $515 million was used for on-site and off-site
extramural support obtained through contracts, cooperative
agreements {CAs}, grants, and interagency agreements (lAGs).
ORD recognized its management of extramural resources as a
material internal control weakness in the Agency's fiscal year
1991 Federal Managers' Financial Integrity Act (FMFIA) report to
the President. Office of .Inspector General (OIG) audits and
surveys at ORD laboratories in 1992 and 1993 disclosed serious
management problems related to contracts, CAs, and lAGs.
In 1993, because of material weaknesses identified in the
management and use of extramural agreements at other ORD
laboratories and preliminary indications of similar problems at
the Environmental Research Laboratory Gulf Breeze, Florida (ERL-
<3B), the OIG.initiated an audit of ERL-GB CAs and related
.activities at the Office of Administration and Resources
Management's (OARM) Grants Administration Division (GAD),
Washington, D.C. The primary objectives of the audit were to
determine if ERL-GB, in coordination with ORD Headquarters and
GAD, :
Effectively and efficiently used, administered, and
controlled extramural funds to obtain research under CAs
within the requirements and intent of applicable laws,
regulations, and policies.
Properly managed CAs to ensure performance of
agreement requirements and attainment of research
objectives.
BACKGROUND
With a current annual budget of over $500 million, ORD's primary
mission is to provide quality, timely scientific and technical
information, products and assistance in support of Agency
programs and goals through 12 environmental laboratories which
employ about 1,900 EPA staff. ERL-GB is one of the 12 ORD
laboratories.
To accomplish its mission with strictly imposed Federal
employment ceilings, ERL-GB and other ORD laboratories have
increased their dependency on extramural level-of-effort (LOE)
-------
Executive Summary
contracts, grants, CAs, and lAGs to conduct or supplement much of
their research. Between PYs 1987 and 1992, on-site cooperator
and contractor staff at ERL-GB increased from 59 {51 percent of
total ERL-GB staff) to 115 (67.6 percent of total staff).
ERL-GB's FY 1992 budget totaled $12.2 million. Of that, $6.9
million (56.8 percent) was appropriated for extramural research
under contracts ($1.83 million), CAs/grants ($4.6 million), and
lAGs ($511,000). Forty-four on-site personnel were provided
under CAs, including the Senior Environmental Employee (SEE)
Program. Contractors, cooperators, and SEE personnel represented
about 68 percent of ERL-GB's available human resources, providing
technical, scientific, and administrative support.
With this level of dependency on extramural support, strong
management controls were necessary to offset inherent risks and
the potential for fraud, waste, and abuse of Federal resources.
However, ERL-GB managers either did not establish or properly
implement the control systems needed to adequately protect
against such risks.
ft
RESULTS IN BRIEF
ERL-GB managers did not properly manage or control the award, and
use of CAs or the services performed under such agreements to
ensure effective and efficient use of extramural funds,
consistency of agreements with applicable laws, regulations, and
related Agency policies, and effective attainment of research
objectives contained in assistance agreements. The inappropriate
use and management of CAs and questionable CA awards to certain
organizations and individuals were primarily attributed to: (1)
lack of definitive guidance on the use of CAs versus contracts;
(2) misapplication of existing statutory and regulatory guidance
by ERL-GB managers; (3) exclusive use of CAs for services
provided by educational and nonprofit institutions; (4) use of
limited competitions and conflict of interest situations related
to repetitive CA awards to select universities and institutions;
and (5) insufficient oversight by ERL-GB project officers (POs).
In addition, ERL-GB had not properly implemented the FMFIA
internal control process or the Agency's records management
requirements. As a result, internal control weaknesses in ERL-
GB 's operations were not detected and reported in the annual
FMFIA assurance letter to ORD and management processes,
decisions, and organizational functions were not properly
documented, controlled, or retained in ERL-GB's official files.
11
-------
Executive Summary
PRINCIPAL FINDINGS
IMPROPER AWARD. USE. AND MANAGEMENT OF COOPERATIVE AGREEMENTS
ERL-GB's award of CAs was inconsistent with legislative intent
and provisions of the Federal Grant Cooperative Agreement Act
(FGCAA). Our review of 15 CAs (potential value $10.4 million)
disclosed in nine instances that ERL-GB managers used CAs
(potential value $7.28 million) to procure goods and services
when contracts were the appropriate funding instrument. Also,
ERL-GB used CAs (potential value $631,300) in two other instances
when a grant was the appropriate funding mechanism because no
collaboration or EPA involvement occurred in the research
performed. These conditions occurred because of insufficient
guidance on the uses of CAs versus contracts and ERL-GB's
approach of awarding only CAs to educational and nonprofit
institutions without proper consideration of. the principal
purpose of the research to be performed. ERL-GB also considered
EPA's anticipated involvement and interaction with these
institutions rather than the primary beneficiary of the research
in selecting the instrument to fund the research required. ERL-
GB records did not document the principal purpose of the proposed
research or the basis for selecting a CA as the instrument to
fund the research.
ERL-GB's limited competitions and related awards gave the
appearance of favoritism because repetitive awards were made to
select universities or principal investigators (PI). Some of
these institutions and Pis had received noncompetitive awards in
prior years. However, because of ORD's stringent goals for
competitive CA awards, ERL-GB began to make awards to these
organizations and individuals through a limited competition
process that exhibited few attributes of real competition as
Intended in ORD guidance and the FGCAA.
Through the CA award process, ERL-GB used off-site CA awards and
related CA services to retain on-site contractor and cooperator
staffs in apparent contradiction to an ORD policy to reduce on-
site extramural support. ERL-GB moved on-site contractors and
cooperators to off-site CAs; however, the people involved
remained at the laboratory. ERL-GB POs negotiated off-site.
cooperator hiring of these individuals and assisted cooperators
in preparing CA budgets for these on-site employees. These
actions occurred because ERL-GB considered these long-term
cooperator and contractor employees essential to the laboratory's
research efforts. Such use of CA awards and related CA services
resulted in EPA involvement in cooperators' decisions, exhibited
.evidence of personal service relationships between EPA staff and
cooperators, increased rather than decreased on-site extramural
support, and caused additional CA costs that may have been
avoided without these additional on-site employees. Also, the
movement of on-site contract support services to CAs reinforces
111
-------
Executive Summary
our conclusion that the principal purpose of some ERL-GB CAs was
to provide direct support and benefit to laboratory research
initiatives and that these CAs should be contracts.
Finally, ERL-GB did not establish effective controls to ensure
that CAs were properly managed, terms of extramural agreements
were complied with, and Government assets were safeguarded
against waste or abuse. Also, insufficient documentation existed
concerning ERL-GB's post-award management and oversight of CA
activities.
BETTER FMFIA IMPLEMENTATION NEEDED
A comparison of ERL-GB's 1992 and 1993 FMFIA documentation
disclosed a substantial improvement in the laboratory's
identification and documentation of critical event cycles,
control objectives, and control techniques for related laboratory
operations. . Based on our discussions of deficiencies noted in
the 1991 and 1992 FMFIA documentation, ERL-GB managers made a
conscientious effort to improve the 1993 FMFIA process. As a
result, ERL-GB significantly improved its 1993 FMFIA •
documentation which represented a big step forward in meeting
Agency requirements and the intent of the FMFIA process.
However, some improvements are still needed to refine control
objectives and techniques. Better ERL-GB implementation of the
FMFIA management control process is essential to assure efficient
and effective laboratory operations and properly safeguard Agency
resources. Proper FMFIA documentation and implementation may
have prevented some of the problems related to CAs and records
management which are cited in other chapters of this report.
ERL-GB management did not ensure that documented FMFIA controls
and processes related to the management of CAs, critical records,
imprest funds, and the FMFIA process were integrated into the
laboratory's day-to-day operations. ERL-GB managers did not
fully understand the importance of FMFIA and their responsibility
for implementing and maintaining an effective internal control
system. Neither were ERL-GB managers adequately trained in FMFIA
requirements nor always held accountable for managing effective
internal control systems. Although ERL-GB's annual FMFIA
assurance statements consistently indicated a strong, positive
commitment to the FMFIA process, the extent to which ERL-GB
actually integrated FMFIA objectives and controls into the
laboratory's operations did not fully support this commitment.
As a result, the laboratory's annual FMFIA assurance reports were
based on incomplete information.
IV
-------
Executive Summary
IMPROVEMENT NEEDED IN DOCUMENTING MANAGEMENT DECISIONS
AND PROTECTING CRITICAL RECORDS :
ERL-GB needs to consistently document critical organizational
functions and management decisions and properly protect critical
records related to CAs and other laboratory operations to avoid
loss of valuable corporate knowledge and ensure protection of
Government interests. Although the Agency's records management
requirements for record maintenance, retention, and control were
in effect since 1984, implementation by ERL-GB was not initiated
until 1992 and had only been partially implemented at the
conclusion of our audit. Record maintenance and retention
practices in place reflected the individual preferences of
laboratory managers rather than Agency requirements, thus
creating a patchwork of inconsistent/ uncontrolled systems
throughout the laboratory. Basically, insufficient direction,
support, and priority by ERL-GB and ORD management prevented the
timely implementation of a sound records management system at the
laboratory. Records were created, maintained, and destroyed on
an individual discretionary basis without regard for or proper
awareness of Federal and Agency regulations. As a result,
critical documentation regarding CA award and management was
either never created or was missing from laboratory files. Also,
evidence was obtained that records had been destroyed without
documentation as to what was destroyed and whether such records
were or were not controlled official documentation of management
decisions or mission accomplishments.
Although Agency requirements for control and retention of in-
house research documentation has existed at least since 1978,
neither the Agency, ORD, or ERL-GB had procedures to ensure
control and protection of research records in the possession of
contractors and cooperators. ERL-GB contracts and CAs, on
occasion, did contain references to 40 CFR, Part 30, which
addressed the maintenance and control of financial records
related to the particular contract or CA. However, there were no
general or specific provisions for control of operational or
research records created as a result of the contractors' or
cooperators' activities. Contractors and cooperators were left
to devise their own records management and retention systems.
This created an unreasonable risk that valuable research
documentation could be inadvertently lost or destroyed.
As a result of records maintenance and retention problems
reported by the National Archives and Records Administration, ORD
planned and initiated several major actions during this audit
that may improve and enhance records management at ORD
laboratories. The specific actions taken or planned and their
impact on ERL-GB's operations are summarized in Appendix VIII.
After discussions of preliminary audit results with laboratory
management, ERL-GB in, October 1993, reported records management
as an Agency-level internal control weakness in its year-end
v
-------
Executive Summary
FMFIA assurance letter to the Assistant Administrator for
Research and Development.
RECOMMENDATIONS
\.
ERL-GB Management, in coordination with ORD Headquarters, needs
to strengthen oversight and control over the award and use of CAs
and the .activities performed under such agreements to ensure
effective use of Agency resources, attainment of research
objectives, and adherence to applicable laws, regulations, and
policies. GAD recognized the need for clear and definitive
guidance on the proper use of assistance agreements and contracts
under the FGCAA as a result of prior OIG audits. As a result,
GAD drafted guidance on the proper uses of assistance agreements
and contracts under provisions of the FGCAA. This guidance was
issued in final by GAD on March 22, 19941. In addition,
controls over the use of CAs would be enhanced through
documentation in CA decision memoranda of the principal purpose
of the proposed research and the basis for selecting an
assistance agreement as the funding instrument.
In addition, ERL-GB needs to improve its FMFIA process and
strengthen controls related to critical laboratory operations.
Finally, ERL-GB should implement a records management system in
accordance with Agency guidance to ensure that documentation of
management decisions and organizational functions are properly
prepared, maintained, and protected in support of critical
laboratory activities.
AGENCY COMMENTS
ORD generally concurred with our findings and recommendations and
indicated that all reported deficiencies would be addressed in a
corrective action plan which ORD will prepare and submit to OIG
as soon as possible. However, ORD did express some concern over
our interpretations of 31 U.S.C. and certain EPA guidance. In
response to ORD's concerns, we modified two report
recommendations. The specific ORD comments related to 31 U.S.C.
and EPA guidance and our response are presented in detail in
Appendix I of this report.
1 Policy for Distinguishing Between Assistance and
Acquisition, March 22, 1994.
VI
-------
TABLE OF CONTENTS
Page
EXECUTIVE SUMMARY .- . : i
CHAPTER 1 - INTRODUCTION
PURPOSE 1
BACKGROUND. 1
SCOPE AND METHODOLOGY. . 3
PRIOR AUDIT COVERAGE 7
CHAPTER 2 - IMPROPER AWARD, USE, AND MANAGEMENT OF COOPERATIVE
AGREEMENTS 9
CAs USED WHEN CONTRACTS WERE APPROPRIATE 10
QUESTIONABLE USE OF OFF-SITE CAS TO REDUCE ON-SITE
EXTRAMURAL SERVICES 14
INDICATIONS THAT PERSONAL SERVICES RELATIONSHIPS MOVED
FROM CONTRACTS TO CAs 24
RECOMMENDATIONS - USE OF COOPERATIVE AGREEMENTS 27
INSUFFICIENT ASSURANCE OF FREE AND OPEN COMPETITION IN
CA AWARDS 29
RECOMMENDATIONS - COMPETITION AND CONFLICTS OF INTEREST.. 44
MANAGEMENT OF COOPERATIVE AGREEMENTS NEEDED IMPROVEMENT.. 46
RECOMMENDATIONS - MANAGEMENT OF COOPERATIVE AGREEMENTS... 51
AGENCY RESPONSE AND OIG EVALUATION OF AGENCY COMMENTS.... 53
CHAPTER 3 - BETTER FMFIA IMPLEMENTATION NEEDED 55
BACKGROUND 55
MANAGERS NOT FULLY COGNIZANT OF FMFIA RESPONSIBILITIES OR
ASSIGNED ACCOUNTABILITY FOR FMFIA IMPLEMENTATION 56
EFFECTIVE IMPLEMENTATION OF FMFIA REQUIRES PROPER
PLANNING ' 59
INTERNAL CONTROL DOCUMENTATION INCOMPLETE 61
PERIODIC INTERNAL EVALUATIONS OF INTERNAL CONTROLS NOT
PROPERLY PERFORMED 68
-------
Table of Contents
OEPER OVERSIGHT OF ERL-GB'S FMFIA IMPLEMENTATION NEEDED
STRENGTHENING 69
AGENCY ACTIONS TAKEN DURING REVIEW - 70
CONCLUSION ..'..' 71
RECOMMENDATIONS 71
AGENCY RESPONSE 73
CHAPTER 4 - IMPROVEMENT NEEDED IN DOCUMENTING MANAGEMENT
DECISIONS AND PROTECTING CRITICAL RECORDS .... 75
BACKGROUND . .' . 76
ELEMENTS OF A SOUND RECORD MANAGEMENT SYSTEM NOT
IMPLEMENTED 77
RECORDS MANAGEMENT - A LOW PRIORITY 81
CRITICAL RECORDS NOT CREATED OR PRESERVED IN CA AND
CONTRACT FILES 82
CRITICAL AGENCY RECORDS IN POSSESSION OF CONTRACTORS/
COOPERATORS NOT PROTECTED 85
REGULAR INTERNAL EVALUATIONS OF RECORDS MANAGEMENT DID
NOT OCCUR 87
AGENCY ACTIONS TAKEN DURING THE AUDIT 87
CONCLUSION 88
RECOMMENDATIONS 88
AGENCY RESPONSE 90
APPENDICES
APPENDIX I: AGENCY COMMENTS ON DRAFT REPORT AND OIG
EVALUATION 91
APPENDIX II: GLOSSARY OF ACRONYMS AND ABBREVIATIONS... 95
APPENDIX III: SAMPLE OF COOPERATIVE AGREEMENTS AUDITED. 97
APPENDIX IV: PRIOR AUDITS OF EXTRAMURAL MANAGEMENT 99
APPENDIX V: COOPERATIVE AGREEMENTS INAPPROPRIATELY
AWARDED IN LIEU OF CONTRACTS 101
-------
Table of Contents
APPENDIX VI:
APPENDIX VII:
APPENDIX VIII
COOPERATIVE AGREEMENTS INAPPROPRIATELY
AWARDED IN LIEU OF GRANTS Ill
DOCUMENTATION OF ERL-GB INVOLVEMENT IN
HIRING UNDER COOPERATIVE AGREEMENTS 115
PROPOSED ORD ACTION IN RESPONSE TO 1992
NARA REPORT AND IMPACT ON ERL-GB RECORDS
MANAGEMENT. . 133
APPENDIX IX:
REPORT DISTRIBUTION 137
-------
-------
CHAPTER 1
INTRODUCTION
PURPOSE
Due to increasing workloads and limited Federal staffs, the
Office of Research and Development (ORD) has become highly
dependent on extramural support to accomplish its mission.
Approximately 68 percent or $348 million of ORD's total 1992
allocation of $515 million was used for on-site and off-site
extramural support obtained through contracts, cooperative
agreements (CAs), grants, and interagency agreements (lAGs).
Office of Inspector General (OIG) audits and surveys at ORD
laboratories in 1992 and 1993 disclosed serious management
problems related to .contracts, CAs, and lAGs.
In Fiscal Year (FY) 1990, ORD recognized its management of
extramural resources as a material internal control weakness in
the Agency's annual Federal Managers' Financial Integrity Act
(FMFIA) report to the President. In 1992, following the Agency's
identification of extramural resource management as a material
weakness, the OIG reported serious management problems related to
contracts and assistance agreements at several ORD laboratories.
These problems related specifically to the award and management
of CAs and lAGs at the Athens Environmental Research Laboratory
(ERL) and the Narragansett ERL. Similar deficiencies related to
CAs were found during a survey of the Gulf Breeze ERL.
Because of material weaknesses identified in the management and
use of extramural agreements at other ORD laboratories and
preliminary indications of similar problems at Environmental
Research Laboratory-Gulf Breeze (ERL-GB), the OIG, in 1993,
initiated an audit of ERL-GB.CAs and related activities at the
Office of Administration and Resources Management's (OARM) Grants
Administration Division (GAD), Washington, D.C. The primary
objective of the review was to determine if ERL-GB, in
coordination with OARM/GAD, effectively and efficiently used,
managed, and controlled extramural funds to obtain quality
research under CAs consistent with applicable laws, regulations,
and Agency directives.
BACKGROUND
ORD's mission is to provide high quality, timely scientific and
technical information, products and assistance in support of
Agency programs and goals. The Agency's research program is
conducted through twelve environmental laboratories across the
country employing about 1,900 scientific and administrative
staff, with an annual operating budget of about $500 million.
-------
I
Chapter 1
Introduction
ORD's' overall planning process engenders an applied research and
development program focused on answering key scientific and
technical questions as a basis for EPA's programmatic and
regulatory decision-making. Short-term scientific^and technical
studies support immediate regulatory and enforcement decisions
while a longer-term core research program extends the knowledge
base of environmental science and anticipates environmental
problems.
To accomplish the mission with strictly imposed Federal
employment ceilings, ERL-GB and other ORD laboratories have had
to increase their
dependency on extramural
level-of-effort contracts,
grants, CAs, and lAGs to
conduct or supplement much
of their research. ERL-
GB' s increased reliance on
extramural support is
illustrated by the pie
charts. Between FY 1987
and 1992 on-site contractor
and cooperator staff at
ERL-GB increased from 59
{51 percent of total ERL-GB
staff) to 115 (67.6 percent
of total staff).
'Li
Changes In ERL-GB On-Site Staffing
FTEs
56.4 49*
I. Cooper a tors
19 9 17%
Contractors
39 3 34*
1987
Contractors
71 42*
1992
1987 - 116 Funded Human Resources
FY 1992 - 170 Funded Human Resources
In a memorandum, dated
November 9, 1990, the
Director of the Office of
Environmental Processes and
Effects Research (OEPER) explained:
The use of on-site contractors has become a major
expense item throughout ORD. In certain instances,
expenditures for on-site services (using contracts,
cooperative agreements, or interagency agreements)
exceeds sixty percent of a laboratory's R&D budget.
On-site non-federal personnel have become a valuable
and necessary adjunct to our research program.
ERL-GB's FY 1992 budget totaled $12.2 million. Of that amount,
$6.9 million (56.8 percent) was appropriated for extramural
research under contracts {$1.83 million), CAs/grants ($.4.6
million, and lAGs/other ($511,000). Forty-four on-site personnel
were provided under CAs, including the Senior Environmental
Employment (SEE) Program. As indicated above, on-site extramural
services personnel represented about 68 percent of ERL-GB's
available human resources, providing technical, scientific, and
administrative support.
-------
Chapter 1
Introduction
The following.chart illustrates increases in extramural funding
by type of funding instrument, as well as total funding between
1987 and 1992.
MM I ion
1987 1988 1989 1990 1991 1992
lAGs/Otner
CAS/Grants
Contracts
D
12 12
SO 83
S3 95
$0,08
SO 63
J.3 92
10.06
11 26
57
SO 05
*1 57
S3 51
S3 67
II. 1
S3 85
06
83
40.51
S<> 6
*1 83
sr. 29
F i sea I rears
5-* 95o decrease in contract funds and 61 4* increase in C*/&-ant funos Between
1991-1992 reflects shift of on-sit* non-fedfrraI staff from contracts to CAs.
With this level of dependency on extramural support, strong
management controls were necessary to offset the inherent risk of
fraud, waste and abuse and ensure the efficient and effective use
of Federal resources. However, Agency managers either had not
established or properly implemented the control systems needed to
adequately protect against such risks.
In March 1992, ORD issued a directive to reduce funding for
contracts and CAs providing on-site technical services by 35
percent. These extramural resources would be reallocated to
competitive off-site contracts and CAs. As shown in the bar
chart above, ERL-GB's budget for 1992 indicated a. shift from 1991
in extramural resources from contracts to CAs/grants. On-site
contracts were reduced from $4 million to $1.8 million. At the
same time, the CA/grant allocation was increased to $4.6 million
approximately $3.4 million budgeted for off-site CAs.
SCOPE AND METHODOLOGY
This audit -primarily focused on the award, use, and management of
laboratory support services through" CAs. During the audit, we
-------
Chapter 1
Introduction
judgmentally selected and performed detailed reviews of 15 active
CAs1 with a total estimated value of $10.4 million. Our sample
was selected from a universe of 34 CAs with a total estimated
value of $17.1 million. Predecessor and successor GAs for the 15
sampled were also selectively reviewed, when considered
necessary, to fully develop conditions identified during our -
audit and to establish a historical perspective regarding the
award of current extramural agreements.
The audit fieldwork was performed from February 1993 through
January 1994 primarily at ERL-GB, GAD, and ORD Headquarters. The
audit period generally included CA awards and related activities
for fiscal years 1991 and 1992. However, older assistance
actions were reviewed when considered necessary. Where possible,
FY 1993 operations were also included in the audit, i.e., FMFIA
process and records management at ERL-GB.
As previously stated, the overall audit objective was to
determine if ERL-GB, in coordination with GAD, properly
administered and controlled extramural funds appropriated to
obtain services under extramural agreements in compliance with
applicable laws, regulations, and Agency directives. Specific
objectives were to:
- Evaluate FMFIA implementation and management controls
related to CAs to assess their adequacy in:
1) protecting the Agency from fraud, waste, and
abuse;
2) ensuring compliance with applicable laws,
regulations, and Agency directives related to
management of extramural agreements; and
3) ensuring compliance with the terms of the agreement and
the quality of performance.
- Assess whether management had complied with applicable
laws, regulations, and directives when soliciting and
awarding CAs for extramural services.
- Determine if ERL-GB used its CAs as Congress, OMB, and EPA
intended to support the Agency's research mission.
- Evaluate whether ERL-GB properly controlled and used its
imprest funds to obtain extramural services and supplies.
1 See Appendix III for cooperative agreements reviewed.
4
-------
Chapter 1
Introduction
Our audit disclosed that CAs were not used .by ERL-GB for intended
purposes under the FGCAA and that ERL-GB had not provided proper
oversight and management of CA activities. . Also, FMFIA
requirements and controls had not been effectively, implemented at
ERL-GB. In contrast, pur audit disclosed that ERL-GB's imprest
fund operations generally complied with Agency and Treasury
regulations and procedures and that imprest funds had been
properly used for small purchases of services and supplies. No
conflict of interest (COD situations were found in transactions
between imprest fund vendors and ERL-GB staff.
Audit Survey and Identification of Previously Reported Issues
During March and April 1992, CMD and ORD performed a joint review
of ERL-GB contract management. Their review consisted of file
reviews at CMD and a subsequent site visit to ERL-GB in April
1992 to review site records and discuss contract related issues.
The ensuing report, issued July 31, 1992, cited contract
management deficiencies related to conflicts of interest,
contractor performance of inherently governmental functions,
personal services indicators, and inadequate contract statements
of work and related work assignments. Our survey of ERL-GB also
revealed strong indications of potential problems in contracting
for services and in contract administration and oversight.
Because of on-going or proposed Agency actions in response to
recent OIG audits2, as well as actions proposed by EPA's
Standing Committee on Contracts Management3, we concluded that
issues identified during the ERL-GB survey such as prohibited
personal services indicators, contractor performance of
inherently governmental functions, conflicts of interest,
inadequate invoice review, inadequate statements of work and work
assignments, and other previously reported contract management
problems did not warrant further audit. Instead, these issues
2 These reports include: EPA's Management of Computer
Sciences Corporation Contract Activities. Audit No. EINME1-04-
0169-21000295 (issued March 31, 1992); Contracting Activities at
Environmental Research Laboratory - Duluth. Audit No. E1JBF1-05-
0175-2100443 (issued July 7, 1992); and Management of Extramural
Resources at Environmental Research Laboratory - Athens. Audit
No. E1JBF2-04-0300-3100156.
3 CONTRACTS MANAGEMENT AT EPA: Managing Our Mission. Staff
Report of the Standing Committee on Contracts Management, June
1992.
-------
Chapter 1
Introduction
were Included in a Special Review report4, issued September 29,
1992, to the Assistant Administrator for Research and
Development. This report was issued under provisions of OIG
Manual chapter 150 for limited scope reviews. Since these issues
were not fully developed through a detailed audit, the work was
not performed in accordance with Governmental Auditing Standards.
Our intent was to identify and report the. existence of these
problems to top ORp management for immediate action or for
inclusion in on-going Agency corrective actions in these areas.
Audit of Award. Use, and Management of CAs
To assess the solicitation, award process, and ERL-GB's overall
use, management, and oversight of CAs, we limited our review to
15 ERL-GB CAs. The sample was selected judgmental based on
information obtained during an initial file review of all current
CAs. We primarily selected those agreements which: 1) provided
ERL-GB on-site services; 2) were awarded to institutions where
key laboratory management had close relationships; 3) purchased
large amounts of equipment; 4) provided for an inordinate amount
of travel; 5) had large amounts budgeted for subcontracts or
consultants; or 6) authorized other costs which appeared
questionable.
Our general methodology for reviewing each CA in our sample was
to: 1) conduct an initial interview with each project officer
(PO) and obtain files; 2) perform in-depth reviews of all ERL-GB
and PO files documenting the award, use, and management of the
CAs sampled; and 3) conduct follow-up interviews with POs, on-
site cooperator staff, and other ERL-GB managers (e.g., branch
chiefs, laboratory director) where determined necessary. The
purpose of this intensive review was to gain an overall
understanding of the solicitation, award, use, and management of
each agreement including an evaluation of related internal
controls. Since the University of West Florida (UWF) was co-
located with ERL-GB, additional audit fieldwork was performed at
that university. In addition, we selected three other remote
recipients for site visits. We conducted interviews with the
university principal investigators (PI) and reviewed the PI and
university records/files provided. Because of the distant
locations of some cooperators included in our sample, we could
not conduct in-depth interviews with their Pis or review related
files. However, we did make telephone contact, when determined
necessary, to address questions that arose during file reviews
and interviews with ERL-GB POs.
4 Survey Report - ORD Environmental Research Laboratory,
Gulf Breeze, FL, Report No. E1XMG2-04-0283-2700014, September 29,
1992.
-------
Chapter 1
Introduction
At completion of our initial review of the sample ERL-GB CAs, we
visited GAD to review related files and determine its role in
ERL-GB's assistance decisions. At GAD, we interviewed award
officials and grants specialists involved in the CAs reviewed.
The audit fieldwork performed allowed us sufficient insight into
ERL-GB operations, as related to CAs, for us to identify and
substantively document specific problems as related to the
laboratory's solicitation, award, use, management, and oversight
of the various agreements.
The audit was conducted in accordance with Government Auditing
Standards (1988 revision) issued by the Comptroller General of
the United States. Our audit included tests of management and
related FMFIA controls, policies, and procedures specifically
related to assistance agreements, the FMFIA process, records
management, and imprest fund operations. The.findings in the
report include material control weaknesses identified during the
audit and our recommendations to correct the weaknesses, where
appropriate.
Certain data used in this report as background and summary
information for intramural and extramural support was extracted
from EPA ORD Summary Analysis Reports for both ORD and ERL-GB for
the years 1987 through 1992. No audit tests were performed to
evaluate, the adequacy of ORD's controls over the accumulation of
this statistical data or the validity of the data included in the
summary reports. Therefore, we can not and do not attest to the
accuracy of the ORD Summary Analysis Reports used in this report.
Two other issues were identified, during our audit, which were
outside the original scope of our review. However, in our
opinion, these issues were significant enough to warrant further
audit. These issues related to ERL-GB's overall implementation
of: 1) an effective FMFIA process within its organization; and 2}
a sound records management program to document management
decision processes and laboratory operations. Because these
issues related to ERL-GB's ability to establish an effective
internal control system and provide supporting documentation for.
all operations, including CAs, additional audit steps were
performed to develop these problem areas for the report. No
other issues came to our attention as a result of specified audit
procedures which we believed were sufficiently material to
warrant further audit. However, our audit procedures were not
designed to detect problems outside the scope of our review.
PRIOR AUDIT COVERAGE
Because of the substantial increase in the use of extramural
agreements Government-wide, primarily due to increasing agency
-------
Chapter 1
Introduction
workloads and limited Federal staffs. Congress and the Office of
Management and Budget (OMB) have expressed concern over the use
and control of these resources. Strong management controls are
required to ensure that Government resources are properly used
and adequately protected against fraud, waste/ and abuse both
internally and externally.
In response to the concerns of Congress and OMB, the EPA OIG has
completed numerous audits and special reviews which demonstrated
continuing problems in the way EPA Offices managed and controlled
contracts and other extramural agreements5. A 1983 OIG audit
(Audit No. ElgB2-ll-0019-30828) of ORD extramural activities
under contracts, CAs, and lAGs identified some of the same
problems discussed in this report. More recent reports, issued
over the past two years involving several ORD locations, have
reaffirmed the existence of problems in the award, use, and
management of contracts and other assistance agreements.
Such as:
- EPA's extensive use of extramural agreements to perform
critical Agency functions and augment insufficient EPA staff.
- Lack of competition. Excessive, improper use of contract
consolidations and modifications in lieu of open solicitation
and competition for services. Misuse of CAs to obtain goods
and services for the direct benefit of the Government and avoid
the contracting process.
- Inadequate monitoring and quality assurance criteria to
evaluate contractor and cooperator performance; and
- Potential conflicts of interest in the solicitation and award
of contracts and other extramural agreements.
5 See Appendix IV for list of prior audits concerning
extramural management.
8
-------
CHAPTER 2
ERL-GB's award of cooperative agreements (CAs) was inconsistent
with the Federal Grant and Cooperative Agreement Act (FGCAA).
Our review of 15 CAs (potential value $10.4 million) disclosed in
nine instances that ERL-GB managers used CAs (potential value
$7.28 million) to procure goods and services when contracts were
the appropriate funding instrument. Also, ERL-GB used CAs
(potential value $631,300) in two other instances when a grant
was the appropriate funding mechanism because no collaboration or
EPA involvement occurred in the research performed. This
occurred, in part, because of a lack of clear Agency guidance to
determine when CAs should be used rather than contracts; and ERL-
GB 's approach of awarding CAs to educational and nonprofit
institutions without proper consideration of the principal
purpose of the research to be performed as required under the
FGCAA. ERL-GB also considered EPA's anticipated involvement and
interaction with these institutions rather than the primary
beneficiary of the research in selecting the instrument to fund
the research required. ERL-GB records did not document the
•principal purpose of the proposed research or the basis for
selecting a CA as the instrument to fund the research.
ERL-GB's limited competitions and related awards gave the
appearance of favoritism because repetitive awards were made to
select universities or principal investigators (PI). Some of
these institutions and Pis had received noncompetitive awards in
prior years. However, because of ORD's stringent goals for
competitive CA awards, ERL-GB began to make awards to these
organizations and individuals through a limited competition
process that exhibited few attributes of real competition as
intended in ORD guidance and the FGCAA.
Through the CA award process, ERL-GB used off-site CA awards and
related CA services to retain on-site contractor and cooperator
staffs in apparent contradiction to an ORD policy to reduce on-
site extramural support. ERL-GB moved on-site contractors and
cooperators to off-site CAs; however, the people involved
remained at the laboratory. ERL-GB POs negotiated off-site
cooperator hiring of these individuals and assisted cooperators
in preparing CA budgets for these on-site employees-. These
actions occurred because ERL-GB considered these long-term
cooperator and contractor employees essential to the laboratory's
research efforts. Such use of CA awards and related CA services
resulted in EPA involvement in cooperators' decisions, exhibited
evidence of personal service relationships between EPA staff and
cooperators, increased rather than decreased on-site extramural
support, and caused additional CA costs that may have been
avoided without these additional on-site employees. Also, the
9
-------
Chapter 2
Award, Use, and Management of Cooperative Agreements
movement of contracted support services to CAs reinforces our
conclusion that the principal purpose of some ERL-GB CAs is to
provide direct support and benefit to laboratory research
initiatives and that these CAs should be contracts.
Finally, ERL-GB did not establish effective controls .to ensure
that CAs were properly managed, terms of extramural agreements
were complied with, and Government assets were safeguarded
against waste or abuse. Also, insufficient documentation existed
concerning ERL-GB's post-award management and oversight of CA
activities.
CAs USED WHEN CONTRACTS WERE APPROPRIATE
Annual budgets, FTE ceilings, and ORD policies which limited
intramural funding and directed extramural spending, personal
biases against contracting with educational and nonprofit
institutions, and confusion regarding the collaborative
activities permitted under contracts versus CAs significantly
influenced ERL-GB's selection and use of extramural agreements.
The questionable uses of CAs were sometimes driven by ORD
directives and policy (i.e., reduction in on-site support
contracts) or a specific request from ORD to fund a research
proposal (i.e., Louisiana State University, University of
Maryland CA's). As a result, ERL-GB's use of assistance
agreements did not always meet the intent and provisions of the
FGCAA and may not have achieved the most economical and efficient
use of Federal funds.
Background
Authorizing Statute and Related Congressional Intent
Public Law 95-224, the FGCAA of 1977 eliminates ineffectiveness
and waste resulting from confusion over the definition and
purposes of the legal instruments to select and use contracts,
cooperative agreements, and grants. Congress also intended to
preclude Federal agency circumvention of competitive procurement
through inappropriate use of assistance agreements. The Act
required that the choice and use of these legal instruments be
clear to reflect the principal purpose and type of relationship
expected between the Federal government, contractors, States,
local governments, and other recipients in acquiring property and
services and in providing Federal assistance.
The FGCAA is codified at Title 31 United States Code (U.S.C.),
Sections 6301-6308. The FGCAA sets forth the following criteria
which determines when a contract, cooperative agreement or grant
should be used as the legal instrument which describe the
10
-------
Chapter 2
Award, Use, and Management of Cooperative Agreements
relationship between Federal agencies and the States, local
government, and other recipient:
Instrument
Contract
Cooperative
Agreement
Grant
Relationship
The principal purpose of the relationship is to
acquire by purchase, lease, or barter, property or
services for the direct benefit or use of the
Federal government. -
The principal purpose of the relationship is to
transfer money, property, services, or anything of
value to the recipient in order to accomplish a
public purpose of support or stimulation instead
of acquiring property or services for the direct
benefit or use of the Federal Government; and
there will be substantial involvement between the
Federal agency and the recipient during.
performance of the activity.
The principal purpose of the relationship is to
transfer money, property, services, or anything of
value to the recipient in order to accomplish a
public purpose of support or stimulation instead
of acquiring property or services for the direct
benefit or use of the Federal Government; there
will be no substantialinvolvement between the .
Federal agency and the recipient during perfor-
mance of the activity.
Under the FGCAA, Congress intended that the Government's
principal purpose in using extramural funding would determine the
proper funding instrument. Senate Report No. 95-449, dated
September 22, 1977, from the Governmental Affairs Committee on
the 1977 Act stated that:
... the objective of this added flexibility [authority
to either employ contracts, grants, or cooperative
agreements] is to require the agencies to make
conscious decisions on whether a particular transaction
or class of transactions is in fact a procurement
transaction for the direct benefit of the government or
whether it is an assistance transaction serving non- .
Federal public purposes [emphasis added]. The '
discipline of this choice will tend to prevent the use
of grants [and cooperative agreements] to avoid
competition.
11
-------
Chapter 2
Award, Use, and Management of Cooperative Agreements
Senate Report No. 97-180, dated August 13, 1981, related to
hearings on amendments to the FGCAA Act, stated':
Congress is making every effort to achieve economy and
efficiency in the administration of Federal programs.
These goals are subverted if agencies ignore the
economies of competitive procurement and
indiscriminately use grants [and other assistance
agreements, i.e. CAsJ in place of contracts....
Inappropriate Use of CAs
Based on ERL-GB records and staff interviews, management
decisions to award CAs did not meet the intent of the FGCAA which
was to assure the appropriate selection and use of contracts,
cooperative agreements, and grants. In 9 of 15 CAs we reviewed,
ERL-GB used less restrictive CAs to acquire property and services
from a recipient for direct EPA benefit or use in lieu of the
appropriate, controlled contracting process. For example, one CA
was used to develop protocols and perform product testing on oil
spill technologies. This agreement was to produce information on
the effectiveness of particular products which could be used by
EPA and other Federal agencies in making future selections of
clean-up technologies. The primary beneficiaries of the testing
would be the Federal government (i.e., EPA, National Oceanic and
Atmospheric Administration (NOAA), and the U.S. Coast Guard). In
another instance, a CA was used for the sole purpose of providing
laboratory space and supplies for an ERL-GB scientist to conduct
research in Hawaii. In another case, a CA was used to finance
research performed by a OEPER employee enrolled in the
cooperative education program. Other CAs provided field data
directly to ERL-GB for use in an EPA computerized database that
was collected by cooperators from sampling sites selected by EPA,
using equipment provided by EPA, sampling procedures (protocols)
established by EPA, under a predetermined schedule directed by
EPA. In two other cases, CAs were being used when ERL-GB had no
significant involvement in the research project. In both
instances, a grant was the appropriate funding instrument.
For the 15 CAs in our sample, ERL-GB records related to CAs did
not adequately document a principal purpose of support and
stimulation which would have been the basis for awarding a CA or
a grant as the proper funding instrument. Based on our review of
laboratory and recipient documentation, and interviews with ERL-
GB staff, we concluded that the principle purpose or original
intent of 9 of the 15 CAs was for the direct benefit of EPA or
the Federal government. Therefore, a contract should have been
awarded to fund the proposed projects. Inappropriate uses of CAs
included in our sample and the related CA dollar values are shown
in the chart below. Details of CAs that we concluded were used
12
-------
Chapter 2
Award, Use, and Management of Cooperative Agreements
for the. direct benefit of Federal government are' summarized in
Appendix V. CAs that should be grants are summarized in Appendix
VI.
INAPPROPRIATE USE OF COOPERATIVE AGREEMENTS
Audit Conclusion
Per Supporting
Document at i on
Sample of
ERL-GB CAS
Estimated Value
Should Be Contract
Should Be Grant
Correctly Awarded
Totals
9 a/
$ 7,283,762
$ 631,300
$ 2.446.427
$10.361.489
a/ Total sample was 15 CAs; however, the original CA to
Texas A&M University was proper, but two subsequent CA
supplements should have been contracts. Therefore, the
original CA is counted as correctly awarded and the
supplements are counted under should be contracts.
Senior ERL-GB managers were aware of the FGCAA but, without
specific Agency guidance on its implementation and interpretation
of the law, ERL-GB managers were allowed to make their own
interpretations and application of the statute in the selection
of extramural funding instruments. Personal biases of ERL-GB
managers against using contracts and the contracting process,
especially for funding research by educational and non-profit
institutions, may have contributed to the inappropriate use of
CAs. The laboratory director told us that contracts, placed an
unnecessary administrative burden on universities and that use of
contracts could reduce participation in cooperative research by
educational institutions. ERL-GB managers assumed that
educational organizations and Pis would not want to work under a
restrictive contract.
In addition, ERL-GB managers did not properly consider the
principal purpose of the research as required under the FGCAA.
Neither did ERL-GB official records adequately establish the
principal purpose or the basis for selecting a CA as opposed to a
contract. There was no documentation of principal purpose or
justification for the' funding instrument selected for any of the
15 CAs in our sample. ERL-GB managers incorrectly considered
EPA's involvement or interaction with potential cooperators in
selecting the instrument used in funding the proposed research.
13
-------
Chapter 2
Award/ Use, and Management of Cooperative Agreements
For several CAs, ERL-GB POs explained that the proposed research
could not be performed under a contract because the need for a
dialogue (e.g., potential personal services) between ERL-GB and
the recipients. However, the need for a dialogue or close
collaboration (i.e., avoidance of a prohibited personal services
contractual relationship) and the type of organization is not the
criteria for deciding between a contract and a CA.. Senate Report
No. 97-180, dated August 13, 1981 stated:
. . .When choosing between procurement and assistance,
the degree of anticipated involvement is of no
consequence; the choice is governed solely by the
principal federal purpose in the relationship.
If the principal purpose of the proposed agreement is to supply
goods or services for the direct benefit of EPA, then a contract
is in order. If the arrangement is principally intended to
accomplish a public purpose of support or stimulation, then a CA
or grant would be the proper funding instrument. Only after an
agency has determined the principal purpose of a transaction does
the degree of involvement by the Federal government become
relevant criteria for selecting the funding mechanism (i.e.,
selection between a CA or grant) .
One of the 15 CAs we reviewed was awarded when ERL-GB did not
anticipate substantial involvement in the proposed research. In
another case, a CA was awarded but substantial participation by
the PO did not occur. The FGCAA requires the award of a grant
when substantial Federal involvement is not anticipated in the
proposed project. EPA policy requires that CAs be converted to
grants when substantial participation does not occur after CA
award (see Appendix VI for details) . The laboratory director
told us that ERL-GB used CAs because only ORD' s Office of
Exploratory Research (OER) is currently authorized to award
grants. Therefore, ERL-GB should have referred the assistance
proposals to OER for award of a grant or requested grant award
authority from ORD Headquarters .
QUESTIONABLE USE OF OFF-SITE CAs TO REDUCE ON-SITE EXTRAMURAL
SERVICES
ERL-GB used 4 of the 15 CA awards we reviewed to comply with an
ORD policy directing, by the end of fiscal 1993, a 35 percent
reduction in on-site LOE technical support contract and CA
dollars ($983,499) and related staff years (reduction 39 persons)
from 1991 levels. ERL-GB used these four agreements and other
off -site CAs, not included in our sample (see chart on pages 19 ,
and 20) , to move individuals who provided support services under
on-site contracts and CAs to off -site assistance agreements.
Although ERL-GB 's end-result appeared to numerically comply
14
-------
Chapter 2
Award, Use, and Management of Cooperative Agreements
(dollars and staff years) with the 35 percent reduction, .in
actuality, the personnel and a majority of the related services
remained on-site at ERL-GB.. The personnel and services were
merely moved from one instrument to another. In addition,, ERL-GB
POs were involved in the cooperators' selection and hiring'of
these on-site extramural employees, prepared cooperator budgets
related to these employees, and, in some instances, negotiated
the salaries to be paid by cooperator's for these people's,
services -to prevent any reduction in compensation. ERL-GB
considered these long-term, non-Federal staff to be valuable and
essential to the laboratory's mission and used creative means to
retain their services on-site. This use of CA awards and related
CA services (l) resulted in questionable PO involvement in
cooperator staffing, budgets, and related decisions; (2)
exhibited indications of personal service's relationships between
EPA staff and cooperators (i.e., on-site cooperators for off-site
agreements, PO involvement in cooperator hiring of on-site staff
and related CA budgets, and need for close dialogue or
collaboration between POs and cooperator staff); (3) increased
rather than decreased on-site extramural support by 29 percent;
and (4) caused additional CA costs that may have been avoided
without the addition of on-site staff to cooperator budgets.
Further, the transfer of contracted services to CAs appeared
questionable because these services were for direct support of
ERL-GB research initiatives and, therefore, could not be properly
funded under an assistance agreement.
Background
A March 16, 1992, memorandum from the Assistant Administrator for
Research and Development outlined ORD's plan to significantly
increase the total allocation of extramural resources to
competitive, off-site cooperative research agreements. The
Assistant Administrator's intent was to reduce LOE support type
agreements and maximize competition for research CAs in order to
obtain the best research scientists available in academic
institutions nationwide. This re-allocation of resources was to
develop long-term cooperative research relationships between ORD
and leaders of the external scientific community.
The Assistant Administrator, in his March 16 memorandum,
established as a goal a 35 percent reduction in on-site LOE
contracts and CAs by the end of 1993. In particular, those
extramural agreements providing direct support to in-house
research programs were to be redirected to the award of
competitive off-site CAs and competitive completion form (cost
reimbursable) contracts. FY 1991 was used as the base year for
measuring the reduction. This emphasis on increased extramural
funding for off-site agreements was reflected in ERL-GB's 1992
budget which included a 61 percent increase in funding for CAs
15
-------
Chapter 2
Award, Use, and Management of Cooperative Agreements
•over their 1991 budget versus: a 55 percent decrease in contract
funding from 1991. :
As previously stated, the Assistant Administrator directed the
shift in extramural emphasis from on-site to off-site agreements
in order to increase"ORD relationships with the academic
community and facilitate the best science possible at a
reasonable cost. However, assistance agreements would not
necessarily involve bids or cost/price analysis as normally
required for contracts; therefore, the increased use of CAs would
not necessarily ensure ''a reasonable cost" in comparison to
contracts. In addition, ERL-GB, in its efforts to comply with
the Assistant Administrator's redirection of extramural
resources, did not address the very different uses of contracts
and CAs as set-forth in the 1977 FGCAA.
According to a December 1, 1992, memorandum from the ERL-GB
director to the OEPER director, subject "Implementation Plan for
Meeting the 35% Reduction in LOE Contract Expenditures," ERL-GB
calculated its 35 percent reduction in on-site contracts and CAs
as shown in the chart below.
LOE Contract Costs
LOE CA Costs
LOE Base/Ceiling
LOE On-Site Contract
LOE On-Site CA
Redirected R&D Funds'
Redirected LOE Staff
FY 1991 Base
$2,512,997
$ 297,000
$2., 809, 977
47 Person Years
14 Person Years
$ 0
0 Person Years
FY 1994 Target
$1,402,000
$ 0
$1,826,498
22 Person Years
0 Person Years
$ 983,499
39 Person Years
As shown above, ERL-GB planned to reduce its on-site LOE support
from 61 person-years in the 1991 base year to 22 person-years by
1994 (a decrease of 39 positions). To accomplish its goal, ERL-
GB proposed to negotiate a replacement on-site LOE contract with
a 1994 base cost of approximately $1.4 million. A $1.1. million
reduction from the -$2.5 million level in 1991. In addition, two
University of West Florida {UWF) CAs, which were included in the
1991 base as providing LOE support, were originally scheduled to
terminate in July and September 1993. However, both UWF CAs were
extended to September 1994 (one year) at no additional cost to
the Government. ERL-GB indicated that subsequent CAs to UWF did
not provide LOE type support.
16
-------
Chapter 2
Award, Use, and Management of Cooperative Agreements
The chart below reflects the significant shift of-.ERL-GB's on-
site extramural support and related services from contracts to
CAs between FYs 1991 and 1992. In just one year, on-site
cooperator staff increased from a. -84.9 percent to a positive
121.1 percent above the 1987 on-site cooperator level. At the
same time on-site contractor staff decreased 28 percent (108.7%
minus 80.7%) as compared to 1987.
% Change From 1987 Base Year
1987 1988 1989 1990 1991 1992
ERL-GS Staff
Contractors
Cooper a tors
0
0
0
-8.7
12
0
-11.7
20 9
-67.3
-6
52.6
-74 9
-0.7
108. 7
-84 .9
-2.5
80.7
121 1
»->u I f Breeze Lab
ERL-GB's plan for accomplishing ORD's goal of reducing on-site
extramural support was evidenced in a January 14, 1993 memorandum
written by an. ERL-GB manager. In this memorandum, the manager
discussed the plan being developed within his branch to reduce
on-site contract and cooperator support. (A copy of this
memorandum is included in Appendix VII.)
... it had been my impression that we were asked to
a.) .reduce our dependence on the contract [TRI] and
b.) carefully decide which activities were to be
covered by contract or COOP agreement... I have
reduced the TRI staff from the original 26 employees
(1992 level) to 1"B employees. I am currently making
plans to move [TRI employee] and [TRI employee] to
Univ. of New Hampshire [Pi's name] COOP agreement, and
[TRI employee] and [TRI employee] to AARP [SEE
17
-------
Chapter'2
Award, Use, and Management of Cooperative Agreements
program]... These moves reflect a total staff reduction
of 46%.
As a result, certain employees working under the Technical
Resources, Inc. (TRI) on-site LOE contract at ERL-GB were
subsequently moved to off-site CAs, while they remained on-site
at ERL-GB. These long-term contractor employees at ERL-GB were
obviously a valuable resource and had contributed substantially
to accomplishment of the laboratory's mission.
As evidenced in the chart on the following pages, on-site
extramural employees were repeatedly moved between contracts and
CAs and, when possible, converted to EPA employees. As the
highlighted area (March 1992 - initial on-site support funding
reductions) denotes, ORD's policy directing a 35 percent
reduction of on-site extramural support resulted in ERL-GB moving
long-term cooperator and contractor employees, as well as some of
the related services to off-site CAs in order.to retain these
services on-site. As shown on the following pages, some of these
employees had previously moved from one extramural mechanism to
another while remaining on-site at ERL-GB.
*
18
-------
Chapter 2
Award, Use, and Management of Cooperative Agreements
I MOVEMENT OF ON-S1TE EMPLOYEES BETWEEN EXTRAMURAL INSTRUMENTS
NO ITTTLE joautt
1 SIS -Biological Aide PB
Biology Assistant
2 Associate Programmer
3 Biology Assistant
4 Research Aide
5 SIS -Laborer FACIL
Warehouse Clerk
6 Microbiology Technician —
Research Assistant
7 Mknbkdogy Technician —
8 SIS - Biological Aide PB
Microbiology Technician
9 Microbtal Eulogist
10 SIS - Biological Aide EEB
Biology Assistant
U Research Associate U. ILL
JUtlmrninJh.tjJLiLjmtMt
nucrvDEoiogiSi
12 Physical Science Aide
| Microbiology Assistant
13 Blolgy Assistant
Oct 1988 JAng 1990
TRI
_
TRLUWF
UWF CSC
PSS OTHER
TRI TRI
—
TRI
TRI TRI
EB TRI
U. ILL U. ILL
MEBB
TRI
Feb 1991 1 Oct 1991 | Mar 19»| Oct 1992 1 May 1993
TRI TRI
CSC
UWF UWF
TRI
COLEJ COLEJ
TRI
TRI
TRI TRI
MEBB MEBB
TRI TRI
TRI MEBB
MEBB TRI
TRI TRI
14 Chemist — — — — —
IS Laboratory Aide SEE
16 Dishwasher
17 SIS
Biological Aide
Microbiology Assistant
18 Microbioiogist TAI
19 Microbiology Technician
20 Microbiologist Assistant
21 Aquatic Toxkologist TAI
22 SIS • Biological Aide
Biology Assistant
23 Microbiologist
24 Biology Assistant
25 Biology Aide
Press Sie»er
Technician
26 Post-doctoral
1 28 Microbiology Associate
29 Microbiologist TAI
I) Site Manager
f 30 SK.Pby.fcaI Science —
SEE SEE
TRI TRI
TRI TRI
TRI
TRI TRI
EB EB
TRLNRC,
TRI
PB
MEBB SBP
TRI
TRI TRI
MEBB TRI
TRI TRI
— TRI
MEBB
TRI TRI
TRI TRI
TRI TRI
TRI TRI
EB EB
TRI TRLUWF
TRI
TRI
SBP
SBP SBP
TRI TRI
TRI TRI
TRI
,CSC
UWF
TRI
COUEJ
^—
TRI
TRI
MEBB
TRI
TRI
TRI
TRI
UWF
MEBB
TRI
TRI
TRI
TRI
EB
UWF
UWF
SBP
SBF
TRI
TRI
TRI TRAC
TRI TRI
UWF UWF
TRI TRI
COLEJ SSI
UWF UWF
TRI
TRI TRI
MEBB MEBB
TRI TRI
MEBB MEBB
TRI TRI
TRI TRAC
TRI SEE
TRI SEE
UWF UWF
TRI UWF
TRI TRI
UWF UWF
TRI TRAC
TRI TRI
EB EB
UWF UWF
Inn 1993 JAng 1993 | Dec 1999
TRAC TRAC TRAC
AVANT
UWF UWF UFL
AVANT OFF
-------
Chapter 2
Award, Use, and Management of Cooperative Agreements
MOVEMENT OF ON-SITE EMPLOYEES BETWEEN EXTRAMURAL INSTRUMENTS
NO ITTTLE |octi9w
Biology Assistant
31 Biology AUe
rind Operations
32 Microbiology Assistant
33 Research Associate —
34 Microbiology Associate
35 1987/8 - Post-doctoral —
9/8S-MIcrobiologist
10/88 -4/90 -Otter
Mkrobiologlst
36 Research Aid
37 Lab Manager
38 Equipment Specialist
39 Individual Contractor CONTR
Project Manager
Air Conditioning Spec.
Oct 1988 JAng 1990 JFeb 1991 1 Oct 1991
— — — HI
.TRI TRI TRI
UWF
— • TRI TRI TRI
NRC.TRI TRI TRI UWF
Other
CSC CSC CSC
— — TRI
TRI COLEI COLEI COLEI
CONTR COLEI COLEI COLEI
— TRI TRI
41 Biology Assistant
42 Microbiology Assistant —
Biological Aide
43 Faculties Aide
44 Research Associate —
S1S.UWF
RSS RSS COLEI
Mar 1M2J Oct 1992 j May 1993 |jonl993J Anj 1993 | Dec 1993
UWF
TRI
UWF
TU
UWF
CSC
TRI
COLEI
COLEI
TRI
as
— -
COLEI
UWF TRI AVANT AVANT AVANT
TRI UWF UWF UWF UWF
UWF UWF UWF UWF UM
UWF UWF UM UM UM
UWF UWF UWF UWF UWF
./•
GCRL GCRL GCRL GCRL GCRL
TRI SEE SEE SEE SEE
COLEI SSI SSI SSI SSI
COLEI SSI SSI SSI SSI
TRI TRI AVANT AVANT UWF
TRI UWF UWF UWF UWF
TRI OTHER UNH UNH UNH
COLEI SSI SSI SSI SSI
UWF .UWF ,UWF UWF UWF UWF NRC
AVANT • Avantl PB - Patnobktlogy Branch UA - University of Arkansas
COLEJ - Colejon Mechanical * FSS - Program Support Staff UFL - University of Florida
CONTR - Independent Contractor RSS - Research Support Staff U. ILL. - University of Illinois
CSC - Computer Sciences Corporation SBP - Southern BtoProducts, Inc. UNH - University of New Hampshire
GCRL • Gnlf Coast Research Laboratory • SEE - Senior Environmental Employment UNT - University of North Texas
EB ' Ecotoxteology Branch SIS - Stay-ta-Sehool Employee UM - University of Minnesota
EEB - Ecological Effects Branch SSI - SUJnhoff and Sandier, Inc. UO - University of Oklahoma
FACIL - Facilities Staff TAI - Technology Applications, Inc. " UWF - University of West Florida
LAI - Labott Anderson, Inc. . TAMU - Texas A&M University * Replaced by SSI
MEBB - Microblal Ecology and Biotechnology Branch TRAC - TRAC Laboratories - GCRL subcontractor •• Replaced by TRI
NRC - National Research Council TRI - Technical Resources, Inc. *•* ••• Replaced by Avanti
For four off-site CAs in our sample, extramural personnel were
moved from on-site contracts and CAs to these off-site
agreements. File reviews and interviews indicated that ERL-GB
POs were involved in varying degrees in the cooperator hiring of
these on-site extramural employees. For at least three of these
off-site CAs, the original assistance budgets submitted by
cooperators were changed to include the additional on-site
support. About $882,761 in-CA costs were included in cooperator
budgets for salaries, travel, and supplies for the on-site
employees. Evidence was obtained that ERL-GB directly influenced
20
-------
Chapter 2
Award, Use, and Management of Cooperative Agreements
the cooperator's budget preparation to include provisions for on-
site cooperator personnel. Examples of correspondence between
cooperators and POs reflecting PO involvement in cooperator
hiring of on-site personnel and related budget preparation are
presented in Appendix VII. .
For all four CAs, the positions were filled with current
contractor or cooperator personnel located on-site at ERL-GB and
these individuals remained at ERL-GB working under the new off-
site agreements. ERL-GB managers and staff emphasized the need
for the on-site support under off-site CAs for the benefit of
collaboration and substantial involvement. However, the on-site
personnel being hired under the off-site CAs were not previously
cooperator employees who would normally be familiar with the
proposed research but on-site contract/CA employees that ERL-GB
needed to move to meet ORD's goal of reducing extramural support
dollars and staff by 35 percent. Neither were these individuals
serving in key cooperator positions with whom a PO would normally
collaborate. In one case, the cooperator's Co-Investigator told
us he did not know how the work being done on-site at ERL-GB
related to his CA research objectives.
Between October 1991 and December 1993, 23 on-site contractor and
cooperator employees were moved to CAs, subcontracts under CAs,
or SEE1 positions. During this same time-frame, the actual
number of contractors, cooperators, and SEE employees located on-
site increased by 29 percent (112 to 144) rather than decreasing.
However, ERL-GB still reported to ORD Headquarters that it met
the goal of reducing its dependency on on-site LOE contracts and
CAs by 35 percent.
Two examples where on-site contract and CA employees were
recently moved to off-site CAs follow:
University of Arkansas CA awarded September 1992. estimated value
$599.176 - At ERL-GB's request, the University of Arkansas for
Medical Sciences (UAMS) added an on-site employee to be located
at ERL-GB to their application for assistance. The employee who
was eventually hired under the CA was employed under ERL-GB's on-
site LOE support contract. Evidence obtained primarily from the
cooperator's files indicated that the ERL-GB PO directly
influenced the cooperator's hiring of this person and
.participated in preparing the assistance budget related to this
additional on-site CA employee. The total additional cost added
1 The Environmental Programs Assistance Act of 1984 (P.L. 98-
313) authorizes EPA to hire persons 55 years of age or older for
technical support using grants or cooperative agreements under its
Senior Environmental Employment (SEE) Program.
21
-------
Chapter 2
Award, Use, and Management of Cooperative Agreements
to the CA as a result of this on-site position was over
$131,000*.
A comparison of the original application for Federal assistance
submitted by UAMS on July 9, 1992, and the final application for
assistance, disclosed that the original application did not
include any provision for an on-site employee at ERL-GB. There
were only three people budgeted on the original application (PI,
Co-I, post doc) and no one was to be located at ERL-GB.
According to the budget, the total cost of the three year project
was only $392,488. However, a revised application was submitted
on July 23, 1992, which had a total budget of $479,674 and
included an additional on-site employee for ERL-GB. The POs
involvement in the cooperator's budget is reflected in a July 22,
1992, letter from the UAMS Co-I to the PO containing UAMS
employee compensation and fringe benefits information for
calculation of the on-site employee's CA costs. A copy of this
letter in shown in Appendix VII.
The final assistance budget provided that the post doc position,
officially planned at UAMS, would be located at ERL-GB while an
additional research assistant would be hired at UAMS. As shown
in UAMS' original budget and later confirmed to us by'a UAMS
investigator, the University originally planned for the post doc
to be located at UAMS working collaboratively with them.
However, after the full proposal was submitted, the EPA PO
suggested that the UAMS investigators locate the post doc at Gulf
Breeze to assist the PO. The PO said it was his idea to have a
cooperator located at ERL-GB because CAs require collaboration
and substantial involvement.
The PO received copies of all the applications for the post doc
position and he and the PI discussed the candidates. Although
the position in the approved CA budget was for a post doc with a
Phd, the person who was eventually hired was not a Phd. The
individual selected was an on-site TRI contract employee with a
masters degree who served in a research associate position under
the TRI contract and had previously worked as a technician for
the CA PO as a contract employee. The PO, another ERL-GB
scientist, and the TRI site manager all wrote letters of
reference to UAMS for this contractor employee. The UAMS PI said
the ERL-GB PO actively participated in the final selection for
the post doc position because the person hired would be working
directly with the PO at ERL-GB. The PO said he selected the TRI
contract employee because this employee had developed very
2 This amount --includes the additional amount added for
personnel/fringe benefits to compensate for the state tax in
Arkansas ($20,490) , an additional position added at UAMS ($85,244) ,
and indirect costs associated with these amounts ($25,376).
22
-------
Chapter 2
Award, Use, and Management of Cooperative Agreements
important skills and, therefore, was the best qualified applicant
for the on-site CA position.
• Prior to his UAMS appointment, the ERL-GB on-site contract
employee had worked directly with the PO who would oversee the
UAMS CA. The newly appointed UAMS employee informed us that he
once was the PC's technician under the TRI contract (a personal
services relationship) but now, under the CA, the cooperator
employee said he "works independently with the PC's guidance."
When asked if he was still the PO's technician and whether he
worked for the PO or PI, the cooperator would not answer the
question directly but only replied that he "worked to get EPA's
mission .accomplished."
The PO told us that the on-site CA support could not be
accomplished under a contract because it required his input into
the on-site employee's work and EPA employees are "legally not
supposed to talk to contractors at all" (e.g., prohibited
personal services). However, the PO indicated that soon it would
not be necessary for ERL-GB to move employees from the on-site
contract (i.e., to meet ORD's mandated reduction). This must
have occurred because this individual since our review has been
moved back to the new on-site LOE contract with Avanti (see
schedule on page 19, individual number 28).
Based on our review, we could not conclude that adding an
additional person on-site to the,UAMS CA improved collaboration
between UAMS and ERL-GB. As a result of locating the post doc
.position at ERL-GB, the UAMS Co-I said he had to perform the work
originally planned for the post doc position at the University.
The Co-I stated that he did not know how the on-site UAMS
employee's work would contribute to meeting the CA's research
objectives.
Gulf Coast Research Laboratory (GCRL)/TRAC Laboratories CA
awarded February 1991. estimated value 51.543.845 - On-site,
temporary TRI contract employees were transferred temporarily to
the GCRL CA in 1992 and directly to a subcontract under this same
CA in 1993. During the first year of Environmental Monitoring
and Assessment Program (EMAP) sampling (1991), the sediment
toxicity testing work was performed by TRI on-site contract
employees. During the second year (1992), the full-time sediment
toxicity tasks continued to be done by TRI employees; however,
the EPA PO told a GCRL PI that the five temporary TRI employees
performing this task could not continue under the on-site
contract in 1992. A letter, dated December 9, 1991, from, the
ERL-GB PO to the GCRL PI requesting that GCRL hire the temporary
TRI employees is presented in Appendix VII. The GCRL PI
subsequently hired these employees under the GCRL CA. In the
third year of the CA (1993), further cuts in the on-site LOE
contract resulted in all of the sediment toxicity tasks, along
23
-------
Chapter 2
Award, Use, and Management of Cooperative Agreements
with three permanent TRI employees, being moved to the GCRL CA.
According to the PI, GCRL arranged a subcontract in 1993 with
TRAC Laboratories, Inc. (TRACL) to hire all eight TRI employees
(permanent and temporary) who were performing sediment toxicity
tests under the CA and TRI contract. He said his purpose was to
maintain continuity of personnel under GCRL's portion of the EMAP
project. .
The former permanent TRI employees confirmed to us that they were
moved from the on-site TRI contract to a subcontract under the
GCRL CA as a result of cuts in the on-site LOE contract. These .
cooperator subcontract employees performed the same on-site tasks
for TRACL that they were responsible for under the TRI contract.
According to one employee, the move to TRACL was not their idea.
They were told "if you want your job, you will make the move."
The PO said that the laboratory director required that the tasks
be moved from the on-site LOE contract to the GCRL CA. The PI
said that it was more efficient to do the work under a CA because
of the required interaction between these employees and EPA staff
(e.g., personal services restrictions under contracts).
Again, in our opinion, ERL-GB's intent in moving these contractor
employees to a subcontract under the GCRL CA was driven by ORD's
policy to reduce on-site LOE contract and cooperator support by
35 percent. The need for dialogue between EPA and the
cooperators was not sufficient justification for placing these
employees under a CA versus a contract. For the TRI contract
employees moved to TRACL, their tasks did not change after
transfer from the contract to the GCRL CA which further supports
our prior conclusion that the work being performed under this. CA
directly benefitted EPA and should be funded through a
competitive contract.
INDICATIONS THAT PERSONAL SERVICES RELATIONSHIPS MOVED FROM
CONTRACTS TO CAs
ERL-GB and cooperator records and statements by POs indicated
that personal services relationships could exist between ERL-GB
POs and cooperator staffs, especially on-site CA funded staff.
As discussed in this Chapter, ERL-GB personnel told us on several
occasions that CAs were used in lieu of contracted services
because contracts prohibited close dialogue and collaboration
between Federal and contractor employees and that such close
relationships between Federal employees and cooperator staff were
not prohibited. As previously discussed in this chapter, on-site
contractor personnel were moved to off-site CAs in order to
comply with ORD's policy dictating a 35 percent reduction in on-
site LOE technical support contracts and CAs. In addition, the
need for close PO guidance or involvement in these individuals'
work, which was not permitted under the on-site contracts,
24
-------
Chapter 2
Award, Use, and Management of Cooperative Agreements
prompted the use of off-site CAs. POs were substantially
involved in cooperator hiring of these on-site contractor and
cooperator employees and in adjusting cooperator budgets to
include the salaries, benefits, travel and supplies for these
individuals.
Copies of correspondence included in Appendix VII demonstrates PO
and, in one instance, the laboratory director's involvement in CA
on-site staffing. Also, the correspondence in at least two
instances indicates that EPA scientists were supervising on-site
contract personnel*and continued this relationship when these
individuals were transferred to off-site CAs. Investigators> for
two CAs reviewed, confirmed that -the ERL-GB POs were directing
the work of the universities' on-site employees.
Although Title 48 of the Federal Acquisition Regulation (FAR),
Section 37.104(a) prohibits personal services relationships
between contractors and Federal employees, these FAR restrictions
do not apply to CAs. .However, ORD's Directive 2, entitled
"Cooperative Relationships, Interim Guidance," issued October 1,
1992, stated that EPA personnel shall not supervise or direct the
day-to-day activities of cooperator personnel. This interim
guidance also provided that EPA shall have the right of review
and concurrence in the qualifications of personnel proposed to
fill the cooperator's key research positions; however, the
guidance further stated that it was inappropriate for EPA
personnel to become involved in the personnel processes of
cooperating institutions. The on-site contractor employees that
ERL-GB POs recommended or selected for off-site CAs did not
occupy key cooperator positions. They were primarily hired as
research assistants or placed in post-doc positions. In
addition, the PO involvement in hiring went far beyond
concurrence of key staff.
A joint memorandum, dated September 24, 1992, from the Acting
Deputy Assistant: Administrator for Finance and Acquisition, OARM,
and the Deputy Assistant Administrator for ORD to office and
laboratory directors, concerning the "current" shift of
extramural resources from contracts to CAs stated the following:
EPA's Code of Conduct states that EPA employees must
not use their Government positions to "coerce, or
appear to coerce, anyone to provide any financial
benefit to themselves or others" (40 CFR [Code of
Federal Regulations] 3.103(d)). The Code also states
that EPA employees "must not take any action, whether
specifically prohibited or not, which would result in
or create the reasonable appearance of ...giving
preferential treatment to any organization or person"
(40 CFR 3.103(d)(2). Additionally, our
regulations. .. (40 CFR 33.230 (a).). ...prohibit EPA staff
25
-------
Chapter 2
Award, Use, and Management of Cooperative Agreements
±rom directing whom assistance recipients should hire
or whom they should contract with.
The subject memorandum further stated:
Upon request by a recipient organization, EPA employees
may provide a reference for individuals who are
employed by EPA contractors and who are being
considered for employment by the recipient institution.
...In doing so, however, EPA employees should take
great care to avoid even the appearance of undue
influence in hiring decisions, especially EPA officials
who have a role in selecting the assistance recipient
or in defining the scope and amount of the assistance
received [i.e., POs].
For at least 3 of 4 CAs, on-site contract and cooperator
employees were eventually hired by off-site cooperators.
Evidence was obtained from ERL-GB or cooperator files that the
POs requested and/or influenced the cooperators hiring of these
on-site employees under the CA. One PO letter of reference for a
contract employee was submitted after the PO had requested that
the cooperator add this individual to the CA. As previously
discussed, PO involvement in on-site cooperator staffing went far
beyond reference letters.
For at least two CAs, the POs were directing the work of on-site
cooperator staffs. In one instance (UAMS CA, Agreement No.
CR820773), the Co-I, located at the cooperating institution,
stated that he did not understand how the work of the on-site CA
employee related to the CA research. The on-site cooperator
employee was previously an on-site contractor employee who was
selected by the PO to be an on-site research associate under the
UAMS CA. The PO also participated in preparing the cooperator's
budget related to this on-site employees salary. In addition,
there were budgeted provisions for travel and supplies.
Correspondence documenting certain PO involvement in the
cooperator's hiring and budget for this employee is shown in
Appendix VII. The ERL-GB PO and other ERL-GB staff wrote letters
of recommendation to UAMS on behalf of the on-site contract
employee. Further details of this condition were previously
reported above.
Applicable on-site cooperator employees generally gave us
"textbook" answers that Pis (sometimes located thousands of miles
away) actually supervised the on-site cooperator staff. However,
in contrast, university investigators stated that ERL-GB POs
directed the work of their (cooperator) on-site employees. For
example, the on-site"UAMS employee told us that when he worked
under the on-site contract he worked directly for thexCA PO and
was the PO's technician. He said under the UAMS CA he works
26
-------
Chapter 2
Award, Use, and Management of Cooperative Agreements
independently with guidance from the PO. The UAMS on-site
employee would not tell us whether he was still supervised or
directed by the ~PO. He only responded that he worked to
accomplish EPA's mission. However, the UAMS Co-I told us the on-
site employee received all his direction under the CA from the
PO. As stated above, the PO said that the on-site CA support
could not be accomplished under a contract because it required
his involvement in the on-site employee's work and EPA employees
could not talk directly to contract employees (e.g., prohibited
personal services).
We recommend that the Assistant Administrator for Research and
Development ensure that significant improvements are made in ERL-
GB's use of extramural agreements to comply with the FGCAA and
EPA policy3. Specifically, we recommend that the Assistant
Administrator:
Review current ERL-GB CAs, including those cited in
this report, and determine whether the principal
purpose of these agreements are consistent with the
FGCAA and EPA policy or whether contracts should have
been awarded. Submit, where appropriate, any
questionable agreements to GAD and Office of General
Counsel (OGC) for assistance in determining the proper
funding instrument. For those agreements found
inconsistent with FGCAA and EPA.policy, require ERL-GB
to award contracts for any continuing project work when
the related CAs expire.
During ORD's established review process for laboratory
CA RFPs, assistance applications, and decision
memorandums, determine that the primary purpose of
future agreements are to provide assistance and that
the principle purpose is not to procure goods and
services which directly benefit ERL-GB or ORD.
Evaluate laboratory capacity for research projects in
relation to mission and expertise before forwarding
3 Several of the conditions related to use of CAs were
previously reported in the OIG audit of the Athens ERL (Audit No.
E1JBF2-04-0300-3100156, issued March 31, 1993). ORD and GAD agreed
to take EPA-wide or ORD-wide corrective action. . These corrective
actions are currently in process or were taken after the CAs in our
sample were awarded; therefore, no further recommendations were
made in this report on these issues. Only recommendations specific
to ERL-GB or related to new policies were addressed in this report.
27
-------
Chapter 2
Award, Use, and Management of Cooperative Agreements
research projects to ERIis for research funding.
Consider awarding grants where substantial involvement
of the laboratory with a cooperator is not envisioned.
- Evaluate ERL-GB's current initiative to reduce on-site
support at ERL-GB to ensure it is consistent with ORD's
directive to reduce on-site support. Also, determine
whether ERL-GB's movement of contracted services to CAs
are consistent with the FGCAA.
- Require ERLs to refer assistance applications to OER
for grant award when the ERL does not anticipate
substantial EPA involvement in the proposed research.
- Remind the ERL-GB director that ORD policy prohibits EPA
employee supervision of cooperator employees or their
involvement in cooperator personnel decisions other than
approval of key personnel.
We also recommend that Assistant Administrator for Research and
Development instruct the Director of ERL-GB to:
Examine all ERL-GB CAs with on-site cooperator staff,
including those cited in this report, to identify personal
services relationships between ERL-GB and cooperator
employees and take action to eliminate such relationships in
accordance with current ORD policy prohibiting EPA employee
supervision of cooperator staffs.
- Document the principal purpose of CAs and the basis for
selecting a CA as the funding instrument in decision
memorandums or other principal CA records.
Establish controls to ensure that selection of funding
instruments for research projects are consistent with the
intent and provisions of the FGCAA.
Instruct POs to refrain from direct involvement in
cooperator personnel decisions and the preparation of
budgets related to those decisions. Remind POs of EPA
employee standards of conduct that prohibit employee
favoritism or appearance of favoritism toward any
organization or individual.
Evaluate PO actions related to cooperator hiring and
budgeting of former on-site contract employees to identify
violations of Agency procedures and employee ethical
standards. Take appropriate remedial or disciplinary action
where appropriate.
28
-------
Chapter 2
Award, Use, and Management of Cooperative Agreements
- Take necessary action to remove on-site cooperator employees
from off-site CAs where the on-site cooperators are not
effectively contributing to the accomplishment of the CA
research objectives.
- Establish procedures to ensure that personnel assigned to
ORD work assignments funded under CAs interact with the
recipients at the level anticipated during development of
the agreement. The anticipated collaboration should involve
more than required administrative oversight
responsibilities.
INSUFFICIENT ASSURANCE OF FREE AND OPEN COMPETITION IN CA AWARDS
ERL-GB's competitive process for CA awards created the appearance
of favoritism which could subject EPA to criticism of its funding
process, for extramural research. Although the majority of ERL-
GB's CAs were "competitively" awarded, only 21 percent (7 of 34
CAs, estimated value $2.9 million) of ERL-GB's active CAs were
nationally competed. Thirty-five percent (12 of 34 CAs,
estimated value $8.6 million) were awarded through limited
competitions, including two of ERL-GB's largest CAs of over $1
million each. Potential favoritism was indicated in repetitive
awards through limited competitions to a select group of
institutions who had received awards in prior years non-
competitively or .through other limited competitions. Also,
questions arose as to the extent of competition under ERL-GB's
nationally competed CA awards. Two of the 15 CAs we reviewed
were awarded through a national competition and, in both cases,
we identified potential review panel conflicts of interest (COI)
and/or other irregularities which may have compromised the free
and open competition for the CAs. The review panel for another
limited competition did not include an ORD Headquarters staff
member as required by ORD procedures. Potential COIs also
existed for review panels involved in many of the limited
competition and noncompetitive awards. As a result, insufficient
assurance existed that CA funds were effectively utilized to
obtain the best research at the least cost to the Government.
Background
One of the major purposes of the'FGCAA was to maximize
competition in the award of contracts and encourage competition,
where deemed appropriate, in the award of grants and CAs. An ORD
policy on competitive CA procedures, dated November 2, 1983,
eliminated an earlier ORD requirement to compete all CAs of
$100,000 or more in total project costs and gave laboratory
directors the discretion to decide when to compete CAs. Under
this policy, the concurrence of the Assistant Administrator for
Research and Development was required only for those award
29
-------
Chapter 2
Award, Use, and Management of Cooperative Agreements
decisions where the total EPA cost was over $250,000. The
decision to award a CA non-competitively was required to be
justified in a memorandum included in the project file.
A revised ORD delegation of authority issued in November 1984
raised the laboratory director's approval authority for
competitive CA awards up to $1 million. Approval authority for
noncompetitive awards remained at $250,000.
The November 1983 ORD policy gave examples of situations that
would justify a noncompetitive process. This included among
others: (1) the unique capabilities of the recipient have placed
it in a pre-eminent position, (2) the recipient has personnel who
are considered the foremost experts in fields necessary to
perform the work, and (3) the recipient has facilities, equipment
or data which is specialized, vital to the effort, and which no
one else can provide.
An ORD directive on the management of extramural resources,
entitled, "COOPERATIVE RELATIONSHIPS. Interim Guidance," was
issued on October 1, 1992, by the Assistant Administrator for
Research and Development. This guidance reduced laboratory
director approval of noncompetitive CA awards to $50,000 or less;
however, ORD approval of competitive awards was increased to $5
million. The directive also established several different
categories of CAs. According to the guidance, Research Project
Agreements (RPA) were CAs intended to stimulate and support
specifically defined research projects related to the
environmental research program of individual ORD laboratories and
the cooperating institutions. There were three ways RPAs could
be awarded: (1) national solicitation, (2) limited solicitation;
and (3) negotiated sole source. According to the guidance a
limited solicitation had to be justified by evidence of a limited
number of potential cooperators or other significant factors.
Chapter 3 of the ORD Policy and Procedures Manual, dated
September 1986, addresses procedures for evaluating applications
for both competitive and noncompetitive CAs. Both types of CAs
must•be technically reviewed by a panel of both in-house and
extramural reviewers. ORD guidance indicates that competitive
CAs must be advertised widely using all available means. The
usual approach is to initially request and rate pre-proposals
then request full proposals from the highest rated pre-proposals.
According to the Procedures Manual, the panel or review team
should be comprised.of one person from ORD headquarters, one
person from the ORD laboratory, and at least two extramural
reviewers. If more than three proposals/applications are rated
acceptable, the reviewers rank them. The laboratory director
then makes the final selection for award from the top three
proposals and a decision memorandum is prepared.
30
-------
Chapter 2
Award, Use, and Management of Cooperative) Agreements
Synopsis of ORD's CA Review and Award Process
CAs could be awarded either competitively, as encouraged under
the FGCAA Act, or non-competitively under certain conditions.
The awards, within certain dollar thresholds ($250,000
noncompetitive, $1 million competitive4) were reviewed and
approved by ORD Headquarters. Nine of the 34 active CAs {total
maximum value of $17.1 million) awarded by ERL-GB were subject to
an ORD review under these thresholds. However, only three were
reviewed by ORD. All of the CAs awarded were subject to final
review and approval by GAD.
Requests for Proposals (RFPs) were issued for competitive awards.
Review panels, consisting of both laboratory and external
scientists, reviewed and evaluated proposals for both competitive.
and noncompetitive awards. Based on these reviews, proposals
were recommended for award in "decision memorandums." In making
the CA awards, the Laboratory Director either approved or
disapproved the decision memoranda based on.the peer reviews and
other organizational considerations. Post-award CA management
was usually performed by EPA POs and cooperator project
managers/Pis.
Limited Competition in CA Awards
Twelve of ERL-GB's 34 active CAs were awarded through limited
competitions, prior to any ORD guidance (Interim Guidance,
October 1992) permitting limited solicitations. ERL-GB's use of
limited solicitations exhibited a clear pattern of repetitive CA
awards to universities and Pis who were previously awarded
assistance non-competitively or through previous limited
competitions. ERL-GB staff provided several reasons as to why
CAs would be awarded through a limited versus'national
competition: (1) short time-frame for solicitation, (2) preclude
misleading scientific community as to size of awards, and (3)
limit a competition on a regional basis for..a regional program
(i.e., Gulf of Mexico Program). In our opinion, ERL-GB
controlled the competitive process by isolating certain CA
solicitations to a specific geographical area or to a select
* These thresholds were in effect for most of the CAs in our
sample. The October 1992 interim guidance lowered the thresholds
to $50,000 for noncompetitive awards and $5 million for
competitive. On August.27, 1993, OEPER issued "Revised Delegations
of Authority to Approve Contracts, Assistance Agreements, and
Interagency Agreements" which further reduced laboratory director
approval for both competitive and noncompetitive CA awards to
$25,000 or less.
31
-------
Chapter 2
Award, Use, and Management of Cooperative Agreements
group of universities through the limited competition process
instead of openly competing those CAs to the maximum degree
feasible or justifying noncompetitiye awards. ERL-GB's limited
competition process created the appearance of favoritism when
select universities and particular individuals at the
universities received multiple and consecutive CA awards. Some
at these universities were proposing the continuation of research
which had previously been funded non-competitively. The most
noticeable was the near-site university, UWF. By limiting
competition, CA funds may not have been effectively utilized to
obtain the best research at the least cost to the Government.
ORD Directive 1, "Management of Extramural Resources," dated
March 16, 1992, provides for maximum national, peer reviewed
competition for environmental research CAs. Limited competitions
are only justified under ORD policy if evidence of a limited
number of potential cooperators exists. Awarding a
noncompetitive CA is also acceptable under ORD procedures as long
as ERL-GB can appropriately justify its decision. If a
noncompetitive award or limited solicitation can not be justified
in accordance with ORD guidance, then maximum, national
competition is required. However, according to the laboratory
director, noncompetitive awards are no longer acceptable to ORD
and justifying a noncompetitive award to ORD's satisfaction is
next to impossible. However, ERL-GB did not properly justify the
use of limited competitions based on evidence of a limited number
of potential cooperators but used ORD criteria for noncompetitive
awards to support limited solicitations. Because of the
laboratory director's perception of ORD's current restriction on
noncompetitive awards, ERL-GB may have used the limited
competition process as a method to reclassify awards previously
made "non-competitively" to a "competitive" category in order to
meet ORD's goal to award a majority of CAs competitively.
While the limited competition process at ERL-GB gave the
appearance of competition, actual awards gave the appearance of
favoritism. For example, UWF (the near-site university} was
originally awarded only noncompetitive CAs. Since ORD's push to
compete all CAs, the CAs with UWF have been awarded through the
limited competition process (See chart below).
32
-------
Chapter 2
Award, Use, and Management of Cooperative Agreements
™ REPETITIVE COOPERATIVE AGREEMENTS AWARDED TO THE UNIVERSITY OF WEST FLORIDA
1 10/1/90 10/1/91 10/1/92
1 1 1
Cooperator A - Principal Investigator
Cooperator B • On-Site Coordinator
|Ou Spill - *l,uo9,Z9U • Noncompetinve
10/1/93 09/30/94
1 1
(No Cost Extension |
Cooperator B - Principal Investigator
Cooperator A - Co-Prindpal Investigator
|Oil Spill - SI. 048.265 - Limited Competition
Cooperator C - Principal Investigator
Cooperator D - Co-Prindpal Investigator
| Gene Expression- $772,361 -Noncompetiove
* Co-Pi - University of Texas through a subcontract under the CA valued at $154.882.
No Cost Extension |
Cooperator C - Principal Investigator
Cooperator F - Co-Principal Investigator*
(Gene Expression - $539,902 - Limited Competition
Cooperator A - Principal Investigator
Cooperator B - Investigator (Supplement)
Btoremediation/TCE - $695,265 - Noncompetitive | No Cost Extension
_J
|^ Cooperator E - Principal Investigator
^ |Bioremediation/TCE- $442,340- Limited Competition |
Cooperator D - Principal Investigator
Cooperator E - Co-Principal Investigator
[Bioiemedian'on/TCE - $571,800 - Limited Competition
ORD interim guidance issued in October 1992, did authorize
limited competitions. However, a limited competition was to be
justified by evidence of a limited number of potential
cooperators or other significant factors. ERL-GB's primary
justification for using limited competition was the same
justification previously used for noncompetitive awards --
limited time-frames.
As shown in the chart, UWF has continuously been awarded projects
in the same general research areas with the same investigators
performing the research. As also shown above, the noncompetitive
UWF CA for gene expression research was originally scheduled to
end on September 8, 1993; however, on September 16, 1993 it was
extended by ERL-GB with no additional Government cost through
September 8, 1994. This extension would permit cooperator C time
to prepare a new proposal for continuation of this research.
However, cooperator C subsequently submitted a new gene
33
-------
Chapter 2
Award, Use, and Management of Cooperative Agreements
expression proposal through a limited solicitation before the
prior CA was originally scheduled to end. UWF was subsequently
awarded another CA through the limited competition process to
begin in October 1993 'continuing the gene expression work.
Close Relationships Between Coooerators and ERL-GB
Cooperator C has had a long-term relationship with ERL-GB. Upon
completing graduate school, cooperator C (also individual number
23 in chart on page 19} came to ERL-GB in January 1989 to serve
as an National Research Council (NRC) post-doctoral fellow;
however, he was not scheduled to start working under the NRC CA
(ORD-wide CA) until May 1989. According to cooperator C, TRI
(the on-site contractor at the time) offered him a job for the
interim. As a result, cooperator C was hired and worked for TRI
from January until May 1989. He said he performed the same work
under the TRI contract as he subsequently performed under the NRC
agreement. The NRC agreement terminated. in May 1990. Cooperator
C then went back to work for TRI. While working for TRI, ERL-GB
apparently expressed some interest in funding gene expression
research and suggested that cooperator C submit a proposal.
Since he was a contract employee and could not submit an :
assistance proposal, UWF agreed to submit the proposal on
cooperator C's behalf. However, his possible employment with UWF
was contingent on EPA funding the proposal. The proposed
research was subsequently funded by ERL-GB under a noncompetitive
CA awarded to UWF in September 1991. As shown above, a
subsequent CA, to continue this same research, was awarded to UWF
and cooperator C through a limited competition.
In another instance, cooperator E {see chart above) came to ERL-
GB in 1987 as an NRC post-doctoral research fellow and then
subsequently went to work for TRI (see chart page 20. - individual,
number 35) . He was later hired in August 1991 by UWF to lead the
bioremediation/trichloroethylene (TCE) research under a non-
competitively awarded supplement to a UWF CA. When this CA was
scheduled to end (September 30, 1992) , cooperator E submitted a
proposal through a ERL-GB limited solicitation to continue the
bioremediation/TCE research. UWF was subsequently awarded a CA
which began October 1, 1992. In addition, cooperator E was later
listed as the Co-Pi on another bioremediation/TCE proposal which
was also submitted through another ERL-GB limited solicitation in
1993 . The UWF PI for this proposal was previously listed as the
Co-Pi on the UWF Gene Expression CA which was scheduled to end in
September 1993. As a result, a third bioremediation/TCE CA, to
begin October 1, 1993, was awarded to UWF through the limited
competition process.
Two other institutions/universities, GCRL and Texas A&M
University (TAMU) , were also awarded multiple CAs by ERL-GB
through the limited competition process. Seven of ERL-GB 's 34
34
-------
Chapter 2
Award, Use, and Management of Cooperative Agreements
active CAs (almost 21 percent) were.awarded to these two
institutions. ,_r: a .- •
REPETITIVE COOPERATIVE AGREEMENTS AWARDED TO TAMU AND GCRL
09/01/88
10/01/90
10/01/91
10/01/92
10/01/93
10/01/94
I I I
Cooperator A - Principal Investigator
ITAMU - $217.602 - Non-competitive 1
Cooperator B - Principal Investigator
- $386.860 - Noncompetitive
[No Cost Extension |
Cooperator C - Principal Investigator
• S2.052.872 - Limited Competition
Cooperator B - Principal Investigator
TAMU - $494.189 - Limited Competition
Cooperator B- Principal Investigator
- $834,393 - Competitive*
Cooperator D - Principal Investigator
JTAMU - $362.158 - National Competition
1 This project was reviewed and funded by the DOD/DOE/EPA Strategic Research and Development Program.
Cooperator E - Principal Investigator**
[GCRL - SI.543.845 - Limited Competition
J
Cooperator F •'Principal Investigator
[GCRL - $440.000 - Limited Competition
Cooperator E - Principal Investigator
| GCRL - $378.125 - Limited Competition
** A University of Nonh Texas Cooperative Agreement which began in October 1993 has a subcontract to GCRL valued at
$335.000. Cooperator E also serves as me PI on this subcontract.
All 3 CAs awarded {estimated value $2.4 million) to GCRL were
through the limited competition process. Two of these CAs had
the same PI. In addition, a CA (estimated value $843,333), which
was awarded in September 1993 through a national competition to
the University of North Texas, had a subcontract with GCRL valued
at $335,000. This subcontract research was also lead by the same
GCRL PI as listed for the other two GCRL CAs. Two of the four
CAs with TAMU (estimated value $604,462) were non-competitively
awarded (before ORD's current restrictions on noncompetitive
awards) and two subsequent CAs were awarded through the limited
competition process (estimated value $2.5 million). One of the
noncompetitive CAs and one of the limited competition CAs had the
same PI. In addition, two new CAs (estimated value $1.2 million)
were awarded to TAMU in 1993. One of these CAs also had the same
PI as two of the other TAMU CAs.
35
-------
Chapter 2
Award, Use, and Management of Cooperative Agreements
CA Competitive Award Process Not Documented Or Performed As
ReoHiired
ERL-GB did not fully document the decision process for the CA
awards. In addition, ERL-GB either did not rank CA proposals
solicited as required by Chapter 3 of the ORD Policy .and
Procedures Manual or did not document the ranking process. For
all CA competitions reviewed during the audit, there was an
general lack of documentation of the CA competitive selection
process, especially the ranking of the proposals. The record
control schedule in EPA'Directive 2160 - Records Management
Manual indicates that the CA award is to be documented and the
documentation is to be retained in laboratory files. In
addition, we were provided conflicting information regarding
whether or not a ranking of proposals received actually occurred
in many competitions. This lack of documentation and/or ranking
of CA proposals resulted from inadequate ERL-GB controls over the
CA award process and records preparation and maintenance. ERL-
GB 's inadequate records management system and control over
official record preparation, maintenance, and retention are
detailed in Chapter 4 of this report.
Questionable UWF CA Award Not Documented
For one limited competition at ERL-GB file documentation showed
that two CAs were to be awarded; however, we determined that
three CAs were actually awarded. The additional award was given
to a UWF PI {UWF is the near-site university) who had been
working on-site at ERL-GB since 1987 (see chart above). He had
worked for UWF since 1991 on ERL-GB funded bioremediation/TCE
research. Conflicting statements were provided by ERL-GB on how
this third CA was awarded.
ERL-GB records showed that only the proposals from the University
of Minnesota and the University of Arkansas were scheduled to be
funded under the subject limited competition. According to file
documentation and statements by the PO, the UWF proposal was to
be rejected. The peer review committee had identified other
proposals with greater scientific merit. However, despite the
peer review process, the UWF proposal was eventually funded under
this limited competition. A reviewer's note found in ERL-GB
files questioned the laboratory's decision to fund the UWF CA.
... tells me his [UWF cooperator E] application was
acted on by [Branch Chief] at the last minute and
funded! How can this be justified on science quality -
- outside reviews and the fact that [UWF cooperator E]
receives support for the same TCE work on Biodeg coop
because of the supplement for TCE field work. Why has
[Branch Chief] not discussed this decision with members
of the committee [committee member's names] -- this is
36
-------
Chapter 2
Award, Use, and Management of Cooperative Agreements
a matter he must be able to justify to himself and
others.
According to the branch chief, the UWF CA was funded at the last
minute with Department of Defense (DOD) Strategic Environmental
Research and Development Program (SERDP) funds which were made .
available to ERL-GB during July and August 1992. The chief said
they were notified they had SERDP money and it allowed them to
fund the CAs in a different way than they had originally planned.
The branch chief indicated that the research funded had to be of
interest to DOD and the UWF proposal, which included work with
TCS, was the only one that met this requirement (UWF was already
performing TCE research on-site at ERL-GB under a prior CA).
However, file documentation does not support this statement. The
UWF CA commitment notice shows funding from ERL-GB's Superfund
appropriation not SERDP.
While UWF's involvement in TCE research may have been a valid
justification for awarding the CA under SERDP funding, this
apparently was not the case. The decision to fund UWF was
apparently made outside of the formal review process established
to make the funding decisions under the limited competition
process. In addition, the lack of documentation for making the
decision to fund.UWF obscured the entire process and raised
questions of preferential treatment toward this institution in CA
awards.
This limited competition allowed only a very short timeframe
within which the applicants had to prepare and submit their
proposals. The RFP was .sent out on June 16, 1992, and
applications were to be received no later than July 10, 1992.
Thus, perspective applicants had less than, one month to devise a
research plan and prepare a full proposal, including applicable
budgets and quality assurance plans. . Two of the ERL-GB POs for
the CAs awarded explained that the limited competition process
was used because of the short timeframe available for making
these awards. Short timeframes is a justification for
noncompetitive awards under ORD guidance. However, ERL-GB
managers were using this same criteria to rationalize^the need
for a limited competition.
The UAMS cooperator, who.received a CA award under a limited
competition, told us he had a proposal already under development
when he received the RFP. This cooperator further stated that it
would have been "absolutely impossible" .for a researcher to
prepare a full proposal from scratch in this short timeframe.
The proposal he submitted was already drafted and only required
some re-structuring before it was submitted to EPA. However,
even with that headstart, the cooperator said he had to work long
hours to meet the deadline. Already having a proposal drafted
gave this on-site cooperator a competitive edge, but it also
37
-------
Chapter 2
Award, Use, and Management of Cooperative Agreements
created the -appearance that he may have known of the upcoming RFP
prior to it being issued.
ERL-GB needs to assure that limited competitions are properly
justified and that CAs awarded through limited competitions
exhibit fair and equitable treatment, represent effective use of
Agency resources, and do not create the appearance of favoritism
for one cooperator over another. In addition, ERL-GB needs to
better control the selection process and ensure the process is
properly documented for all CAs awarded.
In situations where a noncompetitive award would be justified and
advantageous to the Government, ERL-GB should be allowed to award
the assistance non-competitively. While the FGCAA encourages
competition, it does not prohibit noncompetitive awards if they
are a justifiable and prudent use of Federal funds.
ERL-GB Did Not Rank Proposals or Document the Process ,
For example, in one CA research competition (RFP issued June 16,
1992} we reviewed, ERL-GB staff told us proposals were ranked by
the review panel; however, the ranking was not documented.
According to ERL-GB staff, the ranking was done on a blackboard
and was erased. As a result, there was no documentation of the
decision process for the award of over $1.6 million in CAs. In
another research competition (RFP issued July 30, 1990) in which
three CAs and one interagency agreement were awarded (valued at
$5.6 million), ERL-GB staff were unable to provide any
documentation for the entire award process.
For the one national competition, involving the award of two CAs
in our sample (RFP issued August 30, 1991), ERL-GB's records
contained a full proposal evaluation grid which listed reviewers'
scores of proposals requested by ERL-GB. The grid showed that
proposals were rated on seven items and either provided reviewers
scores for each of the categories or stated see "written
comments". However, the grid did not provide each reviewer's
overall rating of the proposal in all cases. In addition, the
grid did not provide a rating which reflected a combined score
for all reviewers. Further, each proposal did not have the same
number of extramural or in-house reviews, e.g., not all proposals
were reviewed by all review panel members. This could indicate
that certain proposals were directed to certain reviewers to
obtain favorable comments. Although the grid provided evidence
that reviewers' comments were considered in the decision process,
there was no overall ranking of the proposals as required by ORD
procedures.
According to the laboratory director, ERL-GB did not ask for a
ranking of CA proposals in all cases and the director debated the
definition of a ranking as presented in ORD's Policy and
38
-------
Chapter 2
Award, Use, and Management of Cooperative Agreements
Procedure Manual. He said, "We [ERL-GB management) are the
selecting officials", not others. The director said he sometimes
personally ranked the proposals with help from ERL-GB staff; In
the laboratory director's opinion, the decision of what proposals
ERL-GB funded was an inherently governmental function. He said
if the review panel (made up of in-house and external reviewers}
gave them a ranking; then, the panel would be making the funding
decisions not management. The director said, as a manager, he
wanted the review panel's scientific input, but he also had to
consider the Agency's mission, lab resources, etc., in his final
decision.
In accordance with Chapter 3 of ORD's Policy and Procedures
Manual, the laboratory director is the final decision official.
However, the manual also requires a ranking by the reviewers as
follows:
If more than three proposals/applications are rated
acceptable, the reviewers rank them...The ORD official
makes the final selection for award from -among the top
three proposals/applications.
The purpose of the ranking is to document the rationale for the
selection process and ensure that the best proposals get funded.
Contrary to the laboratory director's comments, ranking CA
proposals does not necessarily dictate selection ,t but rather
indicates ranking as'to scientific merit. If ERL-GB chooses to
fund a CA which was not included in the top three proposals in
the ranking, then the process should be documented to support
this decision.
In 1993, after we requested information on prior CA competitions,
ERL-GB began to document the ranking and overall decision process
for CA selections. Prior to this time, the individual decision
memorandums served as the sole record of the decision process.
However, the decision memorandums did not disclose the results of
the peer review process and sometimes misrepresented the extent
of competition. For example, the decision memorandum for a UWF
CA stated:
This proposal was selected following a rigorous process
of review and competition. A pre-proposal was
submitted in response to a request for proposals (RFP)
initiated by EPA/Biotechnology Risk Assessment Research
Program staff. The request for pre-proposals appeared
in Science magazine and was mailed individually to over
200 degree-granting universities in the United States
and Canada. Over 150 responses were received and,
after review, approximately 30 full proposals were
requested. The subject proposal was competitively
reviewed by external and internal reviewers against
• 39
-------
Chapter 2
Award, Use, and Management of Cooperative Agreements
proposals in a similar research topic area and was
selected to fulfill EPA research needs.
Although the decision memorandum implies that this CA award was
chosen from 30 full proposals, only fifteen of these proposals
were requested by ERL-GB. The other 15 proposals were requested
by other ERLs under a national, multi-laboratory RFP. In
addition, ERL-GB's 15 proposals were further divided into six
separate sub-categories for possible assistance funding:
Survival/Colonization, Gene Expression and Transfer, Ecological
Effects, Ecological Effects (MPCAs), Risk Control, and Detection.
The UWF proposal, which was subsequently funded, was the only one
received and listed under the Risk Control category. In our
opinion, nondisclosure of the limits of this competition in the
decision memorandum was misleading. The decision memorandum, as
written, could lead a reader to believe that the proposal was
selected from thirty proposals instead of a universe of one.
Potential Conflicts of Interest
Review Panel COIs
For 11 of the 15 CAs in our sample, potential review panel COIs
were identified relative to the award of these CAs. According to
ERL-GB staff, these COIs result from the small number of
.knowledgeable experts available to review research proposals.
Review panel members were recommended by the prospective POs. In
addition, ORD guidance requires reviewers from ORD Headquarters
on the review panels for competitive CA awards; however, only two
of the panels for our CA sample5 complied with this requirement.
The potential COIs for review panel members and other
irregularities in the award process (see examples below)
increased the potential for favoritism in the award of both
competitive and noncompetitive CAs. The pervasive influence of
the prospective PO over the review process also represented a
significant control weakness.
The laboratory director told us that it was "easy to manipulate"
the peer review system. When we informed the director that ORD
wanted to eliminate the "good old boy" network for CA proposal
reviews, the laboratory director replied that he did not, as he
had been a part of this system for 25 years. He added that the
abuses of the system were small compared to the total volume of
what the peer review system has accomplished. He said he
remained vigilant to abuses and potential abuses of the system.
5 Seven of 15 CAs in our sample were classified as
competitive awards.
40
-------
Chapter 2
Award, Use, and Management of Cooperative Agreements
However, several potential COIs were identified during audit
fieldwork. These included:
- - Panel members who had collaborated and/or published with the
prospective PI, cooperator, or prospective PO (i.e., Miami
University, National Energy Laboratory of Hawaii Authority
(NELHA), University of New Hampshire (UNH), UAMS, TAMU, and
two UWF CAs).
Panel members who were recommended by the prospective Pis
(i.e., Miami University, UWF, UNH).
Panel members who did not sign the COI statement (i.e.,
Miami University, UNH, GCRL).
- A reviewer who ended up working under the CA he reviewed
(i.e., UWF).
- A reviewer who was the PI on another CA with ERL-GB (i.e.,
UWF} .
A reviewer whose name was mentioned in the proposal as a
collaborator (i.e., UWF).
CA Recipient COI
In addition to the potential review panel COIs listed above, we
identified other COIs/irregularities related to the award of
certain CAs at ERL-GB.
UniversjLty of MarylandL Baltimore CA. awarded September 1991 for
$21.110 - A COI situation was created in the award of this CA
because (1) an EPA manager knowingly requested a part-time EPA
employee (student cooperative) to prepare and submit a CA
proposal related to his on-going Phd research and (2) the EPA
employee transmitted the proposal, as a representative of the
University of Maryland (the CA recipient), through ORD
Headquarters to ERL-GB for funding (see further details-.in -
Appendix V). The transmittal letter for the initial proposal was
submitted to ORD and ERL-GB using EPA letterhead stationary. The
ERL-GB PO, the PI, and the subject EPA employee indicated that no
graduate credit was received by this employee for the CA
research; however, the Phd dissertation had not been completed at
the time of our audit. The employee's current Phd adviser at the
University of Maryland told us that this'research could be used
in this person's Phd dissertation. There is a "common theme"
between the employee's Phd dissertation and the research
performed under the CA because the dissertation will be on basic
immunology and the CA work related to dolphin immunological
systems. As a result, the EPA funded research could be presented
41
-------
Chapter 2
Award, Use, and Management of Cooperative.Agreements
•
-„ —.^ f K j „»._
future.
The EPA employee's preparation and submission of the subject
research proposal in April 1990 and May 1991 (the original
proposal was not funded) was inconsistent with 40 CFR 3.103 which
prohibits a Federal employee from using or creating the
appearance of using his position for personal gain. This
potential COI is further exacerbated by the employee's use of EPA
letterhead to-transmit the initial proposal in April 1990. This
use of EPA letterhead to transmit the University's original
research proposal further promotes the appearance that he was
using his EPA employment for personal gain. The employee's
actions are also potentially inconsistent with 40 CFR 3.i03(d)(4)
which requires a Federal employee to be impartial and objective
in regard to matters or applications before the Federal
Government arid Title 18 U.S.C. Section 205(2) which prohibits an
employee from acting as agent or attorney for a private party in
connection with any matter or application before the U.S.
Government in which the employee has significant personal or
financial interest. The EPA employee who prepared and submitted
the research proposal was obviously not impartial or objective
toward this assistance application. In addition, in preparing
and submitting CA proposals in April 1990 and May 1991 to OEPER
and ERL-GB, the employee, in effect, was acting as agent or ,_
representative of the University of Maryland at the same time he
was an EPA employee. Finally, the OEPER manager's request that
the employee prepare the proposal, with knowledge that the
research was related to the employee's concurrent graduate
research, and the manager's subsequent request that ERL-GB fund
the proposal assisted and aided the employee in potentially
violating Federal employee ethical standards.
Both ORD's OEPER and ERL-GB were aware of the EPA employee's
involvement in the CA proposal; however, GAD was apparently
unaware that an EPA employee was the investigator (Co-I) who
would perform the proposed research. GAD's Grants Operations
Branch (GOB) Chief indicated that GAD does not consider those
individuals listed as investigators when looking for potential
COIs related to CA applications. Only the backgrounds of those
individuals named as the cooperator's project manager and/or PI
are reviewed for potential COIs. When we asked if it would be
appropriate when the investigator was an EPA employee and also at
the University -working on his PhD, the branch chief said that if
the CA was awarded for this employee's personal gain and benefit
it would be inappropriate. The chief said it could be something
the Office of General Counsel should look into as a COI
situation.
EPA's Assistance Administration Manual, Chapter 15, Section 5.b.,
requires that either the CA or the assistance application
42
-------
Chapter 2
Award, Use, and Management of Cooperative Agreements
document the substantial Federal involvement anticipated in the
proposed research project. This documentation must specify: what
the Federal involvement will be, when it will be performed, how
it will be accomplished, and who will be responsible for
performing EPA's portion of the work. Neither the assistance
agreement nor the University's assistance application properly
documented the anticipated Federal involvement or who would
perform EPA's portion of the work for this proposed research.
Special conditions in the CA did provide for some collaboration
and contacts between"the ERL-GB PO and the cooperator's project
manager, but there was no documentation that the basic research
was to be performed by an EPA employee and, therefore, EPA's
involvement in the project was almost 100 percent. If EPA's
involvement had been properly documented in the proposed
agreement or assistance application, GAD would have been alerted
that almost 100 percent of this'project was to be performed by
Federal personnel.
University of New Hampshire CA. awarded September 1992 for
5587.023 - In this nationally competed CA, the EPA PO had
significant input into the cooperator's research proposal,
particularly the microbiology portion.. He even provided "ideas
and corrections" needed in the pre-proposal. The PO said he also
talked with other CA applicants on the phone; however, their
proposals were not as closely aligned to his expertise. In
addition, these other applicants had more expertise in the
proposed research area than this particular PI (who was funded)
and, therefore, they did not need or request as much help. As
discussed previously, this CA was subsequently used by ERL-GB to
move on-site contractor employees to this off-site agreement.
Correspondence in ERL-GB files, indicated that "collaboration"
was at a high level .as early as the pre-proposal stage. In
October 1991, the PI provided a "rough" draft of his preproposal
to the PO. In a memorandum attached to the preproposal, the PI
stated:
...What I need from you are some details for the
experimental plan, what parts will need to be developed
from scratch and-your ideas on how to do that (any
novel techniques that will need to be developed?), and
a crude list of what you will need to do the work and
what that will cost (personnel, supplies etc.) so I can
put together a budget. Can you find out how the
budgets work, i.e., do I-need to have a separate
contract for your part or will it go on my budget?
This same procedure was followed during the.full proposal stage.
When asked if it was common for POs to get full proposals in
draft and for POs to offer specific comments before the proposal
is officially submitted for review, the PO said that he had
43
-------
Chapter 2
Award, Use, and Management of Cooperative Agreements
previously looked at official full proposals and talked with
researchers, but he had never read nor provided*specific comments
on any draft proposal until this one. He added that very few
researchers took advantage of contacting the laboratory for
technical advice because they did not recognize the need to make
contact to develop collaboration. He stated that he.spoke to the
other researchers at the full proposal stage, but .he felt it was
too late at that point to begin initiating collaboration. When
asked why this need for collaboration was not emphasized more in
the RFP, the PO said it might discourage participation.
In conclusion, the ERL-GB PO's participation in the actual
preparation of the preproposal and full proposal for a particular
assistance applicant, to the exclusion of other competing
applicants: (1) created a potential COI situation, (2) was
inconsistent with the EPA employee code of conduct (40 CFR
3.l03(d)(2)) regarding preferential treatment or creating the
appearance of such treatment toward any organization or person,
and (3) gave the appearance of favoritism in the eventual CA
award process. This interaction occurred despite the fact that
this proposal was part of a national CA competition. While such
early collaboration in a noncompetitive award might be
appropriate, in a national competition, such extensive and
selective collaboration with one applicant during both the
preproposal and full proposal development stages appears
inappropriate.
We also concluded that the full extent of Federal involvement in
the NELHA CA was not clearly documented in the agreement or
assistance application. As in the University of Maryland CA, an
EPA employee was to perform all of the proposed research and,
therefore, EPA's involvement was almost 100 percent. This was
not mentioned in the application or the agreement (see additional
details regarding the NELHA in Appendix V).
RECOMMENDATIONS - COMPETITION AND CONFLICTS OF INTEREST
We'recommend that the Assistant Administrator for Research and
Development ensure that significant improvements are made in ERL-
GB' s solicitation process to remove any appearance of favoritism
and ensure compliance with the intent of the FGCAA Act and EPA
44
-------
Chapter 2
Award, Use, and Management of Cooperative Agreements
policy6. Specifically, we recommend that the Assistant
Administrator for Research and Development:
- Require ERL-GB Director to utilize free and open competition
to the maximum extent practicable in accordance with current
ORD policy and reduce the use of limited competition. In
situations where a noncompetitive solicitation may be
advantageous to the Government, the ERL-GB Director should
recommend a noncompetitive award.
- Evaluate ERL-GB's CA competitive process for consistency
with the PGCAA and Agency policy.
Clarify ORD procedures for the competitive process. In
particular, emphasize the importance of the evaluation and
ranking of proposals, selection of recipients, and proper
documentation of the entire process.
Instruct OEPER managers to refrain from requesting CA
research proposals from EPA employees where a potential COI
or violation of Federal employee ethical standards could
occur.
Remind ORD and laboratory staffs that the Federal employee
code of ethics precludes the appearance of using public
office for personal gain and requires that Federal employees
be impartial and objective toward applications and other
matters before the Government. Also, remind employees that
the U.S.C. prohibits Federal employees from acting as agents
for .any organization or individual regarding an application
or other matter before the Federal government.
In addition, we recommend that the Assistant Administrator for
Research and Development require the Director, Environmental
Research Laboratory - Gulf Breeze to:
Instruct ERL-GB staff involved in the award and management
of extramural agreements to be alert for COI situations. In
particular, caution employees against personal involvement
or collaboration with potential CA recipients involved in a
6 Several of the conditions related to.CA competitions, COIs,
and PO involvement in CA awards were previously reported in the OIG
audit of the Athens ERL {Audit No. E1JBF2-04-0300-3100156, issued
March 31, 1993). ORD and GAD agreed to take EPA-wide or ORD-wide
corrective action. -These corrective actions are currently in
process or were completed prior to the CA awards in our sample;
therefore, no further recommendations were made in this report on
these issues. Only recommendations specific to ERL-GB or related
to new policies were addressed in this report.
45
-------
Chapter 2
Award, Use, and Management of Cooperative Agreements
Competitive solicitation unless care is taken to offer the
same assistance to all those submitting proposals. Such
pre-award involvement with one applicant creates the
appearance of favoritism which is prohibited by EPA's
employee code of conduct (40 CFR).
For every competitive CA award, clearly document in the
decision memorandum the true extent of competition in the
award process.
Review all future assistance applications and subsequent
agreements to ensure that all Federal involvement in the
research project is fully disclosed as required in EPA's
Assistance Administration Manual.
OF COOPERAT]
CAs were \iot properly managed after award to ensure compliance
with agreement terms or that Agency resources were being
effectively used and safeguarded by CA recipients. ERL-GB did
not implement controls and procedures to determine compliance for
extramural agreements or the propriety of fund expenditures by CA
recipients. As a result, ERL-GB did not adequately oversee the
financial status or technical progress of its CA research. Also,
there was an overall lack of documentation of ERL-GB's CA post-
award management and oversight. Lack of documentation for pre-
award, as well as post-award management of CAs are further
discussed in Chapter 4 of this report.
Background
Chapter 44 of EPA's Assistance Administration Manual, entitled
"Project Officer Responsibilities," advises POs that they are
the recipients' main point of contact with EPA. The Chapter
states that "The Project Officer has the basic charge to manage
and monitor the performance of work under the terms of the
assistance agreement." It also states that the PO "must monitor
technical aspects of work performed and ensure that the recipient
complies with the terms of the assistance agreement." The PO
must provide "documentation to the Assistance Administration Unit
of correspondence, meetings, phone calls, etc., that have a
significant bearing on the performance of either the project or
the recipient or its contractors."
Prior Review
In May 1989, a one and half day Cooperative Agreement Management
Review (CAMR) was performed at ERL-GB by two employees from the
Grants Administration Division (GAD). This review was performed
based on a protocol developed by GAD which defined the areas for
46
-------
Chapter 2
Award, Use, and Management of Cooperative Agreements
review. Overall, the findings were favorable. According to the
review, "We believe the Lab provides the appropriate management
controls to assure efficient and-%ffective use of extramural
research funds through cooperative agreements." However, no
files were reviewed and the conclusions were based primarily on a
•questionnaire developed by GAD.
According to the section.in the CAMR report entitled "Managing
the Agreement", POs are primarily responsible for project
monitoring. Items that are monitored include activities and
outputs, special conditions, budget period end dates, budget
increases, administrative amendments, and equipment. Site visits
are conducted as travel funds allow and. quality assurance site
visits are scheduled.when necessary. The CAMR stated that:
Time did not permit GAD to review files. However,
through discussions with the RSS [research support
staff - Special Assistant for Extramural Research
(SAER)], it appears the files are complete and there
are no problems in this area.
One recommendation made was ..that ERL-GB consider inserting a
critical job element on monitoring CAs in PO performance
standards. ~ u
While the CAMR was basically favorable toward ERL-GB's CA
program, it was very limited in scope. Therefore, the problems
discussed in this and other chapters of this report were not
identified.
Special Conditions Not Always Recognized or Followed
ERL-GB did not always comply with CA special conditions and did
not ensure that the recipients complied. For example, although
special conditions for 11 of the 15 CAs in our sample required
that cooperator quarterly progress reports contain information on
CA expenditures, POs were not requiring or receiving this
information in these progress reports. In addition, ERL-GB POs
did not know "in some cases what special conditions were included
in their respective agreements. The POs apparently did not read
the CAs, as amended by GAD, after awards.
The laboratory director said historically progress reports did
not contain information on expenditures. He said they assumed
GAD was monitoring the financial status of CA recipients.
Tracking financial information was not previously regarded as a
responsibility of ERL-GB. However, the director stated that
since the ERL-Athens audit reported that GAD was not monitoring
CA financial activities, ERL-GB has been awaiting ORD guidance on
this issue. We informed the laboratory director that one of the
special conditions in most CAs required that progress reports
47
-------
Chapter 2
Award, Use, and Management of Cooperative Agreements
contain expenditure information. The laboratory director said,
"If it says it that way, we would expect to get"it."
For one CA (NELHA, CR820699) in our sample the special conditions
required the recipient to submit quarterly progress reports to
the EPA PO; however, the EPA PO, who actually performed the
research, prepared the recipient progress reports.. Not only did
the PO prepare these reports, but he also submitted copies of
them to both the cooperator's project manager and another
researcher at NELHA.
For two other CAs reviewed (Miami University, CR820061 and UAMS,
CR820773), a special condition was added which stated:
The recipient understands that none of the funds for
this project (including funds contributed by the
recipient as .cost sharing) may be used to pay for the
travel of Federal employees or for other costs
associated with Federal participation in this project.
For two CAs with this special condition, the POs were not aware
that GAD had included this special condition. For one CA where
the PI was a Federal employee (Food and Drug Administration),
neither the PO, the PI, nor the Co-I were aware that the CA
specifically precluded Federal employee travel using CA funds.
While this CA application budgeted travel funds for the PI, the
PI had not used CA monies for travel.
For two CAs in our sample (LSU, CR818568 and University of
Maryland, CR818953), special conditions were added to ensure
collaboration between the POs and Pis; however, both POs stated
they did not collaborate with the Pis. In one of these CAs, a
special condition was added to ensure the cooperator's project
manager and the EPA PO communicated at least monthly. However,
according to the PO, he and the PI had not communicated on a
monthly basis except for the first few months of the project.
This condition occurred because the CA project did not relate .to
ERL-GB's mission (see Appendix VI). Under the other CA, one
special condition required the PO to be at the cooperating
University during experimental analyses as part of the Federal
collaboration. Another special condition required samples be
provided to the PO at ERL-GB. However, neither of these special
conditions were followed because of a shortage of travel funds
and the PO's lack of time to participate.
Infrequent Site Visits Limited Effective Monitoring
ERL-GB POs did not make frequent site visits to cooperator
locations primarily due to a lack of travel funds. According to
SRL-GB personnel, site visits had been performed for 8 of the 15
CAs in our sample. The frequency of site visits varied between
48
-------
Chapter 2
Award, Use, and Management of Cooperative Agreements
POs from one visit per year, to one visit in three years, to no
visits at all. When site visits were made, POs usually did not
prepare the required trip reports and never forwarded copies to
GAD for inclusion in the official files, as required by the
Assistance Administration Manual, Chapter 44. Only.three of the
visits referred to above were documented in trip reports.
OMB Circular A-110 {dated July 1976) states that the Federal
sponsoring agency shall make site visits as frequently as
practicable to review program accomplishments and management .
control systems and to provide such technical assistance as may
be required. EPA's Assistance Administration Manual, Chapter 44,
Section 5b, also emphasized the use of site visits as a tool to
monitor assistance agreements.• The Manual states that site
visits should be used to monitor: (1) actual versus scheduled
performance/accomplishments, (2) condition of equipment/property
used on, or purchased for, the project, (3) resources {personnel,
equipment, facilities, etc.) charged to the project are actually
used on the project, and (4) conditions that might adversely
affect EPA's interest (i.,e., change' in the recipient's financial
status, personnel problems, noncompliance with labor/civil rights
laws, and/or over-extension of the facilities).
Chapter 44 of the Assistance Administration Manual further
advises POs to provide constructive advice/criticism during site
visits, but not to attempt to supervise either the project or the
recipient's employees. In addition, POs are to prepare a trip
report that highlights their findings and evaluates the quality
of work being performed. Copies of the trip reports are to be
provided to GAD's Assistance Administration Unit (AAU) for
inclusion in the official file, as well as documentation of any
follow-up actions that are taken.
The laboratory director said there should be trip reports for
site visits to universities, but he did not effectively monitor
to assure they were prepared by POs. The director said trip
reports would probably be the "exception rather than the rule" at
ERL-GB. He further said the laboratory's travel resources were
too limited to permit many site visits and there were only a
handful done in the last two years.
Site visits are probably the POs' best tool to monitor
performance and expenditures under CAs. ORD and ERL-GB's limited
travel funds for site visits.and the lack of trip.reports
(documentation) by POs, when travel funds were available, weakens
ERL-GB's ability to assure recipients' compliance with CA terms
and to ensure that Federal assets are safeguarded.
Because of limited travel funds for POs to conduct site :visits,
ERL-GB included a special condition in some CAs which required
Pis to travel to ERL-GB. According to the laboratory director,
49
-------
Chapter 2 „
Award, Use, and Management of Cooperative Agreements
coopeirators have more flexibility with travel. .Although this did
not allow the PO to monitor resources or equipment/property used
on the project, this procedure did permit POs to discuss progress
of the research with applicable Pis and allowed some monitoring
of CA performance.
SRL-GB POs Did Not Review CA Financial Status Reports (FSRs)
GAD staff received FSRs from the CA recipients, but did not
forward these to ERL-GB POs, as required by EPA's Assistance
Administration Manual. Without these FSRs, POs had little or no
knowledge of expenditures under their CAs because cooperator
progress reports did not contain information on agreement ,
expenditures. According to the laboratory director, ERL-GB
thought GAD was monitoring cooperator financial activities. None
of the 11 POs for the 15 CAs in our sample reviewed FSRs or
routinely required progress reports that contained cooperator
financial expenditures for the funded research. Only one PO
produced a progress report containing information on cooperator
expenditures.
In 40 CFR 30.505, CA recipients are required to submit FSRs
within 90 days after each budget period and within 90 days after
the end of project completion or termination. According to
Chapter 44, Section 5c, of the Assistance Administration Manual
(dated December 1984), FSRs must be reviewed by the GAD's AAU to
assure that the recipient uses the funds properly. A copy should
be sent to the PO who should then review it in relation to the
recipient's progress reports and notify the AAU if there are any
exceptions.
The FSRs received by GAD are only required from cooperators at
the end of each budget period. Since the first budget period of
a CA is normally two years, this means that the Agency has no
expenditure information during the first two years of the
projects. In some cases, ERL-GB was extending the budget periods
past two years, which allowed for a longer period before GAD
received expenditure information. ERL-GB POs were also not
monitoring expenditures under CAs. POs did receive status sheets
from ERL-GB's SAER which showed CA amounts funded and budgeted
amounts left to be funded and some POs stated that they reviewed
CA budgets prior to funding. However, no specific monitoring was
performed by ERL-GB POs to evaluate cooperator actual costs in
comparison to budgeted costs. As a result, POs had little, if
any, knowledge of expenditures made under their CAs.
Quality Assurance (OA) Audits Not Performed
For 12 of the 15 CAs we reviewed, ERL-GB did not perform QA
audits. All 15 CAs had approved QA plans, but only the three
EMAP CAs had received QA audits. According to the 1989 CAMR
50
-------
Chapter 2
Award, Use, and Management of Cooperative Agreements
review, QA site visits are scheduled by ERL-GB when necessary.
However, ERL-GB officials agreed that the QA auditing function
was an area of laboratory deficiency. The ERL-GB QA Officer said
ideally he performed at least one QA audit during the life of an
agreement, but the ideal was rarely accomplished. Generally, the
PO was the only person who made site visits and they were not
trained to do QA audits. As a result of insufficient QA reviews,
there was a lack of assurance that the data being collected under
CAs to develop national environmental policy was reliable or that
all acquired data collected under these CAs was suitable for the
user's intended purpose.
EPA's 1993 FMFIA report to the President and Congress, issued
December 29, 1993, recognized EPA's QA program for assuring
environmental data quality as a continuing material internal
control weakness. The. QA program was first identified as a
material weakness in EPA's 1992 FMFIA report. According to the
1993 FMFIA report, ORD had taken corrective action to (1) focus
top EPA management attention on the importance of QA, (2) provide
QA compliance status reports and distribute policies and
regulations to all senior managers, and (3). develop performance
standards for all EPA managers responsible for environmental data
collection activities. In 1994 ORD planned to initiate an on-
site review process to assist managers in developing QA
management plans and strengthening QA programs.
Although ORD's on-going corrective actions had not substantially
improved ERL-GB's QA program as of September 1993, such actions
should provide significant improvement in the near future.
Therefore, we are only recommending corrective actions related to
ERL-GB's specific QA deficiencies at this time.
RECOMMENDATIONS - MANAGEMENT OF COOPERATIVE AQRREMEMTg
We recommend that the Assistant Administrator for Research and
Development ensure that significant improvements are made in ERL-
GB's management of CAs to ensure compliance with CA terms and
applicable Agency guidance7. Specifically, we recommend that
7 Most of the conditions related to CA management were
previously reported in the OIG audit of the Athens ERL .(Audit No.
E1JBF2-04-0300-3100156, issued March 31, 1993). ORD and GAD agreed
to take EPA-wide or ORD-wide corrective action on some of these
problems. These corrective actions are currently in process or
were taken near the end of our audit fieldwork; therefore, no
further recommendations were made in this report on these issues.
Only recommendations specific to ERL-GB or related to new policies
were addressed in this report.
51
-------
Chapter 2
Award, Use, and Management of Cooperative Agreements
the Assistant Administrator require the Director, Environmental
Research Laboratory - Gulf Breeze to:
Provide POs all current, updated, Agency procedures and
guidance necessary to effectively manage and document
their management of extramural agreements through pre-
award and post-award phases.
Require that ERL-GB POs read and understand the special
conditions of the CAs and ensure that the special
conditions are followed by the recipient.
Require frequent, periodic site visits by CA POs and
review laboratory budgets to identify available travel
funds to accomplish this critical control technique.
- Establish controls to ensure that PO trip reports are
prepared for CA site visits and that these reports
adequately document PO oversight of expenditures under
extramural agreements.
Establish procedures in consultation with GAD, to
ensure that POs fulfill their financial oversight
responsibilities through reviewing FSRs once POs start
receiving FSRs8 from GAD and requiring progress
reports that contain required financial data. Any
exceptions noted between the FSR, cooperator progress
reports, and any other information obtained during site
visits and overall management of the CA should be
reported to ERL-GB management and GAD.
Require applicable ERL-GB staff to perform QA audits of
cooperator projects where possible, especially for
near-site UWF CAs. Allocate sufficient travel funds
and establish controls to ensure that ERL-GB staff
document these QA reviews in appropriate ERL-GB files.
Require POs to maintain adequate written records to
document their management and oversight of CAs,
including, but not limited to, all ERL-GB and recipient
correspondence and telephone conversations relating to
the award, performance, and closeout of assistance
6 Although GAD had not submitted copies of FSRs to POs for
CAs in our sample, GAD's July 1993 response to OIG's report on the
Athens ERL indicated-that GAD would develop a corrective action
plan by February 1994 that would include forwarding of FSRs to
applicable POs. Therefore, no further recommendations regarding
this deficiency were included in this report.
52
-------
Chapter 2
Award, Use, and Management of Cooperative Agreements
agreements. POs should be provided with EPA's record
control schedule for laboratories.
AGENCY RESPONSE AND OIG EVALUATION OF AGENCY CQMMENTJ3
ORD concurred with the findings and recommendations presented in
Chapter 2 and indicated that a corrective action plan to address
the recommendations would be provided to the OIG as soon as
possible (see Appendix I). ORD did express some concerns
regarding two recommendations and the OIG's apparent
interpretation of 31 U.S.C. and EPA guidance as presented in this
Chapter. We modified the applicable recommendations to address
ORD's concerns. Changes to the recommendations and our response
to ORD's concerns related to the presentation of 31 U.S.C. and
EPA guidance in this Chapter are included in Appendix I.
53
-------
Chapter 2
Award, Use, and Management of Cooperative Agreements
(This page intentionally left blank.)
54
-------
CHAPTER 3
BETTER PMPIA IMPLEMENTATION NEEDED
A comparison of ERL-GB's 1992 and 1993 Federal Managers'
Financial Integrity Act (FMFIA) documentation disclosed a
substantial improvement in the laboratory's identification and
documentation of critical event cycles, control objectives, and
control techniques for related laboratory operations. Based on
our discussions of deficiencies noted in the 1991 and 1992 FMFIA
documentation, ERL-GB managers made a conscientious effort to
improve the 1993 FMFIA process. As a result, ERL-GB
significantly improved its 1993 FMFIA documentation which
represented a big step forward in meeting Agency requirements and
the intent of the FMFIA process. However, some improvements are
still needed to refine control objectives and techniques. Better
ERL-GB implementation of the FMFIA management control process is
essential to assure efficient and effective laboratory operations
and^ properly safeguard Agency resources. Proper FMFIA
documentation and implementation may have prevented some of the
problems related to CAs and records management which are cited in
other chapters of this report.
ERL-GB management did not ensure that documented FMFIA controls
and processes related to the management of CAs, critical records,
imprest funds, and the FMFIA process were integrated into the
laboratory's day-to-day operations. ERL-GB managers did not
fully understand the importance of FMFIA and their responsibility
for implementing and maintaining an effective internal control
system1. Neither were ERL-GB managers adequately trained in
FMFIA requirements nor always held accountable for managing
effective internal control systems. Although ERL-GB's annual
FMFIA assurance statements consistently indicated a strong,
positive commitment to the FMFIA process, the extent to which
ERL-GB actually integrated FMFIA objectives and controls into the
laboratory's operations did not fully support this commitment.
As a result, the laboratory's annual FMFIA assurance reports were
based on incomplete information.
BACKGROUND
The FMFIA of 1982 requires each executive agency to establish
internal accounting and administrative controls in accordance
with standards prescribed by the Comptroller General. The goal
of this legislation was not only to reduce,the possible fraud,
waste and abuse of Federal resources, but also to improve the
1 Controls or control systems referred to in this chapter
pertain to FMFIA;financial and management control processes only.
55
-------
Chapter 3
Better FMFIA Implementation Needed
management of Federal operations!. Therefore, effective systems
of internal control established under the FMFIA pertain to the
accomplishment of organizational goals as well as fiscal
responsibility.
The Comptroller General charged the General Accounting Office
(GAO) with establishing the internal control standards against
which all Federal executive agency's internal control systems
would be measured. The standards3 emphasized that good internal
controls were essential to achieve the proper conduct of
Government business with 'full accountability for the resources
made available. OMB Circular A-123, prescribed specific policies
and procedures to be followed by Federal agencies in
establishing, maintaining, evaluating, improving, and reporting
on internal controls in their program and administrative
activities. EPA Resources Management Directive (RMD) 2560
prescribes the policies and procedures for Agency implementation
of FMFIA requirements.
MANAGERS NOT FULLY COGNIZANT OF FMFIA RESPONSIBILITIES OR
ASSIGNED ACCOUNTABILITY FOR FMFIA IMPLEMENTATION
None of ERL-GB's managers we interviewed were clearly aware of
their control responsibilities and understood the importance of
implementing an effective internal control system. Neither were-
all managers with significant internal control responsibilities
actively participating in the FMFIA process. In addition, none
of the ERL-GB managers with significant FMFIA responsibilities,
including the laboratory director, had been trained in FMFIA
requirements except for the Management Control Coordinator (MCC).
Therefore, neither ORD nor ERL-GB assured that laboratory
managers were provided the training necessary to understand the
FMFIA process and develop the skills necessary to effectively
plan and organize the internal control process.
Performance Standards for FMFIA Responsibilities
The ERL-GB Program Internal Control Coordinator {PICO indicated
that there were seven management positions at the laboratory with
significant internal control responsibilities. Our review of
performance agreements for six ERL-GB managers assigned to these
positions disclosed that three agreements had no performance
standards for internal controls related to the manager's
operations. Still, ERL-GB reported in its 1992 FMFIA Quality
2 Standards for Internal Control in the Federal Government,
June 1, 1983.
56
-------
Chapter 3
Better FMFIA Implementation Needed
Control Evaluation Report that FMFIA responsibilities had been
included in the performance standards of all appropriate managers
and supervisors.
OMB Circular A-1233, RMD 25604, and EPA's Internal Control
Guidance for Managers and Coordinators (dated August 1988)
require that each Agency maintain a written performance agreement
for any senior executive service, merit pay or other employee
with significant internal control responsibilities5 and that the
agreement contain performance standards related to internal
control activities.
The PICC identified the following ERL-GB management positions and
functions which have significant internal control responsibility
and, therefore, should have FMFIA responsibilities written into
their performance standards: laboratory director, deputy
laboratory director, administrative officer, branch chiefs,
environmental compliance officer, health and safety officer, and
quality assurance officer. Our review of the 1992 and 1993
performance agreements for the director, deputy director, and
administrative officer (PICC) indicated that significant
improvements had been made in identifying internal control
responsibilities in their 1993 performance agreements and that
these standards generally met the requirements of RMD 2560 and
EPA's Internal Control Guidance for Managers and Coordinators.
However, we did note that the 1993 standards only emphasized
control over administrative and financial activities not all of
the laboratory operations.
"Review of the 1992 and 1993 performance agreements for ERL-GB's
three branch managers revealed no performance standards related
to the FMFIA process or internal controls. As provided in EPA
guidance, each manager having internal control responsibilities
should have a standard, written performance agreement against
which internal control performance can be recognized and
evaluated. The performance agreement should outline specific
3 OMB Circular A-123, Revised: Internal Control Systems,
August 4, 1986.
4 EPA Resource Management Directive 2560: Internal Control,
June 4, 1987.
5 EPA's Internal Control Guidance for Managers and
Coordinators, issued August 1, 1988, suggested specific language
for a FMFIA performance standard at the Assistant Administrator,
Regional Administrator, Senior Executive, and General
Management/General Schedule levels.
57
-------
Chapter 3
Better FMPIA Implementation Needed
internal control responsibilities and established performance
standards which are specific to the employee under evaluation.
While performance standards were not, in place for the branch
managers, the Laboratory Director and FMFIA Coordinator indicated
that ERL-GB managers had been briefed on FMFIA and branch
managers were provided copies of annual internal control
documentation. However, interviews with two of ERL-GB's branch
chiefs disclosed that neither remembered participating in any
part of the FMFIA process until August 1993 when they were
requested to review internal control documentation prepared by
the PICC and to suggest changes. One branch chief, who had been
at the laboratory since October 1990, stated that he had not
heard of FMFIA or seen any internal control documentation before
August 1993. However, this manager had now realized that
internal control documentation was something that he should
continue to use, review, and change as needed. We concluded that
the branch chief viewed the process as beneficial, because the
whole branch had an opportunity to discuss internal controls and
provide input which heightened each individuals awareness of
established systems and the need for controls.
Those ERL-GB managers (branch managers) most responsible for day-
to-day laboratory operations were insufficiently involved in ERL-
GB 's FMFIA process. This condition had an adverse impact not
only on the general effectiveness of internal controls, but the
overall implementation of the FMFIA process.
FMFIA Training
ERL-GB reported in its 1992 FMFIA Quality Control Evaluation
Report that all SES, GM supervisors, and others with significant
FMFIA responsibilities were trained or briefed on FMFIA and/or
management controls. None of the ERL-GB managers we interviewed,
including the laboratory director, had received any formal
training on FMFIA requirements and procedures. The PICC said she
had briefed the managers on FMFIA but she had received limited
training and did not fully understand the process herself.
Overall, our interviews with ERL-GB employees disclosed a general
lack of knowledge about the FMFIA process and how it should be
implemented at ERL-GB. ERL-GB managers' responses to our
questions on the laboratory's FMFIA process and internal controls
demonstrated that they were not fully cognizant of the purpose of
FMFIA and their individual responsibilities as related to ERL-
GB 's internal control system. When managers and others having
internal control responsibilities were asked: "Have you been told
what your FMFIA/Internal Control responsibilities are?", we
received replies such as: "Not to my recollection; my mind is
vague on that activity; I don't understand your question; I may
58
-------
Chapter 3
Better FMFIA Iimple&entation Needed
have been told about such responsibilities, but if so, I have
forgotten." This lack of training on FMFIA and an understanding
of the purpose and goals of an established system of internal
controls contributed to ERL-GB's ineffective implementation of
FMFIA. objectives and controls.
As part of the annual assurance letter for FMFIA, ERL-GB
completed a Quality Control Evaluation Report which reflects the
status of FMFIA implementation. The report requires that the
assessable unit manager respond to specific statements regarding
FMFIA implementation. One statement was: "All SES, GM
supervisors, and others with significant FMFIA responsibility
have been trained or briefed on FMFIA and/or management
controls." ERL-GB responded positively to this statement in its
1991 and 1992 assurance letters but made no reference to any .,
training or formal briefing provided to managers or staff other
than the 3-day FMFIA workshop the administrative officer
{designated PICC) attended in 1988.
Our review revealed no evidence that anyone at ERL-GB other than
-the PICC had received any formal FMFIA training until September
1993. The PICC described this initial training as a good
introduction. However, based on current information she was
receiving from ORD/OEPER and the OIG regarding FMFIA
requirements, additional training would have been beneficial for
both her and the other ERL-GB managers.
Orientation and training for new EPA managers with significant
FMFIA responsibilities and no prior Federal government experience
is especially critical. For example, ERL-GB's director came to
his present position directly from a non-government environment
and he received no initial training in the FMFIA process. The
director told us that in making the change from an academic
environment to ERL-GB's laboratory director there were a variety
of things that he was not prepared for. He could have used
training in all of them including FMFIA. The director commented
that managers who come up through the Government ranks are
exposed to processes and regulations, such as FMFIA, throughout
their career. However, as an academic, these requirements were
foreign to him.
EFFECTIVE IMPLEMENTATION OF FMFIA REQUIRES PROPER PLANKING
FMFIA implementation at ERL-GB did not have a planned approached
as emphasized in Agency guidance. ERL-GB never formulated an
annual or long-term work plan to effectively implement an
internal control system as envisioned under FMFIA. Instead, ERL-
59
-------
Chapter 3
Better FMF1A Implementation Needed
> • • • •.
GB's overall response to FMFIA implementation was reactive not
proactive.
EPA's Internal Control Guidance for Managers and Coordinators
emphasizes that a yearly work plan is critical to the careful
organization and efficient implementation of the internal control
process. The guidance maintains that each MCC must develop an
annual work plan at the beginning of each calendar year. The
purpose of using an annual FMFIA work plan at ERL-GB. would be to
structure the internal control program within the assessable
unit, establish accountability, goals, and time-frames, and,
formally involve management at all levels of the organization.
Directing FMFIA implementation from a formal work plan would
permit each manager to better understand his role and
responsibilities in the process. EPA's FMFIA guidance suggests
that the work plan include:
- planned training for personnel;
- scheduled actions required to correct previously
identified internal control weaknesses which are
followed in the Agency's Internal Control Corrective
Action Tracking System (CATS), and reporting quarterly
progress toward achieving the planned goals;
- established milestone dates for completing the internal
control documentation, risk assessment, management
control plan, and annual assurance letter;
- a schedule to conduct and document internal control
reviews (ICRs) and alternative internal control reviews
(AICRs) as reported and scheduled in the prior years
assurance letter;
- established procedures to assist managers in
identifying or assessing program weakness to enable the
Laboratory Director and, eventually, the Assistant
Administrator to provide reasonable assurance;
- planned actions that will correct weaknesses identified
in prior audits and other studies; and
- a requirement that managers outline their specific
internal control responsibilities in their performance
standards.
Instead of a FMFIA work plan prepared at the beginning of each
year, ERL-GB's PICC relied on the annual management control plan
(MCP) prepared in August as her planning document. The MCP lists
60
-------
Chapter 3
Better PMFIA Implementation Needed
the internal control reviews completed during the current
calendar year and planned reviews for the next five years. This
plan provides no structure for implementing FMFIA. In the PICC's
opinion, work plans were only used by ORD and other Headquarters
units in calling for required FMFIA documentation and reports.
In preparing ERL-GB's MCP, the PICC requested the laboratory
director, branch chiefs, and other responsible individuals like
the health and safety officer and the quality assurance officer
to identify planned in-house and external reviews of FMFIA
controls. For example, the Agency periodically performed reviews
of the ERL-GB imprest fund and property management. There were
also Health and Safety Reviews, Quality Assurance Reviews, and a
review of VAX (computer) security among others. However, other
than tracking ICRs, AICRs, and other reviews performed and
planned, the MCP had little value as a FMFIA implementation plan
and did not include any of the other items recommended in Agency
guidance for inclusion in a FMFIA work plan.
A more detailed, formal planning document would not only assist
the laboratory director and the PICC in fulfilling their FMFIA
responsibilities, it would clearly convey to the branch chiefs
and others performing internal control functions their FMFIA
goals and responsibilities, and facilitate the laboratory
director's year-end FMFIA reporting requirements. The plan
itself would serve as a control technique to help assure
effective FMFIA implementation throughout ERL-GB.
At a December 1993 exit briefing the laboratory director stated
they planned to develop an FMFIA implementation plan for 1994.
INTERNAL CONTROL DOCUMENTATION INCOMPLETE
ERL-GB did not develop complete and adequate internal control
documentation. Documentation did not incorporate all the
recommended materials and represent all the event cycles involved
in accomplishing ERL-GB's mission. Neither did the documentation
reflect complete and implemented control objectives and
techniques. The 1992 control documentation on file was
incomplete and did not represent actual controls in place for
some objectives. We attributed these deficiencies to the fact
that managers in prior years were not fully aware of their FMFIA
responsibilities and adequately trained in the purpose and
requirements of FMFIA. As a result, managers did not completely
understand the need for internal controls and did not establish a
system to properly identify event cycles, control objectives, and
control techniques.
61
-------
Chapter 3
Better FMFZA Implementation Needed
OMB Circular A-123 specifies that agencies shall establish and
maintain a cost-effective system of internal controls to provide
reasonable assurance that Government resources are protected
against fraud, waste, mismanagement or misappropriation and that
both existing and new program and administrative activities are
effectively managed to achieve the goals of the agency. Systems
established to achieve OMB's internal control objectives are to
be formally documented.
EPA's internal control guidance provides that FMFIA documentation
should include two types of written materials. First, there
should be system documentation which would: (1) include policies
and procedures, organization charts, manuals, memoranda, flow
charts, and other related information necessary to describe
organizational structure, operating procedures, and
administrative practices; and (2) communicate responsibilities
and authorities for accomplishing programs and activities. Such
documentation should be present to the extent required by
management to effectively control their operations. Second,
there should be review documentation to show the type and scope
of reviews (ICRs and AICRs), the responsible officials, the
pertinent dates and facts, the key findings, and the recommended
corrective actions.
During our review of internal controls established for the
management of CAs, implementation of FMFIA, records management,
and the imprest fund, we found that ERL-GB's 1991 and 1992
documentation was incomplete and, in certain cases, inaccurate.
Also, internal control review documentation did not exist as
described in Agency requirements. While the actual internal
review reports were generally maintained, they were not
summarized and documented as instructed in Agency internal
control guidance.
Significant Improvement In 1993 FMFIA Documentation
ERL-GB's 1993 internal control documentation (August 26, 1993)
was a definite improvement over the previous years. According to
the PICC, the 1993 documentation received three times the effort
that was devoted in 1992. ERL-GB's objective in 1993 was to do a
more thorough job documenting event cycles, control objectives,
and control techniques. For 1993, the PICC reviewed'the 1992
documentation and made the initial changes the PICC believed
necessary. Then, the internal control documentation was sent to
the laboratory's branch chiefs, quality assurance officer, health
and safety officer, and others as determined appropriate for
review and comment. In our opinion, this is a more logical
approach for documenting the internal control process. Branch
managers and their staff know more about what controls are
62
-------
Chapter 3
Better.PMF1A Implementation Needed
actually in place and working within-their areas of
responsibility. However, as discussed below, additional
improvements are needed to refine this documentation.
Cooperative Agreement Management
^ M, • •jr'rr- ^ r-j—a^- -i i- -^—— —-|
Event cycles for CA award and administration were not included in
ERL-GB's FMFIA documentation until July 27, 1991. ERL-GB's
fiscal years 1991 and 1992 event cycle documentation referenced a
1991 ORD contractor's report on CA controls entitled
"Documentation of Administrative Processes/Internal Controls of
Cooperative Agreements" as their established internal controls.
This document listed all possible controls for a CA program and
did not necessarily represent the specific controls needed by
ERL-GB to effectively manage its CAs. Not adequately documenting
CA event cycles, control objectives and techniques, may have
contributed to the CA management problems reported in Chapter 2.
As a result of identifying extramural management as a material
weakness in its 1990 FMFIA report, ORD contracted for a review of
its administrative processes and internal controls related to
extramural management. The review objective was to assist
laboratories in meeting their FMFIA event cycle documentation
requirements. This contracted report on CAs contained an
extensive list of possible controls for all levels of CA
management. However, ORD specifically informed laboratories that
the report was not to be used in its entirety in place of
detailed FMFIA documentation, but merely as a guide in tailoring
control plans to individual laboratory needs. The report's
transmittal letter from the Director, Office of Research Program
Management, stated:
It is expected that individual offices and laboratories
may use this report to evaluate and refine their
internal controls documentation and to identify
opportunities for improvement... Accordingly, the
report is not intended to be a standard procedures
manual for adoption by all laboratories, nor a
compilation of all the variations in procedures.
Through 1992, ERL-GB still had not fulfilled its responsibility
for preparing and documenting detailed control objectives and
techniques for CA activities at ERL-GB as instructed by ORD.
Without this detailed documentation, ERL-GB had no basis for
testing and verifying the internal control processes related to
CAs.,
In 1992 ERL-GB also recognized extramural management (which
includes CAs) as a material weakness in its FMFIA assurance
63 '
-------
Chapter 3
Better FMPIA Implementation Needed
letter. In 1993, ERL-GB stated in its assurance letter that the
laboratory had taken the initial action to correct this weakness
by hiring a contract expert.
One of the most significant improvements made in ERL-GB's 1993
internal control documentation was defining control objectives
and techniques for CAs. However, our review showed that some of
the 1993 documented controls were not implemented or followed.
For example:
Control Technique: POs receive training on assistance
agreements.
Three of eleven POs had not received PO training for assistance
agreements at the time of our audit. One of the three includes
the Branch Chief for the Microbial Ecology and Biotechnology
Branch.
Control Technique; Performance Standards and Position
Descriptions include cooperative agreement responsibilities.
Four of the eleven PO's performance standards reviewed did not
specifically include PO duties.
Control Technique; Pre-proposal solicitations published in
the Federal Register and appropriate technical publications,
and notices sent to universities with programs in relevant
research areas.
The national competition that we reviewed resulted in the award
of five CAs totalling $ 2.5 million. However, the request for
proposals was not published in the Federal Register as indicated
in the control technique. The only advertisement placed was in
Science magazine. For two other limited competitions we
reviewed, there was no advertisement placed. Six CAs and one
interagency agreement (IAG) totaling $7.2 million were awarded.
In these two CA competitions, the request for proposals was
provided only to those institutions that ERL-GB considered to
have relevant research areas.
Control Technique; PO reviews special conditions and
requires reports/actions from Principal Investigator as
specified.
Our review found that special conditions were not always complied
with by ERL-GB or CA recipients. In these instances either the
PO was not familiar with the special condition or did not require
the recipient to comply. It was evident that neither ERL-GB nor'
64
-------
Chapter 3
Better FMFIA Implementation Needed
the recipient placed a high degree of importance on special
conditions.
Administrative Management/Fund Controls
Our audit revealed other administrative management and fund
control problems both related and unrelated to CAs. We concluded
that these deficiencies could also be attributed to the
inefficiency and ineffectiveness of ERL-GB's FMFIA process and
related internal controls.
Records Management; ERL-GB identified an event cycle for records
management with an internal control objective and related
techniques in FYs 1991, 1992 and 1993. However, at the
completion of our audit at ERL-GB (September 1993), these control
techniques had not been implemented (See Chapter 4).
Between 1991 and 1992 the FMFIA control 'techniques for records
management changed completely. For 1993, there was a small
change as shown below:
Control Objectives
Control Techniques (examples)
FY 1991: Ensure that all
records are maintained for
easy retrieval and
documentation.
-Personnel Coordinator -
Maintain personnel file for
all employees.
-Program Staff maintain filing
system and periodically purge.
-Signed, dated copies of
official documents filed by
subject matter.
-Chronological file contains
copy of all correspondence.
65
-------
Chapter 3
Better FMFIA implementation Needed
Control Objectives;
Control Techniques (examples)
FY 1992/1993: Ensure adequate
documentation of Agency
policies and programs.
FY 1993: Communicate regularly
with Headquarters records
managers.
-Designate Records Officer.
-EPA Records Management Manual
updated and available.
-Develop uniform lab-wide
records procedures.
-Chronological file contains
copy of all correspondence.
-Standardized file stations.
-Designate file custodians for
each file station.
-Communicate regularly with
Headquarters records managers
(made objective in 1993).
-IMSD6 conference calls.
-IMSD weekly reports
-IMSD yearly conferences
As shown above, FMFIA objectives and techniques were refined to
better reflect requirements of good records management consistent
with Agency guidance. However, as reported in Chapter 4, the
techniques listed were generally not in place. For example, ERL-
GB did not: (1) have standardized file stations and designated
file custodians; (2) ensure that the Agency's Records Management
Manual was updated and available to all record keepers; and (3)
develop uniform laboratory-wide records procedures. Neither did
the records documentation identify the laboratory staff who were
responsible for performance of the individual control techniques.
In addition, there were other control techniques that should have
been recognized which were overlooked. For example, records
responsibilities were not included in the performance standards
of managers with significant records responsibilities. Also, EPA
records control schedules which governed records creation,
maintenance, and disposition were not widely distributed at ERL-
GB until April 1993.
Based on our discussions with ERL-GB management concerning record
management problems (see Chapter 4), ERL-GB identified records
management as a material weakness in their 1993 FMFIA assurance
letter.
6 Information Management and Services Division, Office of
Information and Resources Management.
66
-------
Chapter 3
Better FMPIA Implementation Needed
Federal Managers' Financial Integrity Act (FMFIA); ERL-GB's 1991,
1992, and 1993 PMFIA documentation delineated control objectives
and related techniques for FMFIA. The 1993 documentation further
refilled the techniques presented and generally assigned
responsibilities for accomplishment. However, the FMFIA process
should have formally recognized the input that should be provided
by other ERL-GB managers having significant internal control
responsibility. For example:
Control Technique; PICC updates and reviews Event Cycle
Documentation at least annually.
FMFIA documentation should recognize that branch managers and
other personnel with significant internal control
responsibilities should have regular input into the preparation
of system documentation.
Control Technique; PICC Plans FMFIA activities using
calendars and documents sent by the ORD MCC, and the
Management Control Plan (MCP).
This technique would be enhanced by adding a requirement to
prepare an annual ERL-GB work plan for delineating and
implementing varibus FMFIA actions during the year. This would
provide better control and direction.
Imprest Fund: ERL-GB's 1991, 1992, and 1993 documentation
delineated control objectives and related techniques for the
imprest fund. The 1991 and 1992 documentation was very
rudimentary and did not assign control responsibility. However,
ERL-GB expanded the 1993 documentation to establish more specific
control techniques. The refined techniques also assigned
responsibility for accomplishment and, if these controls are
effectively implemented, they should provide adequate control
over the fund.
These and other examples where actual ERL-GB operations did not
comply with the 1993 and prior control documentation raised
questions concerning the accuracy of the documentation and the
degree of ERL-GB's control over implementation. Internal control
documentation should reflect actual controls in place and
established controls should be consistently followed. ERL-GB has
indicated that deficiencies will be corrected.
67
-------
Chapter 3
Better PMPIA Implementation Needed
f .;
PERIODIC INTERNAL EVALUATIONS OF INTERNAL CONTROLS NOT PROPERLY
PERFORMED
ERL-GB did not periodically or systematically test whether
documented internal controls were adequate or functioning. To
certify as to the adequacy of event cycle documentation and
controls, Agency FMFIA guidance (HMD 2560) requires that control
techniques be periodically tested to ensure proper implementation
by management staff. Since ERL-GB officials did not test
controls and ensure adherence with documented controls for CAs
and other administrative activities, internal control weaknesses
went undetected. As a result, critical control techniques
identified in ERL-GB's PMPIA documentation were either not
implemented or were not implemented as intended.
OMB Circular A-123 requires assessable unit managers to schedule
ICRs/AICRs each year to review controls. Managers must prepare
management control plans (MCPs) which identify component
inventory (subunits), by assessable unit, with associated risk
ratings and list ICRs/AICRs scheduled for a 5-year period. The
OMB Circular states that ICRs/AICRs must test controls, evaluate
the effectiveness of the controls, recommend corrective actions,
and report on the results. OMB guidelines encourage use of AICRs
to streamline the process, but Circular A-123 also states that
the AICRs must "determine overall compliance and include testing
of controls and the development of required documentation."
ERL-GB's 1993 MCP did not match the planned ICRs/AICRs with the
component inventory by subunit as required in Agency Internal
Control Guidance for Managers and Coordinators. The guidance
provides examples of subunits as branches, staffs, groups, etc.
ERL-GB's 1992 MCP identified five subunits: Directors Office,
Program Support Staff, Research Program Staff, Ecotoxicology
Branch, Pathobiology Branch, and the Microbial Ecology and
Biotechnology Branch. However, the 1993 MCP did not identify any
subunits. Consequently, the 1993 MCP did not reflect that the
assessable unit manager had scheduled ICRs/AICRs that would
assess controls in each subunit over a 5-year period.
Additionally, ERL-GB relied solely on external ICRs/AICRs by EPA
Headquarters and others to fulfill the review requirement.
However, these reviews did not necessarily meet OMB criteria for
internal control evaluations.
ERL-GB managers did not schedule any ICRs for 1991, 1992, and
1993 -- just AICRs to be performed by external groups. The
large majority of the. AICRs scheduled appeared to be primarily
quality assurance and performance reviews which would not
necessarily meet OMB criteria for examinations of internal
controls. We reviewed documented AICRs from 1991, 1992, and 1993
i
68
-------
Chapter 3
Better FMFZA Implementation Needed
and found that the OMB criteria for testing controls was not met
or the review results7 were not documented sufficiently to
determine if the criteria was met. None of the AICRs tested
controls identified in the FMFIA event cycle documentation to
determine whether the controls were working effectively. The
only AICR which indicated some testing of controls was a 1992
Headquarters contract management improvement review which
identified specific contract problems at ERL-GB. However, the
contract management improvement review did not identify the scope
of review or identify what, if any, controls were tested. All
the AICRs were performed by EPA Headquarters units or other
external reviewers and basically summarized discussions of
program or administrative concerns. Only the 1992 contract
management improvement.review resulted in a formalized plan for.
corrective action.
ERL-GB did not plan and conduct its own ICRs/AICRs, because they
apparently did not understand the underlying purpose and
requirements for these internal evaluations. OEPER's PICC should
have reviewed ERL-GB's MCP for acceptability and monitored the
unit managers progress in meeting the FMFIA requirements.
However, ERL-GB did not receive any apparent feedback from ORD on
its MCP. Therefore, ERL-GB proceeded under the assumption that
its approach toward developing the MCP and the scheduled reviews
was acceptable to ORD. Scheduled AICRs in the MCP should test
all internal control systems over a 5-year period. ERL-GB should
plan to test those areas not currently covered under external
reviews. ERL-GB should ensure that all the ICRs and AICRs
reported on the MCP meet OMB and Agency requirements for internal
evaluations of internal control systems.
OEPER OVERSIGHT OF ERL-GB'B FMFIA IMPLEMENTATION NEEDED
STRENGTHENING
Under EPA Order 1000.24, the Assistant Administrator for Research
and Development, as "primary organization head" (POH), is
responsible for overall development and maintenance of effective
systems of internal control under FMFIA within ORD. EPA policies
and procedures specifically state that one of the major
objectives of the FMFIA internal control requirements is to
provide the POH with reasonable assurance that "programs are
efficiently and effectively carried out in accordance with
applicable law and management policy."
The Assistant Administrator for ORD assigned, as his
representative, a MCC who is assisted by other Headquarters PICCs
located within each immediate ORD office. OEPER's PICC is
responsible for coordinating, monitoring, and implementing the
69
-------
Chapter 3
Better PMFIA Implementation Needed
Agency's FMFIA guidance within its remote laboratories. The
OEPER PICC is also responsible for ensuring that progress is made
in implementing FMFIA.
Interviews with ORD's MCC and OEPER's PICC, and a review of
related files indicated that each assessable unit manager,
including the ERL-GB Director, was individually accountable and
authorized to independently implement the FMFIA process. ORD did
provide, through OEPER, annual guidance on the preparation of
internal control documentation and related reports which
emphasized current Agency and ORD FMFIA initiatives. However,
the FMFIA submissions were reviewed primarily to determine
compliance with the annual guidance. There were no independent
Headquarter's level reviews performed that would have
specifically identified ERL-GB's FMFIA inadequacies reported in
this chapter.
We were informed by the ORD MCC, that some of the FMFIA
deficiencies noted in the report were common to other ORD offices
and laboratories; however, there was no documentation that ORD
senior management notified OEPER or ERL-GB of specific
deficiencies in ERL-GB's FMFIA documentation and plans. For
example, while ERL-GB's MCP contained obvious deficiencies in its
plan and execution of internal reviews, there were no ORD records
indicating that problems were brought to the attention of the
laboratory. OEPER's PICC did not track or otherwise determine
that ERL-GB's scheduled reviews of internal controls were
actually performed or that such reviews met established OMB
standards. Neither did OEPER analyze event cycle and control
objectives and techniques, and other information provided in
documentation submitted by ERL-GB to ensure that it was complete,
consistent, and met OMB definitions. Instead, ERL-GB FMFIA
submissions were accepted with little documented analysis or
comment, relying primarily on the assessable unit manager's
assurance to the Assistant Administrator that FMFIA was
effectively implemented. 'However, as demonstrated in this
Chapter, more needs to be done at the Headquarter's level to
provide feedback to ERL-GB on FMFIA deficiencies and ensure that
FMFIA is implemented by ERL-GB in a consistent and effective
manner.
AGENCY ACTIONS TMCRN DURING OUR REVIEW
During our audit, ERL-GB managers devoted more time to the 1993
FMFIA process and included more input from ERL-GB staff than ever
before. In addition, ORD has initiated scheduled teleconferences
to discuss emerging FMFIA issues. Also, in late September, early
70
-------
Chapter 3
Better FMPIA Implementation Needed
October 1993, ERL-GB's director, along with other OKD directors,
received some initial training on FMPIA.
CONCLUSION
Effective internal controls are essential to safeguard Agency
assets, preclude fraud, waste, and abuse, and ensure efficient
and effective mission accomplishment. Internal control systems
are only as good as the overall effort devoted to implement those
systems. In ERL-GB's case, the FMFIA process did not adequately
identify internal control weaknesses or ensure proper
implementation of FMFIA control objectives and techniques
relative to CAs and certain other administrative/management
functions', ERL-GB managers did not recognize or understand the
importance of FMFIA requirements. None of ERL-GB's managers had
received training in FMFIA purposes and requirements. As a
result, critical control objectives and techniques were either
not identified in internal control documentation or improperly
implemented. ERL-GB's noncompliance with FMFIA requirements may
have contributed directly to the problems discussed in other
chapters of this report.
RECOMMENDATIONS
We recommend that the Assistant Administrator for Research and
Development require proper implementation of ERL-GB's FMFIA
internal control process to ensure material weaknesses are
properly identified and adequate controls are established for
extramural resource management and administrative processes.
Specifically, the Assistant Administrator should require the:
Director. Office of Environmental Processes and Effects Research
to: - .
- Advise the ERL-GB director of the importance of proper
implementation of the FMFIA and the establishment of effective
internal control systems over critical laboratory operations.
- Include as part of any future on-site management review at ERL-
GB the evaluation of FMFIA implementation.
- Require the OEPER PICC to increase oversight of ERL-GB's FMFIA
process to assure that:
* ERL-GB's internal control documentation is complete and all
activities (event cycles) involved in the laboratory's
mission, as related to other ERL submissions, are included.
71 '
-------
Chapter 3
Better PMFIA Implementation Needed
PICC should also evaluate whether related control objectives
and techniques appear sufficient to reduce the potential
risks.
* Internal and external reviews listed on ERL-GB's MCP are
"designed to test controls, evaluate effectiveness of
controls, recommend corrective actions, and report on the
results.
In addition, the Assistant Administrator for Research and
Development should require the:
Director. Environmental Research Laboratory - Gulf Breeze to;
- Establish more effective oversight of all laboratory FMFIA
documentation and implementation to ensure that laboratory
managers properly implement FMFIA requirements in compliance
with statutory, EPA, and ERL-GB procedures.
- Include internal control responsibilities in the performance
agreements of all managers.
- Closely monitor the laboratory's FMFIA process and verify that
managers are held accountable for proper implementation of
controls and appraised on their FMFIA performance.
- .Arrange for or provide FMFIA training to all ERL-GB managers
and personnel with internal control responsibilities.
- Require ERL-GB PICC to: (1) assure that assessable subunit
managers' are cognizant of and perform their FMFIA
responsibilities and (2) prepare and distribute, an annual work
plan to those having FMFIA responsibilities. The work plan
should encompass all planned FMFIA activities for the year and
assign responsibility for completion of each task with
milestone dates. Progress in completing the plan should be
tracked during the year with exceptions reported to the
assessable unit manager.
- Continue to review FMFIA processes and update documentation at
ERL-GB. In conjunction with OEPER, establish that:
* Detailed control objectives and techniques are identified
for all critical event cycles and are tailored to ERL-GB
operations'both administrative and operational.
* Control objectives and techniques are documented in
sufficient detail to permit the testing and evaluation of
control implementation through ICRs and AICRs.
72
-------
Chapter 3
Better FMFIA Implementation Needed
Schedule and conduct AICRs/ICRs which cover controls for each
subunit at least once every 5 years. Also, require the MCC
to maintain an MCP that:
* ^Lists all subunits, and schedules and tracks completion
of reviews by those same subunits.
* Lists only, as ICRs/AICRs, those scheduled reviews which are
designed to: test the specific controls documented for the
activity under review; evaluate effectiveness of those
controls; recommend corrective actions; and formally report
on the results, as required by OMB Circular A-123.
* Schedules reviews over a five year period which adequately
cover the control objectives and techniques in the event
cycle documentation.
Require the PICC to track weaknesses identified by internal
reviews and the corrective actions taken.
AGENCY RESPONSE
ORD concurred with the findings and recommendations presented in
Chapter 3 and indicated that a corrective action plan to address
the recommendations would be provided to the OIG as soon as
possible (see Appendix I).
73
-------
Chapter 3
Better FMFIA implementation Needed
(This page intentionally left blank.}
74
-------
IMPROVEMENT NEEDED IN DOCUMENTING MANAG"*8****^*11 DECISIONS
AMD PROTECTING CRITICAL RECORDS
ERL-GB needs to consistently document critical organizational
functions and management decisions and properly protect critical
records related to CAs and other laboratory operations to avoid
loss of valuable corporate knowledge and ensure protection of
Government interests. Although the Agency's records management
requirements for record maintenance, retention, and control were
in effect since 19841, implementation by ERL-GB was not
initiated until 1992 and had only been partially implemented at
the conclusion of our audit. Record maintenance and retention
practices in place reflected the individual preferences of
laboratory managers and staff rather than Agency requirements,
thus creating a patchwork of inconsistent, uncontrolled systems
throughout the laboratory. Basically, insufficient direction,
support, and priority by ERL-GB and QRD management prevented the
timely implementation of a sound records management system at the
laboratory. Records were created, maintained, and destroyed on
an individual discretionary basis without regard for or proper
awareness of Federal and Agency regulations. As a result,
critical documentation regarding CA award and management was
either never created or was missing from laboratory files. Also,
evidence was obtained that records had been destroyed without
documentation as to what was destroyed and whether such records
were or were not controlled official documentation of management
decisions or mission accomplishments.
Although Agency requirements for control and retention of in-
house research documentation has existed, at least, since 1978,
neither the Agency, ORD, or ERL-GB had procedures to ensure
control and protection of research records in the possession of
contractors and cooperators. ERL-GB contracts and CAs, on
occasion, did contain references to 40 CFR, Part 30, which
addressed the maintenance and control of financial records
related to the particular contract or CA. However, there were no
general or specific provisions for control of operational or
research records created as a result of the contractors' or
cooperators' activities. Contractors and cooperators were left
to devise their own records management and retention systems.
This created an unreasonable risk that valuable research
documentation could be inadvertently lost or destroyed.
1 EPA Directive 2160, Records Management Manual, has been
in effect since 1984. However, current EPA records control
schedules have been in effect since 1978.
75
-------
Chapter 4
Improvement Needed In Documenting Decisions and Protecting Records
As a. result of records maintenance and retention problems
reported by the National Archives and Records Administration, ORD
planned and initiated several major actions during this audit
that should improve and enhance records management at ORD
laboratories. The specific actions taken or planned for FY 1993
and She impact on ERL-GB's operations are discussed' later in this
chapter and summarized in Appendix VIII. After discussions of
preliminary audit results with laboratory management, ERL-GB, in
October 1993, reported records management as an Agency*level
internal control weakness in its year-end Federal Managers'
Financial Integrity Act (FMFIA) assurance letter to the Assistant
Administrator for Research and Development.
BACKGROUND
Erior NARA Reviews of EPA Records Management
In 1977, the National Archives and Records Administration {NARA)
inspected EPA's records management program and made
recommendations for the establishment of a sound records
management system within the Agency. In 1990, NARA conducted a
follow-up evaluation of EPA's records management system2 which
involved visits to 52 EPA offices and included ORD Headquarters
offices and selected field laboratories. NARA found that EPA had
not implemented an Agency-wide records management program in
accordance with its own guidance to ensure that records control
schedules were appropriately applied. NARA reported that while
EPA had improved its program in a number of areas, several of its
1977 recommendations still were not implemented. NARA concluded
that EPA's inaction had resulted from a "... lack of senior
management support and leadership for an improved records
management program."
EPA Records Management Directives and Guidance
EPA's records management program is founded on EPA Directive 2160
- Records Management Manual (1984 edition). Additional policy
guidance is provided in EPA Directive 2100 - Information
Resources Management Policy Manual, Chapter 10 "Records
Management11 {1987 edition) .
At the conclusion of our on-site audit fieldwork in September
1993, ERL-GB had not fully implemented a record management system
2 A National Archives and Records Administration
Evaluation: Records Management In The Environmental Protection
Agency. February 19, 1992.
76
-------
Chapter 4
Improvement Needed In Documenting Decisions and Protecting Records
as specified in the subject Agency guidance. The same EPA-wide
condition was reported by NARA in 1992.
lETilgMTgHTS OF A SOUND RECORD MANAGB;MT!NT SYSTFM NOT IMPIi'^MfciN'rKP
In the 1992 followup report, NARA identified five essential
elements for an effective records management program:
- A clear definition of program objectives, authorities,
and responsibilities.
- Sufficient and qualified staff to implement and
administer the program.
- Formal and continuing training for staff members with
records management responsibilities.
- Regular internal evaluations to monitor the
effectiveness of the program and to identify real and
potential problems within the program before they .cause
severe damage.
- Top-level management support to ensure that the
above elements exist and are carried out.
EPA directives indicated that a records management system will
identify the location of all critical records at a facility,
especially the official files listed in Records Management Manual
control schedules. These control schedules identify various
files as official records, the period of required retention, and
examples of documentation included in each category. ORD
laboratories have a specific records control schedule in the
Records Management Manual.
To safeguard these official records, EPA directives specify
designation of official file stations, file custodians, and a
records management officer (RMO) to control and maintain those
official records identified in control schedules and other
critical records as identified by Agency or laboratory
management. In addition, EPA records management guidance
provides for a vital records program to safeguard records needed
for the Agency to function after an emergency or disaster and a
vital records officer for each EPA location. EPA guidance
further identifies specific laboratory records considered vital
to Agency functions in the event of an emergency or disaster.
ERL-GB had not implemented the elements of a sound records
management system to include appointment of sufficient qualified,
77
-------
Chapter 4
Improvement Needed IB Documenting Decisions and Protecting Records
trained staff and proper designation of critical records as
specified in Agency guidance. By not establishing a formal
records management program and providing adequate guidance and
training to those responsible for records, ERL-GB encouraged a
situation where individuals with record keeping responsibilities
developed their own records management methods and procedures.
Individual managers and staff also determined individually what
records to create and how they were to be maintained and
controlled without proper consideration of NARA and Agency
requirements (i.e., EPA's records control schedule for laboratory
records as approved by NARA). In addition, records disposition
procedures were determined by individual managers based on
available file space rather than file retention timeframes
established under EPA record control schedules. As a result,
critical records were not created to document management
decisions related to CA and other program operations. Also,
records were destroyed without documentation as to what was
destroyed or whether these records were of an official or
critical nature.
Sufficient Qualified. Trained Staff
ERL-GB did not have sufficient, qualified and trained staff
assigned to implement and administer its records program. In
1992, ERL-GB designated a RMO. This is the only records
management position specified in Agency directives that had been
designated at ERL-GB. Further, the individual designated as the
RMO was overburden with other administrative duties and did not
have sufficient time or staff to perform her records management
duties. ERL-GB had not appointed a vital records officer,
designated file custodians, and none of ERL-GB's staff having
records maintenance responsibilities, including the RMO, had
received required records management training. As a result,
records management was given low priority.
The ERL-GB's Chief of Program Support - Administrative Office was
designated as the RMO. However, records management was assigned
as a collateral duty. The Chief's other areas of responsibility
included personnel, budgeting, purchasing, payroll, training,
property management, automatic data processing, program planning,
and other miscellaneous administrative activities. The
miscellaneous duties included serving as PO on four on-site
contracts and as the designated FMFIA coordinator. According to
EPA Directive 2160, Records Management Manual, local RMOs must
not only be qualified to perform the duties assigned, but also
78
-------
Chapter 4.
Improvement Needed In Documenting Decisions and Protecting Records
have the status and sufficient time to:
- develop policies, directives, and instructional materials
governing the organization, maintenance, and disposition of
all records within the organizational unit;
- provide staff advice, guidance, assistance, and training
in all aspects of the records/information management
program; .
- coordinate and evaluate records management program efforts
and effectiveness by making periodic surveys of information
systems;
- plan and coordinate a Vital Records Program; and
- coordinate the retirement and retrieval of records to the:
Federal Records Center.
The Chief of Program Support with appropriate training, would be
a qualified individual to perform as the laboratory's records
manager. However, when the records manager was appointed, her
workload was not adjusted to allow adequate time to effectively
perform RMO duties. Neither was she provided additional staff to
assist in accomplishing the objectives of records management. •
ORD's action plan, in response to the 1992 NARA review, stated
that designated records, managers would not only have the status
but sufficient time to devote to establishing a sound records
management program. However, this action was not properly
implemented at ERL-GB.
At a December 1993 exit briefing, the laboratory director said
that he was relieving the RMO of PO duties for three of the on-
site contracts and making other adjustments in her workload to .
allow her more time for records management..
Identification and Control 'of Official Laboratory Records
ERli-GB had not completed a survey to identify laboratory
recordkeeping requirements as proposed under EPA Directives and,
therefore, did not possess adequate knowledge of laboratory
records processes and the location of all official files. As a
result, there were no officially recognized file stations except
for records maintained in the ERL-GB Administrative Office and
Office of the Director. Also, required file maintenance plans
were not established for all areas where official records were
maintained and there were no officially recognized file
custodians.
79
-------
Chapter 4
Improvement Needed In Documenting Decisions and Protecting Records
During our review, official records were found in branch offices,
and in the files of contractors, cooperators, and individual
staff members. These locations had no assigned accountability
for records management. None of these sites were recognized as
official file stations. In addition, none of the sites,
including the Administrative Office and the Office of the
Director, were assigned file custodians or required to follow an
approved file maintenance plan as specified in the Records
Management Manual. Filing systems were individually developed
and inconsistent between various laboratory offices. Therefore,
records outside the Administrative Office and the Office of the
Director were maintained on an unofficial basis without proper
controls and protection from loss or destruction.
According to Chapter 7 of the Records Management Manual (Files
Maintenance), 41 CFR requires that official file locations -
"file stations" - be established for the filing of official
records. A file station would be every separate location within
an organizational unit where records of any kind are accumulated
in an organized manner. A file custodian should be assigned .
responsibility for the operation of each file station in
accordance with a formal file maintenance.plan submitted to the
local RMO.
Without knowledge of the various types of records being created
at ERL-GB and oversight of records practices, management could
not assure that management actions and laboratory operations were
adequately documented, and that Government records were being
appropriately maintained and disposed.
The laboratory director at the December 1993 exit briefing
indicated that they had initiated an inventory of all records
maintained at ERL-GB, however, the inventory is not yet complete.
Vital Records Program and Officer
Although EPA guidance identified specific laboratory records that
were considered vital for emergency or post-emergency operations,
ERL-GB had not recognized the need for a vital records program.
Therefore, a vital records officer was not designated and
procedures for safeguarding vital records specified in Agency
guidance were not implemented. As a result, ERL-GB operations
may not be adequately protected in case of disaster. Such a
disaster could mean the destruction of ERL-GB's vital records
resulting in the permanent loss of valuable program and research
records and the disruption of program operations.
According to Chapter 4 of the. Records Management Manual, vital
records are records that are essential to the Agency in carrying
80
-------
Chapter 4
Improvement Needed In Documenting Decisions and Protecting Records
out its functions in emergency and post-emergency situations, and
in protecting the legal rights or interests of individuals and
the Agency. The selection of records as "vital" would include
those of archival or research value, as well as those records
with^no lasting value that would be valuable during, and after an
emergency.
EPA's Records Management Manual also provided for the designation
of a vital, records officer at each laboratory. This officer
would be responsible for implementing and administering ERL-GB's
vital records program which would include identifying all of the
laboratory's vital records and sending vital records to approved
alternative sites for preservation. A copy of these records
would be retained for laboratory use.
In 1977, NARA reported that EPA had directed a formal vital
records program in-Agency guidance; however, implementation had
not occurred. NARA recommended that EPA implement its vital.
records program at all organizational levels. In the 1992
followup review, NARA reported that the status of EPA's vital
records program was virtually unchanged and concluded that:
Any significant loss of data through natural disaster
or sabotage would devastate the performance
capabilities of EPA and would adversely effect the
numerous persons, organizations, and state and local
governments the agency is supposedly protecting.
RECORDS MANAGEMENT - A LOW PRIORITY
It was not until 1991 that ERL-GB recognized records management
as a controllable event cycle in its internal control
documentation (See Chapter 3), and 1992, under prompting by ORD
Headquarters, that a local RMO was designated. ERL-GB managers
were not cognizant of EPA records management requirements and
their individual responsibilities for effective implementation.
Therefore, ERL-GB managers and their staffs did not recognize the
importance effective records management played in day-to-day
laboratory operations. At the time of our audit ERL-GB had not
distributed existing guidance to establish a records management
system consistent with Agency directives. As a result, ERL-GB
operated under inconsistent records practices that did not always
adequately document laboratory operations and safeguard the
records that were created.
The ERL-GB staff we interviewed, who had record keeping
responsibilities, confirmed that they were not provided any
records guidance other than what was recently distributed by the
81 -
-------
Chapter 4
Improvement Needed In Documenting Decisions and Protecting Records
RMO in April 1993. This was old guidance which had been provided
to ERL-GB by ORD Headquarters as a result of record management
problems identified by the OIG in recent audits of other ERL
laboratories. None of the individuals we interviewed, during the
audit, including the laboratory director's secretary, were
familiar with general EPA directives on records management. Only
one copy of EPA Directive 2160 could be located at ERL-GB. This
copy was in the ERL-GB Administrative Office and it was
incomplete.
At a December 1993 exit briefing, the laboratory director
indicated the'statement that records management at ERL-GB was
"low priority" may be an incorrect description. He said until
recently records management had "no priority" at ERL-GB.
CRITICAL RECORDS NOT CREATED OR PRESERVED IN CA AND CONTRACT
FILES
Chapter 1 of the EPA Records Management Manual states that the
Agency will make and preserve records to provide adequate and
proper documentation of operations. In addition, Agency records
may not be destroyed without the prior approval of NARA. NARA
provides its approval of record retention and destruction in the
form of EPA records control schedules.. Since 1978, EPA has had a
NARA approved records control schedule for research laboratory
records [Records Management Manual, Appendix E (Transmittal TN28,
November 13, 1978)]. A record control schedule represents the
inventory of official/critical records within a program or
activity. In addition to a records inventory, the schedule also
provides a brief description of the file, the types of records to
be included, and specific information on the period of retention
and disposition instructions for each item. According to the
Records Management Manual, all EPA employees are charged with the
responsibility of ensuring that records actions agree with the
records control schedules. Compliance with EPA's records control
schedules is essential to ensure that records determined to have
long-term value are properly prepared and adequately protected.
CA and Contract Records
In reviewing various CA PO files, inconsistencies were noted in
what records were created and how they were maintained. As
stated above, the records control schedule for laboratory records
provides examples of documents that should be included in
particular CA files. For example, research case files for
projects conducted by cooperators should include proposals
(including rejected proposals), applications, relevance reviews,
decision memos, award and modifications, funding orders,
• . - ' 82 • '
-------
Chapter 4
Improvement Heeded In Documenting Decisions and Protecting Records
commitment notices, grant agreement, cost advisory reports,
progress reports, and related correspondence including reports on
site visits, telephone memos, and other records which may be
created in the day-to-day management of the research project.
However, the CA files we reviewed routinely lacked documentation
which was specifically identified in the records control
schedule.
For example, the 12 rejected proposals from a series of 17 full
proposals for CA awards could not be located. These proposals
were requested under a competitive nationwide request (August 30,
1991} resulting in the award of 5 CAs totalling $2.5 million.
The records control schedule specifies that rejected proposals
are to be retained for three years. At the time of our review
(June 1993), less than two years had expired since this
solicitation. The record keeper indicated that the rejected
proposals were shredded due to file space shortage at ERL-GB.
According to the record keeper, a new procedure had been put in
place to document rejected proposals. Under this procedure the
front page of the application, the transmittal letter, and the
letter of acknowledgement for the proposals would be kept with
all other information destroyed. At a December 1993 exit
briefing, the laboratory director stated that he was not aware of
this new procedure and it was not laboratory policy as far as he
was concerned. Nevertheless, the record-keeper presented this as
an acceptable approach for documenting rejected proposals and
apparently thought that this decision was within her authority.
This new proposed procedure, whether or not sanctioned by the
laboratory director or even put in place, and the old accepted
practice of destroying rejected proposals conflicted with the
three year retention requirements established in the records
control schedule. The potential existence of a records policy
without the knowledge or approval of the laboratory director, in
our opinion, further demonstrates the absence of control over
records at ERL-GB.
In another CA research competition (June 16, 1992), the decision
process for awarding $1.6 million in CAs was not documented to
clearly show how the award selections were made. Conflicting
statements were made by those involved in the awards on how the
selections were determined. Accurate documentation of the
decision process would have eliminated this confusion and
provided evidence of an unbiased competitive award process. Our
review further disclosed that CA POs consistently did not receive
required reports/records from cooperators (i.e., progress
reports) or document their own PO activities (i.e., site visits,
telephone memos).
83
-------
Chapter 4
Improvement Needed IB Documenting Decisions and Protecting Records
An example of insufficient documentation of contracting decisions
was also found during our audit survey of ERL-GB extramural
activities. Laboratory records could not be found that
documented the decisions to (1) award a $4 million on-site 8(a)
contract, (2) modify the same contract eight months after award
to increase the maximum potential value by approximately $10
million, and (3) extend the contract for an additional year. The
PO told us during the survey that he had no knowledge as to the
location of the contract pre-award files. In addition, neither
the PO nor other ERL-GB staff could provide specific information
on the decision processes for this contract. The verbal
statements provided by those involved in the contract were
sometimes contradictory about what happened and why. However,
without written records that documented what actually occurred
there was no way to evidence the pre-award and contract
management process. Files documenting contract award and
management apparently had been prepared, but both past and
current POs had no knowledge of the files or their current
location. The original PO said that he had no personal knowledge
of the files being destroyed; however, no ERL-GB files were ever
sent to the Federal Records Center. Therefore, these files had
been lost or destroyed without the POs knowledge.
In written response to this finding, the laboratory director
stated that "... official contract procurement records and
documentation are maintained in CMD, Cincinnati." This is true;
however, official records which document contract award
justifications/processes are required by ORD's laboratory records
control schedule to be generated and maintained at ERL-GB. The
purpose of records control schedules and the utilization of
Federal Records Centers is to provide necessary controls to
ensure that Government records are prepared, maintained, and
safeguarded until no longer determined useful and then destroyed
in accordance with approved NARA retention requirements.
Records Destruction
ERL-GB had not consistently followed the Agency's records control
schedule for laboratory records. Those ERL-GB officials and
staff with record keeping responsibility disposed of records
based on their individual standards for retention, and stored
records based on their perceived needs. When additional file
space was needed, those records deemed to have long-term or
permanent value, were not forwarded to the Federal Records Center
as required, but were destroyed or maintained on-site when
possible. ERL-GB's primary storage space was located in a supply
warehouse.
84
-------
Chapter 4
Improvement Needed In Documenting Decisions and Protecting Records
Approximately 70 boxes of various types of archived records were
stored in a ERL-GB warehouse. According to ERL-GB managers, this
represented all the laboratory's archived records. Only 70
cartons of archived records from the 1960's to 1993 indicated
that many official records listed in the laboratory control
schedule may not have been retained as required. In addition, as
discussed in the previous section; ERL-GB'.s inability to produce
scheduled records further indicates a lack of retention.
During the audit, OIG investigators obtained evidence that a
number of laboratory records (primarily contract files) were
destroyed prior to initiation of our audit survey (May 1992).
These records were apparently destroyed by on-site contractor
staff based upon instructions from EPA staff. However, the poor
records procedures at ERL-GB precluded identification of the
nature of the records destroyed and whether official laboratory
records included in-the laboratory records control schedule were
properly disposed.
Records Storage
The storage space provided in the supply warehouse for archived
records did not meet the standards established for records
storage set by NARA at its Federal Records Centers. At the
initiation of the audit, older ERL-GB records were stored on
pallets in the supply warehouse intermingled with various types
of supplies. Recently, ERL-GB moved these records to the attic
of the supply warehouse. While this is an improved location, the
space still does not adequately protect these records because the
electrical equipment room has no humidity control or sprinkler
system. In its 1992 report, NARA criticized other EPA facilities
for using similar records storage arrangements in lieu of Federal
Records Centers.
CRITICAL AGENCY RECORDS IN POSSESSION OF CONTRACTORS/COOPERATORS
NOT PROTECTED
ERL-GB did not exercise control over records in the possession of
contractors and cooperators. ERL-GB did not include provisions
in contracts or CAs or issue specific instructions to contractors
and cooperators related to the creation and maintenance of
critical laboratory records produced under related contracts or
agreements. The.maintenance and preservation of information that
contractors and cooperators generated in the process of
performing under an agreement was left to their professional
discretion. While quality assurance plans normally documented
the scientific approach of the CA research, the extent of
direction provided on documenting the research data developed
85
-------
Chapter 4
Improvement Heeded In Documenting Decisions and Protecting Records
were statements such as: "... experimental procedures and primary
data should be recorded in laboratory notebooks and computer
files." Neither the quality assurance plans nor the extramural
agreements specified contractor/cooperator requirements related
.to records creation, maintenance, retention periods, and
disposition. Therefore, records created under an extramural
agreement supporting research performance .(e.g., records that
could provide the basic support for research products or other
work performed), which are not delivered to EPA on closure of the
agreement, may not be adequately safeguarded.
ERL-GB's RMO stated that she was not aware of any guidance which
addressed the issue of records in the hands of contractors and
cooperators other than financial records. We agree. However,
records generated under contract or CA may have significant value
as a permanent record similar to that recognized for in-house
research in the laboratory records control schedule. For in-
house research, the records control schedule indicated that
research project case files are subject to permanent protection.
This would include documentation on originating, planning,
conducting, and reporting on the research. According to the
schedule, these types of records should be maintained at the
laboratory for three years after completion of the project.
After three years, the files should then be transferred to the
Federal Records Centers. The files are kept at the Federal
Records Centers for 20 more years of protected storage and then
offered to the National Archives. If in-house research files
are regarded as having such long-term value, the Agency should
not accept any less protection for research project files
developed under extramural agreements.
Both the laboratory director and the deputy director indicated
that, while rare, there have been occasions when supporting data
generated under extramural agreements had to be retrieved from
the contractor or cooperator. The Agency RMO subsequently told
us that he believed that cooperators and contractors should
either be required to comply with EPA's record control schedules
or deliver supporting research records directly to the Agency.
The laboratory director at the December 1993 exit briefing stated
that retention/control requirements for contractor or cooperator
operational records was not required and he did not believe such
requirements were needed, especially for cooperators. He said
cooperators receive assistance not contracts and the records
created belong to the cooperator. He indicated such requirements
would just add more overhead burden on academic institutions.
However, we pointed out that retention of financial records was
currently required under CAs and that cooperators and grantees
were required to maintain records for possible audit. Therefore,
86
-------
Chapter 4
Improvement Needed Xn Documenting Decisions and Protecting Records
we saw no additional administrative burden for records retention
provisions in line with EPA records management policies.
However, EPA has the option of requiring the cooperator to
deliver all research records (or a copy of such records) to the
Agency upon completion .of the agreement.
REGULAR INTERNAL EVALUATIONS OP RECORDS MMlAGFMgM'P PIP HOT OCCUR
ERL-GB did not regularly review existing laboratory records
management practices for effectiveness and compliance with Agency
policy. For example, an internal evaluation had never been
performed of the ERL-GB's only official records management
procedure (chronological correspondence files) to ensure proper
staff implementation of the established policy. When asked about
internal evaluations of ERL-GB records procedures, the RMO
discussed reinforcing the requirement to provide two copies of
all correspondence for chronological files at secretarial
meetings. However, the RMO conceded that no testing had been
performed to actually verify compliance. NARA emphasized in its
report that regular internal evaluations of records procedures
were necessary to determine the effectiveness of established
records practices and to identify real and potential problems
before they can cause severe damage.
Otherx than the requirement to forward copies of correspondence to
the Administration Office for inclusion in a chronological file,
there were no ERL-GB record procedures to evaluate. However,
when ERL-GB does implement record procedures to create, maintain,
and dispose of records in accordance with Agency policies and
records control schedules, internal evaluations should be the
primary management control to ensure that its policies and
procedures are being properly implemented.
AGENCY ACTIONS TAKEN DURING THE AUDIT
In response to the February 1992 NARA report, EPA provided NARA a
corrective action plan in July 1992 with individual plans for
each major Headquarters program, including ORD. For its
response, ORD drafted one basic plan to encourage records
management continuity throughout ORD offices and laboratories.
ORD recognized that, since the Office of Information and
Resources Management (OIRM) had EPA-wide responsibility for
issuing policies and procedures related to records management,
extensive assistance and support from OIRM would be necessary to
successfully complete many of its planned actions. ORD promised
to work closely with OIRM in (1) reviewing existing records .
87
-------
Chapter 4
Improvement Needed IB . Documenting Decisions and Protecting Records
guidance, (2) revising ORD records control schedules, and (3)
implementing an acceptable records management program within ORD.
Corrective actions ORD proposed in response to the NARA report
would also address many ERL-GB records management problems,
identified in this chapter. At the time of our audit, some of
these actions had either been completed, were in process, or were
planned for future action. However, several completed actions
resulted in little improvement in records management at ERL-GB.
Those actions planned for completion in fiscal 1993 and their
direct impact on ERL-GB 's record management are summarized in
Appendix VIII.
CONCLUSION
ERL-GB 's needs to significantly improve its records management to
ensure creation of appropriate official records, protect critical
research and operational records from loss or premature
destruction, and preclude disruption of Agency operations in the
event of disaster. Current records management practices were
not consistent with Agency policies and procedures for records
creation, maintenance, or disposition. With only minimal
guidance on records management and without any formal records
management training, ERL-GB staff were assigned records
management as a collateral duty. As a result, records management
did not receive proper emphasis at ERL-GB and records practices
were often inconsistent and uncontrolled within ERL-GB 's various
operations. Required file documentation was found to be missing
and, sometimes, unaccounted for. In addition, records were
destroyed without proper accountability as to what was destroyed
and whether these records were official controlled documentation
of laboratory operations.
ORD needs to continue to move toward accomplishing its NARA
corrective action plan to improve records management. In
particular, ORD and OEPER need to ensure that ERL-GB moves in the'
same direction. ERL-GB has been slow in developing consistent
record keeping practices in accordance with Agency directives and
records control' schedules.
RECOMMENDATIONS
Effective implementation of ORD's proposed corrective actions in
response to the 1992 NARA report on EPA records management should
provide significant progress in resolving most of the issues
presented in this chapter. However, in addition to those
actions already proposed or taken, we recommend that the
, 88 • •
-------
Chapter 4
Improvement Needed In Documenting Decisions and Protecting Records
Assistant Administrator for Research and Development:
Determine if research records in the possession of research
contractors and cooperators have the same long-term value as
,the in-house research files described under existing records
control schedules. If so, require that special conditions
to extramural agreements contain appropriate direction on
the creation, maintenance, retention, and disposition of
these critical records.
Evaluate whether records management is a pervasive problem
in OEPER laboratories. If similar problems exist at other
laboratories, OEPER and ORD should consider reporting
records management as a material internal control weakness
in their next FMFIA report.
Also, we recommend that the Assistant Administrator for Research
and Development require the:
Director. Office of Environmental Processes and Effects Research
to:
Revise the ERL-GB laboratory director's performance
standards to reflect the importance of good records
management practices-and his responsibility to ensure the
effective implementation of a records management plan
consistent with EPA's directives and records control
schedules.
Coordinate and assist ERL-GB in the implementation- of sound
records management policies and procedures and, as currently
planned (see Appendix VIII) through on-site reviews,
determine that ERL-GB implements and maintains an effective
records management program.
Director. Environmental Research Laboratory - Gulf Breeze to:
Provide sufficient time and/or resources for the Chief
Program Support - Administrative Office to accomplish her
RMO duties.
Conduct a survey of all of current laboratory records to
identify types of records maintained and current procedures
for safeguarding and maintaining critical laboratory
documentation.
Based on the records survey, designate official file
stations and assign file custodians to be responsible for
records maintenance within their areas of responsibility.
89
-------
Chapter 4
Improvement Heeded In Documenting Decisions and Protecting Records
Schedule appropriate records management training for key
managers, the RMO, and other staff with record keeping
responsibilities (e.g., file custodians).
Revise the performance standards of the RMO and all other
'key personnel having records responsibilities to include a
critical performance element for sound records management
and effective implementation of Agency directives and
records control schedules.
Establish laboratory procedures for the creation,
maintenance, retention, and disposition of official records
consistent with EPA's record control schedules for
laboratory records. The procedures should include the
proper utilization of the Federal Records Center for records
storage.
Identify those ERL-GB records that would be considered vital
and subject to the special protection afforded such records
under the EPA's vital records program. Once identified,
implement a vital records program at ERL-GB as specified in
EPA's Records Management Manual.
Establish as an FMFIA control technique, regular internal
evaluations of existing record management practices to
determine the effectiveness of established records
procedures and to correct problems that may cause premature
loss or destruction of critical laboratory records.
Provide visible support for the RMO's implementation of a
records management program at ERL-GB consistent with
established EPA directives and record control schedules.
AGENCYRESPONSE
ORD concurred with the findings and recommendations presented in
Chapter 2 and indicated that a corrective action plan to address
the recommendations would be provided to the OIG as soon as
possible (see Appendix I).
90
-------
Appendix I
AGENCY RESPONSE TO THE DRAFT REPORT
AMD PIG EVALUATION
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHMQTOH,aC. 90460
WR 24 1994
OFFICE OF
RESEAflCHANDOEVELOPMENr
MEMORANDUM
SUBJECT: Management of Cooperative Agreements at ERL-Gulf
Breeze, Draft Audit Report No. E1JBF2-04-0386
sistant Administrator
Research and Development (8101)
TO: Elissa R. Kaxpf
Associate Assistant Inspector General
for Acquisition and Assistance Audits (2421)
We have reviewed the draft audit report on Management of
Cooperative Agreements at the Environmental Research Laboratory,
Gulf Breeze, Florida (ERL-GB) . Your audit staff has provided us
with valuable insights concerning activities we need to undertake
to strengthen our management systems. Please extend our thanks
to the audit team for bringing these matters to our attention.
Except as noted below, we concur with the findings and
recommendations and will correct all deficiencies highlighted in
the draft audit report. We will provide you with a more detailed
action plan and schedule as soon as possible.
The audit applies a model for assistance agreements that we
believe may differ from that envisioned under USC 31 and EPA
guidance. For example:
o Research activities that serve a public purpose and
benefit EPA are not mutually exclusive concepts. As
long as the principal purpose is public stimulation or
support, then the use of assistance is proper.TEe
audit appears to-use the fact that research results are
of interest or use to EPA as prima facie evidence that
a contract should have been used. The test should be
the principal purpose test.
o The audit calls for a type of. financial monitoring by
ORD project officers that may not be appropriate for
assistance agreements according to the guidance and
practices of the Grants Administration Division.
91
-------
Appendix I
AGENCY RESPONSETO THE DRAFT REPORT
AMD PIG EVALUATION
-2- • . - -
o The audit's recommendation to "instruct POs to refrain
from involvement in cooperator . . . budget
preparation" should be revised. A critical difference
between contracting and assistance management is in the
Government's pre-award relationship with the outside
party to the agreement. We believe that it is proper
for Project Officers to "involve" themselves with
cooperators" prior to award. This can include
discussions on the scope of work (and thus influence
the budget). We concur that in competitive actions,
all organizations must be treated fairly and equally.
We also concur that EPA should not intervene in -
cooperator personnel decisions. However, the audit s
recommendation as stated needs to be clarified so that
it complies with EPA and Federal assistance management
policy.
As part of our corrective action plan, we will work with the
Grants Administration Division to ensure that our use of
assistance agreements complies with USC 31 and EPA guidance. I
would also urge your staff to ensure that its interpretation of
EPA and Federal policy is consistent with the Grants
Administration Division's — or, if it is not, that the matter be
resolved between your two respective offices.
As we have discussed previously, we would like audit
findings to be explicit and definitive whenever possible. Where
you have found mistakes, or good management practices, please be
clear about it. . A few examples from the first page of the
"Principal Findings" section (page iii) illustrate what I believe
we need to avoid (our emphasis in bold):
" . . ERL-GB managers used CAs (potential valued at $7.25
million) to procure goods and services when contracts were
the more appropriate funding instrument"
"... awards exhibited attributes of favoritism"
"... These questionable actions"
"... Questionable EPA involvement in cooperator s1
decisions, exhibited evidence of personal service"
These statements imply deficiencies without clearly stating
them. He recommend that if the audit found favoritism, personal
services or other wrong practices, to say so explicitly.
92
-------
Appendix I
AGENCY RESPONSE TO THE DRAFT REPORT
AND PIG EVALUATION
-3- • • -
For your information/ I am attaching the proposed response
from ERL-GB which Includes proposed corrective actions. This
attachment is not to be used as ORD's official corrective action
listing. We are in the process of reviewing these actions and
will submit an ORB corrective action plan in the near future.
Finally, I would like to let you know that we appreciate the
audit's positive statements about our efforts under way to
improve our management activities*. Just as we need to know where
we are making mistakes/ we also benefit from an objective
auditor's findings concerning what we are doing right. Your
highlighting the Laboratory's efforts to improve its Federal
Managers' Financial Integrity Act (FMFIA.) and your
recommendations for further Improvement will reinforce our
management improvement efforts.
Thank you for the opportunity to comment on your draft
report.
Attachment
We agree with QRD that 31 U.S.C. (codification of FGCAA) and EPA
guidance permits the use of CAs to fund research when the
principal purpose is for public stimulation and support.
However, we did not intend for the report to imply that the
statutes or guidance preclude all research which may be of some
benefit or interest to EPA. DIG interpretations and citations of
31 U.S.C. and EPA guidance used in this report were provided to
OGC for review and comment and changes were made as recommended
by OGC. Also, GAD did not take exception to our interpretation;
of guidance or statutes.
We did not state that research of interest or incidental benefit
to EPA precluded the use of a CA to perform such research. All
of the research performed under the 15 CAs we sampled, we
believe, were of some interest or benefit to EPA or the CAs would
not have been funded. The appearance of benefit to EPA may have
been a criteria for selecting a CA for audit review, but no
exception was taken if the CA files and ERL-GB staff interviews
revealed that the principal purpose of the funded research was
for public support and stimulation. As a result, in 6 of the 15
CAs reviewed we did conclude that the use of a CA or grant to
fund the proposed research was proper because the principal
purpose was public support and stimulation despite any obvious
93
-------
Appendix I
AGENCY RESPONSE TO TUB PB&FT REPORT
AND QIC EVALUATION
» ' • . *
EPA interest or indirect benefit to EPA's mission.. However, in 9
instances we questioned the use of CAs because the preponderance
of evidence obtained during the audit indicated that the
principal purpose of the funded research was to benefit EPA
directly and significantly.
In response to ORD's comments related to the recommendations
regarding PO financial monitoring of CAs and PO involvement in
cooperator budgets, we modified the language in the
recommendations to address ORD's concerns.
We added the phrase "in consultation with GAD" to the
recommendation concerning PO financial oversight
responsibilities. However, we could not find any statement or
recommended action in the report relative to financial oversight
processes that were not already required in EPA's Assistance
Administration Manual or in the special conditions of the
applicable CAs .
He agree with ORD that POs should discuss proposed scopes of work
with potential cooperators prior to CA award and be involved in
the review and finalization of cooperator budgets to ensure
efficient and effective use of CA monies. However, our
recommendation was intended to address those instances where the
PO was actually involved in preparing those parts of the
cooperator 's budget related to on- site cooperator personnel who
were requested by the PO. This situation gives the appearance
that the cooperator did not plan this position and the on-site
staff are for the PO's {augmentation of PO resources) rather than
the cooperator 's benefit. Therefore, we changed the
recommendation to state, "Instruct POs to refrain from direct
involvement in cooperator personnel decisions and the preparation
of budgets related to those decisions . "
In conclusion, we also made editorial changes requested by ORD
where we determined such changes were appropriate or did not
affect the clarity of the report's findings.
-------
Appendix II
GLOSSARY OF ACRONYMS AND ABBREVIATIONS
AA - Assistant Administrator
AAU - Assistance Administration Unit
AICR - Alternative Internal Control Review
CA -'Cooperative Agreement
CAMR - Cooperative Agreement Management Review
CFR * - Code of Federal Regulations
COI - Conflict of Interest
EMAP - Environmental Monitoring and Assessment Program
EMAP-NC - Environmental Monitoring and Assessment Program - Near
Coastal <
EPA - Environmental Protection Agency
ERL-A - Environmental Research Laboratory - Athens
ERL-GB - Environmental Research Laboratory - Gulf Breeze
FAR - Federal Acquisition Regulations
FGCAA - Federal Grant and Cooperative Agreement Act
FMFIA - Federal Managers Financial Integrity Act
FSR - Financial Status Report
FTE - Full-Time Equivalent
FY - Fiscal Year
GAD - Grants Administration Division
GAO - General Accounting Office
GCRL - Gulf Coast Research Laboratory
IAG - Interagency Agreement
ICR - Internal Control Review
IG - Inspector General
IMSD - Information Management and Services Division
LOE - Level of Effort
LPMIS - Louisianian Province Information Management System
LSU - Louisiana State University
MCC - Management Control Coordinator
MCP - Management Control Plan
NARA - National Archives and Records Administration N
NELHA - Natural Energy Laboratory of Hawaii Authority
NETAC - National Environmental Technology Applications
Corporation
NOAA - National Oceanic and Atmospheric Administration
NRC - National Research Council
OARM - Office of Administration and Resources Management
OEPER - Office of Environmental Processes and Effects Research
OER - Office of Exploratory Research
OGC - Office of General Counsel
OIG - Office of Inspector General
OIRM - Office of Information and Resources Management
OMB - Office of Management and Budget
ORD - Office of Research and Development
PI - Principal Investigator
PICC - Program Internal Control Coordinator
PO - Project Officer
POH - Primary Organization Head
QA - Quality Assurance
95 '
-------
Appendix II
RARE - Regional Applied Research Effort
.RFF - Request for Proposal , ,
RMD * Resources Management Directive
RMO - Records Management Officer
ROC - Record of Communication
RPA - Research Project Agreement
SAER - Special Assistant for Extramural Research
SEE - Senior Environmental Employment
SERDp - Strategic Environmental Research and Development
Program
TAMU - Texas A&M University
TCE - Trichloroethylene
TRACL - TRAC Laboratories, Inc.
TRI - Technical Resources, Inc.
UAMS - University of Arkansas for Medical Sciences
UNH - University of New Hampshire
UWF - University of West Florida
96
-------
Appendix XIX
SAMPLE OF COOPERATIVE AGREEMENTS AUDITED
Recipient
_. Number
^
Coope rat ive Acere eraent s;
1 Arkansas, University of CR820773
2 Gulf Coast Research Laboratory CR818218
3 Louisiana State University CR818568
3 Maryland', University of CR817791
2 Maryland, University of CR818953
1 Miami University CR820061
1 Minnesota, University of CR820771
2 Mississippi, University of CR818217
Natural Energy Laboratory of
Hawaii Authority CR820699
1 New Hampshire, University of CR820062
2 Texas A&M University CR816736
2 Texas A&M University CR818222
2 West Florida, University of CR817770
2 West Florida, University of CR818676
2 West Florida, University of CR818998
Date
Awarded
Total
Proj ect
Costs
09/28/92 $ 599,176
02/26/91 $ 1,543,845
09/23/91 $ 236,858
08/28/90 $ 394,442
09/16/91 $ . _ 21,110
09/14/92 $ 467,080
09/29/92 $ 527,320
02/08/91 $ 965,157
09/30/92 $ 42,830
09/17/92 $ 587,023
09/12/90 $ 386,860
03/12/91 $ 2,052,872
08/22/90 $ 695,265
09/09/91 $ 772,361
09/19/91 $ 1.069.290
SlO.361.489
1 - We concluded that the principal purpose of these agreements was to
provide assistance to the recipients to accomplish a public purpose of
support or stimulation.
2 - We concluded that the principal purpose of these agreements was to
directly benefit the Federal Government and, therefore, they should
have been awarded as contracts. For Texas A&M CA (CR816736), we only
97
-------
Appendix ill
too& exception to the two cooperative agreement supplements totalling
$121,032.
3 - We concluded that these CAs would have been more appropriately
awarded as grants because there was no substantial involvement between
EPA and the recipients.
98
-------
Appendix IV
PRIOR AUDITS OF EXTRAMURAL MANAGEMENT
PIG Audits; ;
1983 Review of the Office of Research and Developments Extramural
Research Activities (Audit No. ElgB2-ll-0019^30828), March
••31, 1983. - - .
ORD Locations: Office of Research and Development,
Washington DC
Various laboratories at Research Triangle
—Park, North Carolina and Cincinnati, Ohio.
1986 Contract Management Practices at Environmental Monitoring
Systems Laboratory - Las Vegas (Audit No. E1P25-09-0242-
6000773), March 26, 1986.
ORD Location: Environmental Monitoring Systems Laboratory,
Las Vegas, NV.
1992 EPA' s Management of Computer Sciences Corporation Contract
Activities (Audit No. E1NME1-04-0169-2100295), March 31,
1992.
ORD Locations: Office of Research Program Management
Atmospheric Research and Exposure Assessment
Laboratory, Research Triangle Park, North
Carolina.
Health Effects Research Laboratory, Research
Triangle Park, North Carolina.
Environmental Research Laboratory - Gulf
Breeze, Florida.
Environmental Research Laboratory -
Corvallis, Oregon.
1992 Contracting Activities at Environmental Research Laboratory
Duluth (Audit No. E1JBF1-05-0175-2100443), July 7, 1992.
ORD Location: Environmental Research Laboratory - Duluth,
Minnesota
99
-------
Appendix
1993 Management of Extramural Resources: QRD's
4 Environmental Research Laboratory - Athens. Georgia
{Audit No. E1JBP2-04-0300-3100156), March 31, 1993.
ORD Location: Environmental Research Laboratory -
Athens, Georgia
1993 ORD's Narragansett Environmental Lab Management"of
m Extramural Resources (Audit No. E1JBF2-01-0275.-3100236) ,
June 16, 1993.
ORD Location: Environmental Research Laboratory,
Narragansett, Massachusetts
100
-------
Appendix V
COOPERATIVE AGREEMENTS INAPPROPRIATELY AWARDED
IN LIEU OF CONTRACTS
Protocol Development and Product Testing Funded Under CA Directly
Benefitted Federal Government
» ' - . '
The University of West Florida (UWF) CA (CR818998, awarded
September 1991 for $1,069,290} was used to develop test protocols
(testing methods) and then test selected bioremediation products.
Neither the CA decision memorandum nor any other record clearly
documented the principal purpose of the CA or the basis for ERL-
GB's selection of a CA as the proper funding instrument.
Preaward documentation expressed the Federal government's need to
know the reliability of oil spill technologies in order to
effectively carry out Federal agencies' statutory
responsibilities for oil spill cleanups. Based on record reviews
and interviews of EPA staff, we concluded the protocol
development and product testing performed under the UWF CA was
for goods and services that directly benefitted the Federal
government. Therefore, the work should have been performed
through a competitive procurement (contract) instead of an
assistance agreement.
The need to evaluate oil spill technologies evolved out of the
experiences EPA had in dealing with the massive Alaskan oil spill
in 1989. The Agency was suddenly confronted with a variety of
oil spill remediation products. However, EPA and other Federal
agencies (e.g., NOAA, U.S. Coast Guard) involved in oil spill
cleanups had no way to evaluate the effectiveness"of products
used and proposed for use. The failure of some of the
technologies had an adverse impact on the effectiveness of
remediation efforts in the Alaskan oil spill. The Alaskan
experience demonstrated a need to know, up-front, the real
potential of new remediation products. As a result, ORD
established a product testing program through the National
Environmental Technology Applications Corporation (NETAC).
NETAC is a non-profit corporation operated through the University
of Pittsburgh. Under a separate CA, EPA provided NETAC funding
to coordinate the product testing effort. NETAC was to do the
initial work of assembling a group of products for testing and
distributing them to the designated ORD laboratories. ORD
laboratories were tasked with developing the protocols (test
methods) which would be used in identifying safe and efficient
bioremediation products for future oil spill cleanup efforts.
During our audit survey at ERL-GB in May 1992, an ERL-GB manager
told us that even though this "was not research," ERL-GB agreed
to supervise the work under a CA. ERL-GB's selected approach was
to use the services of UWF to develop the protocols and to
perform the actual product tests on behalf of EPA. UWF was
noncompetitively awarded a CA on September 19, 1991, for this work.
• ' 101 . . "
-------
Appendix V
J3RL-GB records show that, in order to define work needed under
the CA, ERL-GB scientists actively participated in the
preparation of UWF's CA proposal. In addition, according to the
CA decision memorandum, ERL-GB required that the activities be
performed on-site at ERL-GB in order "to provide the necessary
guidance in methods development" and because of the "necessity
for EPA scientists to actively participate in the protocol
development ...." The proposal, the reviews of the proposal, the
decision memorandum, and the PO all related the importance of the
research to the laboratory's mission and ORD's research
priorities. One of the reviewers of the CA proposal stated:
Unlike many proposed research projects, this work is
not intended as classical, basic research that is
formulated by the Principal Investigator, but rather it
is borne out of a specific EPA need to develop
procedures for evaluating oil spill bioremediation
products.
ERL-GB records indicated that ERL-GB initially considered using
its on-site LOE contractor to perform the proposed research and
product testing. We believe this would have been the more
appropriate choice, but as stated in the CA decision memorandum:
"This was not an option because we [ERL-GB] are at our [on-site
contract] ceiling and cannot hire additional [contract]
employees." The CA PO said that while it could have been
possible to do this work under contract, they needed to be able
to have a more interactive relationship than is now considered
proper in a contractual relationship (e.g., personal services).
Based on our review, the intent of entering into this agreement
was to produce data/information on particular products which
could be used by EPA and other Federal agencies in making future
selections of clean-up technologies. In our opinion, the fact
that: 1) ERL-GB's on-site support contract was at ceiling and
could not be used to conduct the proposed testing, 2) ERL-GB
scientists anticipated the need for a close collaborative effort,
and 3) the limited time available to conduct the work did not
provide sufficient justification for using a CA over a contract.
A contract would have been a more appropriate mechanism because
the work was the result of a specific need of EPA and other
Federal agencies and, therefore, clearly provided direct benefit
to the Federal government. The need for collaboration enters
into the decision process when deciding between a CA and a grant.
Collaboration and dialogue between EPA staff and contractors are
allowed under a contractual agreement as long as the association
does not foster- a personal services relationship.
In a memorandum, dated December 2, 1992, the Assistant
Administrator for Administration and Resources Management (OARM)
stated that CAs would be inappropriate to provide technical,
analytical, and application review advice for direct EPA benefit
102 ••-.,-
-------
Appendix V
or when the proposed projects would produce specific information
that would be directly incorporated into Agency technical,
policy, or regulatory decisions. In our opinion, the UWF project
fits this category and directly supports an initiative that ERL-
GB had the responsibility to accomplish. In accordance with the
FGCAA, the proper funding instrument would have been a contract.
CAs Provided Information for EPA Database
Four of the 15 CAs reviewed at ERL-GB were used to provide data
in support of EPA's Environmental Monitoring and Assessment
Program - Near Coastal (EMAP-NC)1. ERL-GB also used one of
these off-site EMAP CAs to perform work previously performed
under the on-site technical support contract. This action was
in direct response to an ORD policy memorandum requiring the
reduction of on-site extramural support (see Chapter 2, page 14).
Neither the CA decision memorandum nor any other record clearly
documented the principal purpose of the CA or the basis for ERL-
GB 's selection of a CA as the proper funding instrument. Based
on record reviews and interviews, we concluded the work performed
under the EMAP CAs was primarily for the direct benefit of the
Federal Government. Therefore, the needed services should have
been funded through a competitive contracting process.
Institution
EMAP-NC Cooperative Agreements
Agreement No. Awarded
Value
Gulf Coast Research Laboratory CR818218
(LC)
Texas A&M University (LC) CR818222
University of Mississippi (LC) CR818217 *
Texas A&M University (NC) CR816736
(Supplements) (NC)
LC = Limited Competition.
NC « Noncompetitive award.
02/26/91 $1,543,845
03/12/91 $2,052,872
02/08/91 $ 965,157
09/10/91 $
12/10/92 $
23,386
97,646
EMAP is a nationwide initiative being implemented by EPA's ORD in
response to the demand for information on the condition of the
nation's ecological resources. The EMAP is to assess and
document the ecological status and trends in the nation's
forests, wetlands, estuaries, coastal waters, lakes, rivers, and
streams. Great Lakes, agricultural lands, and arid lands on an
integrated and continuing basis.
1 Program name was subsequently changed to Environmental
Monitoring and Assessment Program - Estuaries.
103
-------
Appendix V
For EMAP near coastal component, ecosystem health is being
addressed by investigating the regional distribution of fish and
bottom-dwelling animals. EMAP-NC is also determining what
portions of estuaries can support these resources and finding out
why certain areas do not support them. ERL-GB was responsible
for EMAP-NC implementation and sampling in the Louisianian
Province (includes Gulf of Mexico from north of Tampa Bay to the
Mexican border.) All information generated during sample
collection periods was incorporated into the Louisianian Province
Information Management System (LPIMS) which is located at ERL-GB.
Laboratory records indicate that ERL-GB issued an RFP in July
1990 which included a very detailed description of the work
required and how it would be performed. In fact, a comparison of
the proposal submitted for one cooperator, who was awarded $1.5
million in EMAP funds, revealed that a majority of the proposal
material came directly, from ERL-GB's RFP.
For the EMAP CAs, ERL-GB selected the sampling sites, provided
equipment, provided standardized protocols for sampling, and
directed the time period within which the sampling should be
performed. In addition, the RFP, the proposals, the POs and Pis,
the decision memorandums, and the actual assistance agreements
all referred to the fact that the cooperators would be providing
needed data for EMAP-NC. According to the POs and Pis, collected
data was the only required CA product which had to be submitted
directly to ERL-GB for analysis and assessment.
The special conditions of the CAs demonstrated both the data
collection purpose and EPA's direct control over the tasks.
Cooperators were instructed to follow standardized protocols
developed by EPA. One of the CA special conditions required that
the cooperator's field crews follow the EPA PO's logistics
schedule, phone in to ERL-GB daily prior to sampling, and report
problems immediately to the Field Operations Center at Gulf
Breeze relating to weather conditions and inability to sample
scheduled sites. Another of the CA special conditions stated:
All field data generated during the summer sample
collection periods will be recorded on multi-part forms
provided by the EPA Project Officer; subsequently
entered into electronics form, within 24 hours, using
computer programs and forms provided by the EPA Project
Officer; and, transferred within the same 24 hour
period, to the Louisianian Province Information
Management System (LPIMS} located at the Environmental
Research Laboratory - Gulf Breeze using software and
toll-free data lines provided by the EPA Project
Officer. Hard copy of the field data forms and back-up
diskettes will be shipped to LPIMS within 6 days of
collection unless specifically requested by the EPA
Project Officer. No field data will be archived at the
104
-------
Appendix V
• [cooperator's institution] that has not already been
transmitted to LPINS.
When asked if EMAP was procurement or assistance, one EMAP PO
stated that he was not sure of the difference between the two.
However, in his opinion, the EMAP CAs qualified as assistance
because there was a dialogue {i.e., close collaboration) between
the laboratory and the universities. Another PO said there was
no reason that the work could not be done under a contract.
However, the PO further said the work was being done under CAs
because it was research into how to set up a national monitoring
program and the individual universities may utilize the data they
collect in their own research. In addition, there was clearly a
cooperative nature in the work between the universities and ERL-
GB. One of the Pis also said that a CA allows interaction
between EPA staff and cooperators and the EMAP sampling crews
needed to be able to talk to EPA to modify the approach if
necessary and to change the schedule.
The need for a dialogue between EPA and the cooperators, or
cooperators eventual use of the information collected in their
own research is not sufficient justification for using a CA in
lieu of a contract. According to the FGCAA, the Government's
principal purpose in negotiating the agreement would be the
determining factor in selecting between instruments. The intent
of entering into these agreements was to produce information to
be included EPA's EMAP database. The detailed descriptions
included in the RFP clearly show this work was for the primary
benefit of providing data for the use of EPA in making future
environmental decisions. A December 1992 memorandum, entitled
"When to Use Contracts or Cooperative Agreements and Grants",
issued by the Assistant Administrator for Administration and
Resources Management, listed examples of activities that cannot
be funded through assistance agreements such as the production of
specific information that will be'directly incorporated into
Agency technical, policy, or regulatory decisions. Based on this
criteria and other evidence obtained during the audit, we believe
the appropriate funding mechanism to accomplish these tasks would
have been a contract as EPA and the Federal government as a
whole, were the primary beneficiaries of the information
collected. .
Cooperative Agreements Supported EPA Employee Research
Natural Energy Laboratory of Hawaii Authority (NELHA)
NELHA was noncompetitively awarded a CA (CR820699, awarded
September 1992 for $42,830) for the purpose of providing
equipment, supplies, and laboratory space in direct support of an
ERL-GB scientist's research in Hawaii. Neither the CA decision
memorandum nor any other record clearly documented the principal
purpose of the CA.or the basis for ERL-GB's selection of a CA as
105
-------
Appendix V
.the proper funding instrument. Because the estimated cost of
this agreement was under the $250,000 threshold for
noncompetitive awards in effect at the time2, it was not subject
to ORD Headquarters review. Because the CA provided direct
support for an EPA research scientist, the principle purpose was
not to provide "assistance" to NELHA, but direct benefit to EPA.
Therefore, we concluded that a competitive procurement/contract
would have been the appropriate funding mechanism for these goods
and services.
i
An ERL-GB scientist and PO, who had previously developed acute
fish toxicity tests for both the States of Florida and
California, was asked by EPA's Region 9 in June 1991 to submit a
proposal to develop a protocol for the same type toxicity tests
for the State of Hawaii. In July 1991, this scientist wrote a
preproposal in response to a Region 9 request for proposals. A
full proposal followed in March 1992. Region 9 had been provided
extramural funds through the Regional Applied Research Effort
(RARE) Program. This is a program in which ORD provides money to
the regions to assist them in the development or investigation of
regional environmental issues. The ERL-GB scientist's proposal
was one of three (out of thirteen submitted) that was selected by
Region 9 for assistance awards. The RARE funds were subsequently
transferred to ERL-GB. In September 1992, ERL-GB awarded a
noncompetitive CA to NELHA which allowed the ERL-GB scientist to
go to Hawaii to perform the research proposed.
NELHA provided the equipment, supplies, and space needed to
conduct the research. The ERL-GB scientist, as a biologist,
utilized the facilities provided under the CA to conduct the
research. He primarily worked alone at NELHA. The CA did not
provide funds for NELHA personnel. The PO, who performed the
research, commented that this project was a "little weird" in
that NELHA's participation in the project only consisted of
providing facilities, equipment, and supplies.
According to ERL-GB's SAER, the laboratory had no allowable
method for spending RARE money because extramural money can not
be spent on internal operations. Therefore, ERL-GB used a CA to
fund this project. Guidance on the RARE program does not
generally prohibit the use of contracts but does prohibit
contracts for RARE projects outside the scope of a laboratory's
mission. The subject research was a part of ERL-GB's on-going
research and, therefore, within the scope of its mission. The
RARE program guidance, dated October 19, 1993, stated:
2 As of August 27, 1993, the laboratory director's approval
authority for both competitive and noncompetitive CA awards was
$25,000 or less. All CAs above this threshold required ORD
Headquarters review.
106
-------
Appendix V
• The [RARE] proposal must include: a RARE coversheet
describing the project, a funding vehicle specifying
the project manager~and contractor or university that
will be conducting the research.... [emphasis .added]
In our opinion, a contract would have been the appropriate
funding mechanism for this research. However, a contract would
have1*required greater justification and award timeframe than a
noncompetitive CA. In addition, the funds for supplies and space
under a contract for an FTE would have counted against the R&D
appropriation dollar limit for the use of R&D funds for direct
FTE support. Use of a CA precluded the direct support from being
counted against this R&D ceiling.
Not only did the ERL-GB scientist personally conduct the
research, he wrote the research proposal and technically served
as both the PO and PI under the CA. The ERL-GB scientist
personally: (l) selected NELHA as the site to perform the
research; (2) assisted in the preparation of the application for
Federal assistance, which included his vitae (resume) not the
NELHA project manager's.(or PI); (3) directed purchases to be
made under the CA; and 4) actually performed the research at
NELHA. All of the reviewers of the CA proposal, external and
internal, recognized that the ERL-GB scientist was technically
the PI although the NELHA director was officially designated as
the project manager (or official PI). The ERL-GB scientist could
not officially serve as both the PO and PI. Based on information
included in the assistance application, GAD should also have
recognized that an EPA employee would actually be conducting the
research and that NELHA had only minimal involvement in the work
to be performed.
Although we question the use of a CA to directly support EPA
staff research, we do not question the value of the research
performed by the ERL-GB scientist at NELHA. The CA was used to
support an FTE's research and the research directly benefitted
EPA programs. As stated above, we therefore believe that a
contract would have been the appropriate mechanism to procure the
laboratory space and supplies provided under the agreement.
University of Maryland. Baltimore
The University of Maryland was,noncompetitively awarded a CA
(CR818953, awarded September 1991 for $21,110) to provide
supplies and travel funds in direct support of a part-time EPA
employee who worked in ORD's OEPER (cooperative student trainee).
Neither the CA decision memorandum nor any other record clearly
documented the'principal purpose of the CA or the basis for ERL-
GB 's selection of a CA as the proper funding instrument.
Although this CA was under the $250,000 threshold for
noncompetitive CA awards in effect at the time and, therefore,
not normally subject to outside ORD Headquarters (OEPER) review,
107 ' ' -
-------
Appendix V
it was initially submitted to ERL-GB through the Deputy Director
of OEPER. Since this CA did not provide "assistance" to the
University, but direct support (direct benefit to EPA) in the
form of supplies ($10,638 budgeted) and travel ($1,000 budgeted)
for an ORD biologist's personal research interests (closely
related to employee's Phd dissertation research), we concluded a
contract or possibly a small purchase would have been the more
appropriate funding mechanism. In addition, the use of R&D funds
for FTE travel represents a potential unauthorized transfer of
funds between the R&D and S&E appropriations since such costs are
not authorized under the R&D appropriation and the S&E
appropriation is to be used for EPA personnel costs including FTE
travel.
The part-time OEPER employee was concurrently a Phd candidate ;at
the University of Maryland. Because the OEPER employee had
performed research, as a Phd candidate, concerning T-cell
responses or immunological systems of rodents and performed other
immunological work on dolphins over the past two years, OEPER
management requested that the employee submit a related research
proposal for assistance funding. A proposal was prepared by this
part-time employee, listing himself as the co-investigator (Co-I)
on the research proposal. The PI listed was the employee's Phd
advisor at the University.
The original proposal, transmitted on EPA letterhead, was
submitted through OEPER to ERL-GB for review in April 1990.
However,the initial review was not favorable. The OEPER employee
revised the proposal, removed his name as the Co-I, and re-
submitted the proposal directly to ERL-GB in May 1991. Although
the OEPER employee would actually perform the research, his name
was not mentioned in the subsequent proposal other than in the
Quality Assurance (QA) Narrative Statement as the person to
receive samples at the University.
In a letter, dated June 25, 1991, to the laboratory director, an
outside reviewer on the subsequent proposal stated:
Unfortunately, due to loop-holes in the CO-OP systems,
this work will probably be funded in it's entirety.
The need for this kind of work to be done is great,
however, there is not enough information provided to
adequately evaluate whether the investigator has the
expertise, equipment, technical assistance, or access
to major lab space required to perform this type of
study...[Pi's name] is a well respected investigator
and it is my hunch that he has not reviewed this
proposal, other than perhaps conversationally.
Although it was. apparently well known to both OEPER and ERL-GB,
nothing in the formal proposal's application for Federal
assistance indicated that the actual investigator for this CA was
108
-------
Appendix V
a Federal employee. Therefore, GAD would not have discovered
this problem in its review of the assistance application.
However, a copy of the EPA employee's vitae (resume) in the GAD
files identified him as an OEPER employee. GAD personnel
informed us that they normally only review and evaluate the vitae
of the proposed project manager or PI when reviewing CA
applications. As a result, GAD may not have known that they were
awarding a CA to fund the research of a Federal employee.
Both the PO and the OEPER employee said that he, as the
investigator, performed all of the research under the CA. The PI
said he only supervised the employee's work. The OEPER employee
said the CA provided money for his supplies and travel while EPA
paid his salary through the cooperative education program.
According to the laboratory director, this project was suggested
to ERL-GB by OEPER.. OEPER indicated that there was money
available to devote to this dolphin research. Since the
laboratory was trying to develop a Center for Disease Research,
the laboratory director agreed to fund the CA because it was .
appropriate to ERL-GB's mission and he wanted to increase ER1-
GB's visibility.
Subsequent to our December 15, 1993, exit briefing with the
laboratory director, we received comments from the Deputy
Director, OEPER that stated that no.travel expenses were paid
from CA funds for this part-time employee and that the research
was in the area on which the employee was preparing a Phd
dissertation. However, the CA budget included travel and the
University of Maryland PI said that the OEPER employee was the
only person who traveled under the CA. The University of
Maryland subsequently provided us with a copy of a travel voucher
showing that the OEPER employee and a research technician
traveled to Sarasota, Florida using CA funds.
109
-------
Appendix V
(This page intentionally left blank.)
110
-------
Appendix VI
COOPERATIVE AGREEMENTS INAPPROPRIATELY
USED IN LIEU OF GRANTS
Louisiana State University
ERL-GB awarded a CA (CR818568, awarded September 1991 for
$2367858), instead of a grant, to Louisiana State University
(LSU) when there was no anticipated ERL-GB involvement in the
project. This occurred because ERL-GB and other ORD laboratories
were not authorized to award grants. As a result, ERL-GB used
the only mechanism available to fund the proposed research - a
CA.
In a letter to the chairperson of a Senate appropriation
subcommittee, dated June 11, 1990, a U.S. Senator requested
"...support for an add-on [to EPA appropriations] of $200,000 for
a research project on the Formosan subterranean termite at
Louisiana State University." According to a Senate Conference
Report, dated October 18, 1990, fiscal year 1991 appropriations,
EPA received "$200,000 for a research project on the Formosan
subterranean termite at Louisiana State University." According
to EPA's FY 1991 resource (appropriation) distribution list, this
$200,000 appropriation add-on was allocated to the ORD.
Although this research did not relate to ERL-GB's mission at that
time, ORD's OEPER gave ERL-GB the responsibility to find a
cooperator at LSU to conduct the "ear marked" research on the
formosan termites. ORD managers explained that laboratory
missions are flexible and missions can be adjusted to include new
assignments.
The ERL-GB PO could not readily explain to us why ERL-GB was
selected for this task. According to CA records, the assigned PO
brought his concerns with this award to the laboratory director,
...We'll have to handle this one fairly carefully. For
example, we can't advertise it because the funds are
earmarked (see attached memo) to the Louisiana State
University...This research does not fit well into
Environmental Protection, which is a concern to me.
ERL-GB subsequently requested a research proposal from LSU and a
noncompetitive CA was awarded in September 1991 even though ERL-
GB anticipated little involvement in the proposed research.
A special condition was added to the CA which gave the appearance
that there would be some collaboration between ERL-GB and LSU.
However, according to both the PO and the PI, no substantial EPA
involvement occurred as was required to justify a CA over a grant
when the CA was awarded. This type of research was not being
performed at ERL-GB.
Ill
-------
Appendix VI
When we asked why a CA was awarded instead of a grant, the
.laboratory director stated that only ORD's OER is authorized to
award grants and that OER does not award noncompetitive grants.
Since ERL-GB was not allowed to award grants and anticipated no
substantial involvement in the research, ERL-GB should have
referred the "ear marked" project back to ORD Headquarters for
consideration of an OER grant award. However, ORD managers
stated that laboratory mission and expertise does not necessarily
preclude the award of a CA in such cases. Missions can be
adjusted and expertise can be developed because POs are trained
scientists. ORD managers said ERL-GB and the PO chose not to be
substantially involved in the proposed research. However, we
concluded the use of the CA, in this case, was inappropriate
because ERL-GB did not plan to have substantial involvement in
the proposed research and such involvement has not occurred.
University of Maryland. College Park
This University of Maryland CA (CR817791 awarded August 1990 with
a total budgeted cost of $394,442) was not converted to a grant
when it became evident that ERL-GB would not have significant
involvement in the research. The University of Maryland CA was
intended to study the fate and persistence of genetically
engineered organisms released into the environment. While this
research did relate to the laboratory's mission because it
concerned risk assessment, neither the PO nor anyone else at ERL-
GB collaborated under the CA. The original, prospective PO,
whose research area was related to this CA proposal, died before
the CA was awarded. Subsequently, a new employee at ERL-GB was
assigned to be PO. This PO told us that he came to ERL-GB around
the time this project was being considered for funding and was
subsequently assigned the project. However, the research being
performed was not in the PO's research area and he chose not be
involved with the research.
When we asked about collaboration under the CA, the ERL-GB branch
chief explained there were varying degrees of substantial
involvement. The degree ERL-GB cooperates varies from agreement
to agreement. He said ERL-GB collaborates by reviewing quarterly
reports, discussing projects in meetings, telephone calls, and at
the "All Investigators" meeting (annual meeting of scientists to
present and discuss research results). However, based on our
file review and discussion with the PO, the PO's only involvement
with this CA consisted of monitoring the agreement through
progress reports submitted by the PI.
According to Attachment A of EPA Order 1000.19, anticipated
substantial involvement during performance does not include the:
...normal exercise of Federal stewardship
responsibilities during the project period such as site
visits, performance reporting, financial reporting, and
112 •
-------
Appendix VT
audit to insure that the objectives, terms, and
conditions of the award are accomplished.
Since the PO told us he only reviewed cooperator progress reports
(which is included as-a Federal stewardship responsibility) and
did not collaborate under the CA, we concluded a CA was not the
appropriate funding mechanism to accomplish this research task.
In accordance with the FGCAA, a grant would have been a more
appropriate mechanism.
The laboratory director told us that originally there was an
intention for ERL-GB collaboration under this CA; However, due
to unforeseen circumstances (death of the prospective PO), no
collaboration took place. When the laboratory realized there
would not be substantial EPA involvement as required to justify a
CA over a grant, the CA should have either been converted to a
grant in accordance with Chapter 1, paragraph 6c(4) of EPA's
Assistance Administration Manual or the Laboratory director
should have assured that the necessary collaboration took place.
113
-------
Appendix VI
(This page intentionally left blank.)
114
-------
Appendix VII
DOCUMENTATION ON ERL-GB INVOLVEMENT IN HIRING
UNDER OFF-SITE COOPERATIVE AGREEMENTS
Pages 117 - 118: Letter, dated January 12, 1993, from a ERL-GB
branch chief to the laboratory director for ERL-GB. The letter
reflects the laboratory's plans to shift on-site contract employees
to off-site CAs.
Pages 119 - 122: Two letters, dated September 9, 1993 and November
5, 1993, respectively, written by a former on-site contract (TRI)
employee who was transferred by ERL-GB to the UAMS CA and who later
resigned the CA position because of an apparent promise bv the
laboratory director to place him on the University of Minnesota CA.
The Minnesota position did not materialize; therefore, this
individual applied for unemployment compensation which is the
purpose of these letters. This person was later hired by ERL-GB's
current on-site technical support contractor, Avanti. Both letters
evidence this persons close relationship with ERL-GB scientists.
In the November 5, 1993 letter he refers to the ERL-GB PO for the
UAMS CA as one of his supervisors.
Page 123: Letter, dated July 22, 1992, from UAMS Co-I to ERL-GB PO
with UAMS compensation and benefits information so the PO can
calculate budget for on-site CA employee (a TRI on-site contract
employee at the time).
Page 125: Letter, dated September 3, 1993, from ERL-GB PO to
University of Minnesota PI transmitting additions to CA budget
(amounts for salary, fringe benefits, supplies) for UAMS on-site
cooperator (former on-site contract employee) who was to be
transferred from UAMS CA to the Minnesota CA. Letter acknowledges
the ERL-GB director's knowledge and approval of this transfer. The
purpose of this letter was apparently to fulfill the director;s
promise to move the UAMS on-site cooperator to the Minnesota CA as
shown in the letter on pages 125 and 126. However, funding for the
additional position on the Minnesota CA could not be obtained and
the transfer did not occur.
Page 126: Letter of reference, dated April 12, 1993, from the ERL-
GB PO for the UAMS CA to the UAMS PI recommending an on-site
contract employee for the on-site UAMS CA position.
Page 127: Letter, dated August 28, 1992, from the ERL-GB PO for
the University of New Hampshire CA to the University of New
Hampshire PI concerning his request that the University hire an on-
site contract employee to an on-site CA position with the
University of New Hampshire. The letter indicates that this
contract employee had been working directly for an EPA scientist
through the on-site contract.
115 Audit No. E1JBF2-04-0386
-------
Appendix viz
Pages 129 - 131: Letter, dated December 9, 1991, from ERL-GB PO
for GCRL CA to the GCRL PI concerning preparation of the 1992 CA
budget. On page 132, item 3., the PO requests that the GCRL PI
hire 5 temporary TRI employees under the GCRL CA. These
individuals would be located at Gulf Breeze and would continue
performing sediment toxicity testing under the EMAP program as they
did under the TRI contract. The PO suggest a CA budget amount of
$50,00,0 to $55,000 for these TRI employees.
Page 132: Letter, dated June 1, 1992, from GCRL PI to the GCRL
director concerning GCRL hiring the five temporary TRI employees
under the GCRL CA. The letter specifically states that EPA
requested that GCRL hire these people under the CA.Pages 121 - 122:
Letter, dated January 12, 1993, from a ERL-GB branch chief to the
laboratory, director for ERL-GB. The letter reflects the
laboratory's plans to shift on-site contract employees to off-site
CAs.
116 Audit NO. E1JBF2-04-0386
-------
Appendix VII
UNITED STATES ENVIRONMENTAL. PROTECTION AGENCY
January
1993
MEMORANDUM
SUBJECT: Contract support
FROM: [ Branch Chief]
TO: C ERL-GB Director]
In regard to contract support, it had been my impression
that we were asked to a.) reduce our dependence on the contract
and b.) carefully decide which activities were to be covered by
contract or COOP agreement. Z have made considerable efforts to
accommodate both requests; through interactions with yourself and
IEFU.-QBo«»utv OV.CIOT) z have become more aware of those biotechnology
spects that can and perhaps should be considered as legitimate
d legal contract activities.
Since no one has specifically asked for my input relative to
staffing plans, and based .on recent, information suggesting •that
decisions have been made without an appreciation for our needs, z
submit the following response to the above two requests.
X have reduced the TRZ staff from the original 26 employees
(1992 level) to 18 employees. Z am currently making plans to
move [TRi employee) and rmi •mptoywi to Oniv. of New Hampshire ( IUNH PII COOP
agreement), and nw «npioy««i and fTR! employee) to AARP. [TRI employee]
services will be replaced by additional AARP person (request will
be forth coming) . These moves reflect a total staff reduction of
46%. z assume the other Branches nave made similar efforts in
staff reduction.
Activities that Z believe appropriately fall in the ca-fcegozry
of contract services, based largely on their ability to provide
services on a branch—wide basis (I.e., no orientation toward a
specific individual or project) , can be divided into three
categories; analytical chemistry support, microbiology support
and field application support. The recommended staffing (in part
conceptual, based on future demands) for these support services
is as follows;
.) Analytical Chemistry Support (WAM —
Coordinator — senior scientist (rrai «fnpi«v*«i)
Methods Development — MS chemist (m»
Extractions & Analysis — BS chemist c
3.
2
.) 10
117
-------
Appendix VIZ
Extractions & Analysis — BS chemist (vacant:)
Nutrient chemistry — BS chemist (ITRI •moiev*«i )
b. ) Microbiology Support (WAM —
mtoti /
(EAL-OB )
•otonttotl '
3.5
13
4
7
11
6
14
CD
Coordinator - senior- scientist (. rrai employee! }
Sequencing •—. MS biologist ( (TRi employee! )
Culture collection — MS biologist (
Monitoring — MS biologist (vacant)
Fermentations — BS biologist (vacant)
c.) Field Application Support (WAM -JHW--GB j
Scientist]
Coordinator — senior- scientist (.T....Q 3
Microcosms — MS biologist ( _";_,) 8
Inoculation — MS biologist (vacant). 5
Biotreatability - MS biologist (im«wtow.i) 9
Sampling 6 Analysis — BS biologists (rm««»»»..t) 12
The numbers (right hand side) reflect priorities of the
positions relative to support needs. If you include [TR» employee!
and ITRi employee! , and assume that the above vacancies are filled in
the near future, the projected total TRI staff for the MEBB
Branch would be 17 or an over-all reduction of 35* from the
original 1992 levels.
Is this staffing plan appropriate or do I continue to
.dismantle the biotech contract support:?
118
-------
Appendix VII
9, 1993
[UAMS
•Oepartmcm of Health and K«iv»im Services
Food and Drug Administration
NCTR
Jefferson. AR 72O79-9SO2
Dear Dr. IUAMS PII ,
I -want to thank you for the opportunity to work with you on the Arkansas/USEPA
cooperative agreement. I have enjuyed this work experience and Ihc progress we have made.
Or.^Sn.has encouraged me to contact Dr. IERL-GB Sofentteti here at the laboratory: he has offered
me an opportunity to estKblish new avenues of research \viih liiivj here in Gulf Breeze. Given his .
expertise and reputation, tnd my desire for additional professional growth in preperation for
advanced degree candidacy, I heiieve this experience cnn he beneficial. Thus. I have decided to
accept this offer-
^B I therefore wish to resign my position as Research Associate effective October 1, 1993.
I inform you hy FAX message to insure continuity in your collaborative efforts with Dr. -O^MS CAJ
' by early replacement, should you choose some overlap.
Again, thank you for the opportunity to work in this cooperative agreement: I shall look
forward to maintaining future contact. If you need additional information, I shall reply promptly
to your requests.
With my best regards.
[UAMS Coopex-a-tor]
[ERL-GB FO - UAMS CA]
[UAMS Co—I]
119
-------
Appendix VIZ
(This page intentionally left blank.)
120
-------
Appendix VII
V O
.c'. November 5. 1993
- .Florida Depanment of Unemployment Compensation
P.O.Box 18970
Pensacola. FL 32523-8790
Dear Mr. |
I am writing to appeal the decision
ig my unemployment
Tbe letter
from your office dated 11/01793 indicated that benefits were not payable because my reason for
quitting was not attributable to the employer (the Universiry of Arkansas). This is only partially
true in my case. I did indeed send a letter of resignation to my supervisors both at toe Universiry
of Arkansas and to cooperators at the U.S. Environmental Protection Agency in Gulf Breeze. FL.
I began employment with ibe Universiry of Axkansas on May 1. 1993 as a Research Associate
' a position funded by ihe EPA through a cooperative agreement whh the university. My
shion involved direct interaction with an EPA scientist at the Gulf Breeze laboratory. Dr.
IERL-GB PO - t in July, I was approached by Dr. IERL-QB sei«MMimiwiih the prospect of working
with him in starting up his research program at the EPA lab. I could not do this under the scope
of work outlined in ihy?- Arkansas cooperative agreement. DrJ1*--"* •*" ""and X spoke several titnfts
with the laboratory director. Dr. IERI-OB »»«c,tori concerning a mechanism by which a position
*-rpMit< be created for T™» to begin my interaction with Dr.*0*'0* • ' " 1 I was given assurance by
would be available for my toy October 1. 1993.
several occasions thai a po
— . _ . IERL-GB . _. - ...... . __ -
Several nemos were passed between Dr. s«ton«i«ti «nd Dr. omotari which mrticaleri that there
•would be no problem in providing a position.
'While <***«» discussions 'w^tr* *«»t^"g place* Dr. S««!?j «*n EPA itfiiffntl** and
ynv*P^fg«^
-------
Appendix VIZ
officially made the position available.
. A . .. . . . __ JEHL-OB IERL.QB
AJi«r much discussion w»ib Dr. oir»etori and Dr. setvntteti . all the necessary things
appeared to be in order for me to begin work on October 1. under an existing cooperative
agreement with the University of Minnesota. Under the advisement of Dr. sHiMifti . I submitted
* tener of resignation on September 9, to the University of Arkansas staling that I wished to
terminate my employment as of October 1. 1993. in order to move into a new position in
collaboration with Dr. !££££| • * subsoioed this tener only after I had assurance from Dr.
and Dr. that a position was available. When I submitted this iener. I felt
somewhat obligated to DT.UMM CM as well as pressured by him. In retrospect, seeing how things
have turned out, I would not have resigned my position but at the time I had no way of knowine
. __ [ERL-GB *
that r>r.Dir*otor| was not going to be able to keep his word and provide me with a position.
I found out only during the middle of the last week of September that the position I was
promised was not going to tnatftrialize. At this point, ft was too late to reverse my decision to
resign as the University of Arkansas as they had already begun the process of fcfr*»g another
person. So as of October 1. I found myself unemployed through no fault of my own. I fully
intended to be employed by the University of Minnesota on October 1. The only thfr.j i feel I
am guilty of is putting my trust in some one by believing them at their word, and giving into
pressure to resign as a way of helping out a fellow colleague. I have already gotten a raw deal
from the EPA and do not wish to receive the same treatment from the Department of Labor and
Employment Security. I believe that I should, be
unemployment
Z don't plan on being out of work for a long period of time but as one month *»• already passed.
I am getting to the point of being in desperate financial straits. The information I IT**** provided
is true and accurate to the best of my knowledge. I can provide copies of memos if they axe
necessary. Z nope the infoxznalion provided here will enable you to reverse your decision and
provide me with benefits. Please advise my as to your decision as soon as possible as Z will
pursue this maner with the help of legal counsel should h be necessary. Thank you for your
assistance.
Sincere!
[UAMS Coopex-atiozr ]
122
-------
Appendix VII
MICRO 5016865359
Jul 22.92 IS:2O No .OO9 P.O2
Dr. IERL-GB PO - UAMS CA]
'U.S. EPA
Gulf Breeze, Florida
»^» mmi **
Dear UAMS
CAl *
Mere are some figures which may toe helpful in determining if
any extra money is required to support the postdoctoral
associate.
Insurance CoetB and Arlcansax stiare Tax
insurance IB mandatory and UAMS pay*
nonth.lv insurance premium. The costs to the
pay for 4O* o* the premium are as follows*
t~
to
cost
month
employee coverage only
£mploye« and spouse only
Employee and children only
Employee, spouse, children
$68.67
93.54.38
$121.33
$207.06
cost for health Insurance can be tax sheltered by
.uction before taxes are paid.
X.ife insurance at 1 x salary is provided at ao cost.
Additional life insurance is available in increments of the
annual gross salary, i.e. . an additional $3O X or S«o K with
coat depending on the age of the employee.
Dental insurance is optional. The family rate is $18 per
month with no deductible and free coverage: for 2 annual
visits for ohaclcup and cleaning.
Unfortunately, state tax is not optional. .As an example,, at 30,000
married employee with 2. deductions (himself and spouse) with
no tax shelter will, pay $110.42 per month in state tax.
X hope you find this information to toe helpful.
Sincere!;
[UAMS Co-l]
123
-------
vii
(This page intentionally left blank.)
124
-------
Appendix vii
S/ix
UNITED STATFS ENVIROWKinM. PROTCCTIOM AO6HCY
3, 1993
Dr. cntivarvity of
Biocheaiatry
Univaraity of KLaneaota
St. Paul. KM SSlofl
I provide intonation on |«M« ce*»—M—I "hlob I hooo ii
sufficient for your porpoM at Minnesota.
P—__* current stipend is appended with breakdown of fringe
benefit, the tax, and ni« cheica for lovol of retirwnent deposit
with TTA*.
goat apuointaont at the tamo stipend a« appropriate.
.«— .»—M era *«,ooo !•*•! of mpply you .uggmit-d, Miniwaote
Minor ohnn9«* to tno owrhoad Iwwi of 30.5 you awitionad.
Mtathar you add an itam for travel, voatlnaa, oto., wnan
appropriit*. or oonaidar auCborimation per your approval, I Uav«
to your judgement.
An October 1, 1999 otart data for one year in ne*d«d as
optimal and beneficial for rollof of bia f cwaar fundaowroe to
cpon pocition and per.it——Joining our work proapttiy.
BIX, Director, i. «ppl«aoRt lo* .
in full, in riMal X*ar b^imiBg 1 October
*° *• fttDdad'
X tatiff" **mjj»»fc,^iireaitma" and otbiar aoaniaaitn data have
reached you ia complete f on. Va ahall re*pood promptly,
r, to any ' -""
rficxobiftl • Biochooist
125
-------
-------
Appendix vil
UNITED STATES ENVIRONMENTAL. PROTECTION AGENCY
12 April 1993
Dr. IUAMS PU
Division of Microbiology (HFT-250)
National Center for Toxicological Research
39OO NCTR Road
Jefferson. AR 72O79
This letter is written in support of [TRI employee] who has applied for a position
as Research Associate to work on the Cooperative Agreement berween the U.S. EPA and the
University of Arkansas for Medical Sciences. ^ ••• 'has worked with me for three years. During
Ais time he has been involved in a project to study the btodegradation of aromatic hydrocarbons.
— arily isopropytbenzene (cumene) and analogous compounds. He has cloned and
LCtezized genes encoding catabolic pathways from several different bacterial strains using
ard dotting techniques as well as TaJOOO mutagenesis and analysis of gene products using
stand
a T7
pression system. He has chemically synthesized sevezal pathway intermediates for use
as standards and substrates in enzyme assays and has developed a novel method for assaying
those enzymes of aromatic catabolic pathways mat catalyze reactions involving hard-to-detect
substrates and products.
rrm employee) wotks bard and gets along well with others in the laboratory. He *"»^ been an
important asset, hatfa for Mg iaiowl^dgp ^f yageawA M^fifii^n^g smt\ fff \rfptmtnry firrratfcuig He
is someone to whom others in the lab look tor advice and help. He acts on *»« own initiative to
remedy problems that he encounters yet does not firsitaie to ask questions. ZZU-iis able to clearly
^" • ^^^^^™ »»w • • • • ^^^~™^^ r-^f^ i^v^rw^ •• ^ • ™™™™^»^^^™^^ w%T mfmm^* ^••WWW
tly diwans his own work as well as the work of others. The n
carried out while employed by Technical Resources, t"^. at the Gulf
of a very high quality and will result in at least four full-length, publicati
EPA lab has been
I recommend him highly and without
Sioeerel
126
-------
Appendix VII
28, 1992
DOT. IUNM Pll
BOS
Univ. New Hampshire
Dear
A copy of a letter that is being sent to you is attached. I
hope that this will help in at least initiating .a hiring process.
Hopefully, when the award is made we will have.minimal down time.
The prospective candidate is interested in salary Ss and benefits.
If you can send something down on the benefits package asap it
might help in keeping this person from slipping through our-
fingers. X seem to be in competition for thjfis person with someone
else in our branch. X would like to be able to offer S22.5K to
start if that will fit in the bud jet and be in line with UNH
position titles/qualifications.
The person is jjust out with a bachelor's, but has worked with me
for about eight months on undergrad directed special problems, ,a,
summer intern kind of thing. She has been working for the past t
months on a related project for someone else through the
contractor.
X am not 1OO% sure X can get this one, she is looking to make some
sort of decision by end of next week, X think it prudent to persue
other candidates, and prepare to advertise in the mean while.
In related news, ouar lab is now on internet and e mail will arrive
directly into my computer account:. I will send you a message so
that you can have my
Best wishes.
lost the paper that had it)
127
-------
Appendix VII
(This page intentionally left blank.)
128
-------
-------
Appendix VIZ
UNITED STATES
PROTECTION AGENCY
•M
«MT*h
December 9. 1991
Dr. IGCRLPll
Gulf coast Research Laboratory
P.O. Box 7OOO
Ocean springs, MS 39564
Dr. IGCRLPI1:
Z would like to take this opportunity to commend you and your
staff's efforts with regard to our Environmental Monitoring and
Assessment Program cooperative agreement. After the first year's
ffort relating to sample collection, fisheries evaluations,
thic analyses, and sediment profiles, we are well on our way to
ating a successful group collaboration to assess the ecological
status of the Louisianian Province. Specifically, I would like to
call special attention to the work completed by eHBBBeflBelBelMland
BmUas well as their respective lab staffs) andBeflBeVI
field team leader in the Eastern Subregion. X trust our
xcellent working relationship will continue and that we will enter
into our second year of monitoring with enthusiasm and the
satisfaction of knowing many of our logistical problems are behind
us.
With regard to Year 2 of our three-year cooperative agreement, X
need an operating budget from you delineating the costs associated
with this year's effort. Xn ascertaining the budget X bring the
following items to your attention:
1. The 1993. field effort involved collection from 2O2 sites
(of which 75 occurred in the Eastern Subregion) at a per
site cost of $13oo (not including cost share) . This cost
included crew chief and crew training. The 1992 field
program will consist of 155 sites of which fiO fall in the
Eastern Subregion. X expect to see some inflation in the
per site cost but only nominally. Xn addition, as we
provided the East Team with two contract personnel in
1991 at no cost to GCRX., we will provide three (3)
contract personnel in 1992 (i.e., one crew chief and two
crew members) . As a result GCRX. and its cooperating
institution, University of Mississippi, will need to
provide one crew chief and six (6) crew members as well
1 ->O
-------
Appendix VII
as alternates. The sampling window for 3.992 will be from
July 7 through August 31. Training (7-1O days) will be
« held at 'the Gulf Breeze facility and its length will
depend upon the number of new crew members GCRL provides.
X would expect a budget associated with field sampling
to be between $78-84K.
2. The sediment characterization and benthic evaluations
resulted in 84o cores and 622 benthic samples. This work
was accomplished in 1991 for a cost of $335 per site.
X anticipate 465 benthic samples and 62 O sediment
profiles in 1992. In addition, there .has been much
discussion within the program concerning our use of
ethanol as a preservative* My understanding from your
1991 proposal is that ethanol would be used to archive
samples after sorting, identification, and biomass
measurements were completed. If this has not been the
ease, and we are storing benthic samples in ethanol prior
to biomass determinations, we are in violation of the
EMAP protocols. In 1992, all samples will be maintained
in rose—bengal formalin before identification and
returned to formalin for a minimum total storage time of
three months before biomass determinations are made. I
would expect a budget associated with benthos and
sediment characterization to be between $155—$165K.
3. X would like to take the opportunity of the cooperative
agreement to provide personnel to conduct sediment
toxicity testing; with Ampelisca and mysids in 1992. This
would require 5 personnel for 6 months. These personnel
would be located at Gulf Breeze ERL> and would participate
with a laboratory team at our lab assessing toxicity.
These personnel would be returning members of our 1991
lab team but cannot be rehired through our on—site
contractor. X would like to use this cooperative
agreement to supply these staff. X would anticipate a
budget associated with this activity to be S5O-55K.
4. Thus, X would anticipate a fully loaded GCRX* Year 2
budget in the range of S283-3O5X.
X have included the necessary forms to complete the budget
information. X will need this data by January 15, 1992 with a
letter committing GCRX* to continue the work designated in our
cooperative agreement. The letter needs to be signed by someone
with technical/administrative authority and the budget must be
signed by someone with fiscal authority.
•I
130
-------
Appendix VII
If I can be or any further assistan
not hesitate to contact me.
ce in this process, please do
, EMAF iJouisianian Province Manager
131
-------
Appendix VII
Gulf Coast Research Laboratory
PX>. BOX 7000
703 EAST BEACH DRIVE
OCCAM SPRINQS. MISSISSIPPI 3aMM*MX> -
CnmputowlMtoMB,
MraimattwnaMt
.
raimatt or MOM« u*
mm 11
•» IM
To :
From:
Subject:
MEMORANDUM
June 1, 1992
Or. IGCRL Director) , Laboratory Director
Dr. IGCRL PI) , study Officer, EMAP-N
Exemption from EEOC Policy i or CHAP summer
to'>e
work at least sone o£ the summer at GCRL) in GulrBr
SonS" ?-S* «"vt«».nt.i Protection AgeAcy oS the Ir
Monitoring and Assessment Program - Near Shore fEMAP-NcT
?»?^roCt" These P««»Ple worked on this program last year at the
Gulf Breeze location and have been specifically requested to
return this year due to their individual knowledge of the
project. Last year they were hired directly by EPA or on -site
contractor; this year EPA has requested that GCR£ hire them tS
work in Gulf Breeze. All necessary salary money^is aval laSi* 4
our EMAP-NC Cooperative Agreement (GCRL AccoSn? 33?8? X i
Thank you for your consideration of this
request.
ccs Dr. IGCRLI
IGCRL Director] .
n***
k
IGCRU.
IGCRL PI]
132
-------
Appendix VIII
PROPOSED ORD ACTION IN RESPONSE TO 1992
AND IMPACT ON ERI>-GB RECORDS MANAGEMENT
Records Personnel
^i *
Proposed Action: ORD pledged to ensure that each Headquarters
office and laboratory had a designated part-time records manager
and to work towards assigning a full-time records manager in each
of its laboratories, if determined appropriate (when FTEs could
be made available for this purpose). Also, to appoint vital
records officers as required. This was to be accomplished in the
first quarter of PY 1993. ORD plans to request the appointment
of file custodians in all Headquarters offices and laboratories
by the fourth quarter of FY 1994.
Impact on ERL-GB; ERL-GB's Director did appoint a part-time
records manager in 1992. However, a vital records officer was
never designated.
Performance Standards
Proposed Action: To ensure a management commitment to records
management, ORD proposed to include a records management and
internal control critical job element in all records managers'
performance standards, thereby guaranteeing status and sufficient
time to devote to the program. This was to be accomplished in the
first quarter of FY 1993.
Impact on ERL_GB: The FY 1993 performance standards for the ERL-
GB RMO did not include a records management critical job element.
However, a standard alone would not ensure status and sufficient
time to devote to records management. Neither would a new
critical job element for the RMO ensure top-level management
support unless these ERL-GB managers had an equivalent commitment
in their performance standards.
Records Briefings/Oversight
Proposed Action: ORD indicated that records mangers would brief
all employees on their responsibilities to preserve the integrity
of filing official records in the first quarter of FY 1993.
Additional briefings would be conducted with the assistance of
OIRM to educate staff on the value of central filing and
consistent filing techniques to facilitate easy retrieval.
ORD pledged that Headquarters office records managers would give
continued oversight to laboratory records managers through
' 133
-------
Appendix VIZI
conference calls each quarter, as a minimum, and laboratory
visits as travel funds permit. Site reviews could be part of a
Headquarters Records Management Task Force or a regularly
scheduled Office Director's review.
Impact on ERL-GB; The proposed briefings and quarterly conference
calls have not occurred at ERL-GB. However, during the last week
of September 1993, a headquarters team reviewing the management
of aontracts, CAs, and interagency agreements did apparently
discuss records during one of their sessions.
Records Training
Proposed Action; ORD committed to develop a training program for
ORD Records Managers in the second quarter of FY 1993.
Impact on ERL-GB: The. ERL-GB RMO had not been made aware of any
planned ORD training.
Internal Controls
Proposed Action; ORD indicated that records management would be
included as an ORD-wide Internal Control Event Cycle for 1993
with appropriate internal controls,
Impact on ERL-GB: ERL-GB did include records management as an
event cycle in its FMFIA internal control documentation for 1993.
However, the internal controls identified were not sufficient to
ensure that an effective records management system would be
developed at ERL-GB. In addition, some of the controls cited in
the FMFIA documentation did not exist at ERL-GB (see Chapter 4).
Records Management Guidance
. ^
Proposed Action: ORD indicated that it would request guidance
from OIRM in the first quarter of FY 1993 on the establishment of
official files contents, and the identification of ORD vital
records. In the second quarter of FY 1993, ORD planned to ask
OIRM's assistance in developing procedures for evaluating records
keeping and, if appropriate, conduct an evaluation of records at
one Headquarters program office to demonstrate the proposed
evaluation techniques.
Headquarters records managers were assigned the task of
coordinating policies and procedures with their laboratory
counterparts for consistency. The Headquarters staff were to
ensure that the laboratories had current OIRM manuals on records
management and ORD guidance on file cutoffs.
134
-------
Appendix VIII
Impact on ERL-GB; ERL-GB did not have current OIRM Directives on
records management and ORD Headquarters had not coordinated with
the ERL-GB HMO on policies* and procedures. OEPER. did forward
some miscellaneous records management documents in June 1993,
including records control schedules for laboratory .records; a
draft chapter for EPA Directive 2100 on records management, dated
March 18, 1993; handouts entitled "What is a Record, _"
"Disposition of EPA Records and Nonrecord Materials," "Model
Regional Records Management Operating Procedures Manual," and
"Using the Federal Records Center - A Guide For Headquarters
Staff;1" and a telephone directory of each regional federal
records center. However, no laboratory specific instructions or
direction were provided except that laboratories should utilize
federal records centers. Through September 1993, there was no
indication that any additional guidance or coordination had been
provided to ERL-GB by OIRM, ORD, or OEPER.
i
Establish Records Management Requirements
Proposed Action: ORD planned to do an extensive review of its
current program office records to establish up^to-date
inventories; records schedules; implementation plans and
procedures. To help in this effort, ORD established a
Headquarters Records Management Task Force consisting of
coordinators from each ORD Headquarters office to give oversight
to ORD's records management both at Headquarters and at its
laboratories in the fourth quarter of 1992. The Records
Management Task Force was to coordinate the ORD Headquarters
offices and laboratories effort and after reviewing present
records schedules prepare revised disposition schedules for both
Headquarters offices and the field.
Impact on ERL-GB: At ERL-GB there had been ho independent efforts
to establish records implementation plans/procedures related to
records control schedules. The laboratory director stated that
about a year ago they initiated, but did not complete, an
inventory of all laboratory records currently maintained at ERL-
GB. While there may be activity at the Headquarters level to get
records management on track, it had not occurred at ERL-GB.
As a result of records management weaknesses identified' during
this audit and communicated to the laboratory director, records
management at ERL-GB was recognized as an Agency level weakness
in internal controls. This was reported to the Assistant
Administrator for Research and Development in ERL-GB's year-end
assurance letter, dated October 25, 1993. After reviewing Agency
and ORD guidance on records management, ERL-GB intends to develop
a laboratory action plan to guide implementation of a
comprehensive records management program.
135
-------
Appendix VIII
(This page intentionally left blank.)
136
-------
• APPENDIX ZX
REPORT DISTRIBUTION
Qffice ofIpspector General
•*Inspector General (2410)
EPA Headquarters
Assistant Administrator for Administration and Resources
Management (3101)
Assistant Administrator for International Activities (2610)
Office of General Counsel (2310)
Assistant Administrator for Research and Development (8101)
Director, Grants Administration Division (3903F)
Director, Office of Research Program Management (8102)
Audit Liaison, Office of Research and Development (8102)
Director, Office of Environmental Process and Effects
Research (8401)
Comptroller (3301)
Agency Follow-up Official (3101)
Agency Followup Coordinator (3304)
Attention: Director, Resources Management Division
Audit Followup Coordinator v
Office of Program Management Operations (7104)
Associate Administrator for Congressional and
Legislative Affairs (1301)
Associate Administrator for Communications, Education and
Public Affairs (1701)
Gulf Breeze. Florida
Director, Environmental Research Laboratory, Gulf Breeze,
Florida
137
-------
APPENDIX IX
External
General Accounting Office
138
------- |