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UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D.C. 20460
SEP 18 1995
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OFFICE OF
THE INSPECTOR GENERAL
MEMORANDUM
SUBJECT:
FROM:
TO:
Report on EPA's Acquisition of Analytical Support
Report No. E1SKF4-07-0053-5100483
Elissa R. Karpf ^-^* ^jg.^ -*'- st
Deputy Assistant Inspector GeneraJ
for Acquisition and Assistance Audits
Sallyanne Harper, Acting
Assistant Administrator
for Administration and Resources Management
Elliott P. Laws
Assistant Administrator
for Solid Waste and Emergency Response
We reviewed the Environmental Protection Agency's (EPA)
acquisition of analytical support services at Region 7 and
Headquarters, and identified that acquisition of analytical
support services was not adequately planned. Our objective was
to determine whether EPA's contracting strategy to obtain
analytical support services was efficient and effective. We
evaluated available planning information and concluded'the review
at the end of survey.
In our opinion, acquisition planning represents a potential
weakness in EPA contracts management. The Office of Acquisition
Management should address acquisition planning as part of their
upcoming fiscal year 1996 systematic review strategy, since
similar deficiencies may exist in acquisition planning for other
contracts.
RESULTS IN BRIEF
EPA has not properly planned for the upcoming Environmental
Services Assistance Team (ESAT) contract replacement or for
overall analytical services acquisition. The Federal Acquisition
Regulation (FAR) requires EPA to plan acquisitions and conduct
market surveys to ensure that it meets its needs in the most
effective, economical, and timely manner.
NOV 2 9 1995
US EPA Headqxiarters
vi4, MI'.ilcode 3404
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Printed with Soy/Cancta Ink on paper that
contains * least 50% recycled fiber
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The Office of Emergency and Remedial Response (OERR) within the
Office of Solid Waste and Emergency Response (OSWER) prepared a
Superfund long-term strategy for analytical services to support
its programs. However, the strategy did not adequately address
how to obtain the services economically and efficiently.
The Office of Acquisition Management (OAM) within the Office of
Administration and Resources Management (OARM) completed the
individual written acquisition plan for the ESAT contracts in
April 1995. The plan was based on estimated contractor support
hours and skills needed, instead of estimated sample analyses.
Although OSWER and OARM have taken positive action to improve the
ESAT contracts, actions planned in response to the
recommendations were not adequate. OSWER and OARM needed to seek
information from the analytical services industry and the regions
to make cost comparisons and write better contracts. OSWER needs
to track historical services to estimate the quantities of
analytical samples needed. It needed to use"market research to
develop specific services descriptions and performance
requirements. In addition, it needed to compare cost data to
analyze Government versus contractor performance. OSWER should
be working toward buying sample analyses at specific quality
levels instead of buying contractor hours. Buying clearly
defined services shifts the burden of performance risk to
contractors while reducing EPA's contract administrative burdens.
ACTION- REQUIRED
This report makes several recommendations to the Assistant
Administrator for Solid Waste and Emergency Response and the
Acting Assistant Administrator for Administration and Resources
Management. We are designating the Assistant Administrator for
Solid Waste and Emergency Response as the primary action
official. As such, the primary action official should take the
lead in coordinating the Agency's official response to this
report so that the 90-day timeframe for response is met. Thus,
the Acting Assistant Administrator for Administration and
Resources Management is a secondary action official and should
coordinate with the primary action official.
In accordance with EPA Order 2750, the primary action official is
required to provide this office a written response to the audit
report within 90 days of the final report date. For corrective
actions planned but not completed by your response date,
reference to specific milestone dates will assist this office in
deciding whether to close this report. If you do not agree with
the proposed recommendations, we will consider other actions you
propose in order to correct the deficiencies noted in the report.
We have no objections to the further release of this report to
the public.
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This audit report contains findings that describe problems the
Office of Inspector General (OIG) has identified and corrective
actions OIG recommends. This audit report represents the opinion
of OIG. Final determinations on matters in this audit report
will be made by EPA managers in accordance with established EPA
audit resolution procedures. Accordingly, the findings described
in this audit report do not necessarily represent the final EPA
position and are not binding upon EPA in any enforcement
proceeding brought by EPA or the Department of Justice.
Should you or your staff have any questions about this report,
please contact Bennie Salem, Acting Divisional Inspector General
for Audit, Central Division, at (913) 551-7878.
Attachment
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TABLE OF CONTENTS
BACKGROUND 1
SCOPE AND METHODOLOGY 3
FINDINGS AND RECOMMENDATIONS 5
OERR and 0AM Should Use Acquisition History and Market
Research to Plan Acquisition of Analytical Support
Services 5
Tracking Historical Services Helps Quantify Needs ... 6
Market Surveys 8
Cost Comparisons Identify Economical Sources 9
CONCLUSION 11
RECOMMENDATIONS 13
APPENDIX I 17
OARM Response 17
APPENDIX II. 29
OSWER Response 29
APPENDIX III 51
ABBREVIATIONS 51
APPENDIX IV 53
DISTRIBUTION 53
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BACKGROUND
EPA collects, analyzes, and evaluates sample data from many
pollution sources in its administration of environmental laws.
To accomplish this, EPA operates its own laboratories with in-
house personnel and onsite ESAT contractor personnel. EPA also
obtains support through the Contract Laboratory Program (CLP) and
various other analytical support contracts including the Regional
Environmental Collection and Analysis Program (RECAP) contract in
Region 7.
In 1987, EPA developed the ESAT contracts because EPA's in-house
resources and contractor laboratories did not meet Superfund's
analytical needs. EPA"has always provided the contractor with
laboratory equipment and facilities. Currently, two ESAT zone
contracts provide analytical support for EPA's ten regions. In
addition, ESAT provides support for the Resource Conservation and
Recovery Act program and other non-Superfund analytical efforts.
Through December 1994, total costs for the two ESAT zone
contracts were over $67 million. The existing contracts expire
in September 1995 and EPA plans larger replacement contracts.
The National Academy of Public Administration (NAPA)
November 1994 report, Getting the Job Done, emphasized that
acquisition planning is a critical element in the contracting
process. The report emphasized that contracting personnel should
be involved early in the acquisition process. NAPA reported that
a fundamental cause of contract management problems was a
division of contract authority between program and contracting
offices, and that program offices institute and virtually
complete acquisition planning before they involve contracting
personnel.
OARM implements policies and procedures governing EPA's
acquisition management. Within OARM, OAM's Contracts Management
Division (CMD) at Research Triangle Park, North Carolina,
organizes and directs EPA's procurement support function for the
analytical support services contracts. CMD provides guidance and
contract assistance to EPA's programs, and assures compliance
with laws, procurement regulations, and policy.
OSWER provides technical support and evaluation of solid waste
and emergency response activities for EPA's ten regions. Within
OSWER, OERR's Analytical Operations Branch is responsible for
identifying analytical support requirements.
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OERR issued its Long-Term Contracting Strategy (LTCS) on
August 31, 1990, to: (1) analyze the long-term contracting needs
of the Superfund program, and (2) design a Superfund contracts
portfolio to meet needs over a ten year period. The LTCS
recommended decentralizing the ESAT contracts in 1995 to enhance
competition and provide flexibility to respond to specific
regional needs. However, the LTCS did not address acquisition
planning beyond the decentralization issue.
In April 1991, OERR established the Delivery of Analytical
Services (DAS) task force to develop the Superfund strategy for
analytical services delivery. In a January 1993 memorandum, the
OERR Director approved a DAS strategy for the regions to obtain
and manage 75 percent of analytical services, including regional
ESAT contracts. The DAS task force had three goals: (l) to
assess Superfund's long-term needs for analytical services;
(2) to establish the roles and responsibilities of private
parties, EPA contractors, and EPA staff in addressing these
needs; and (3) to provide the framework for Superfund analytical
services delivery to Superfund over the next decade. However,
the final DAS report did not address these three goals.
Both the LTCS and DAS proposed regionalizing the analytical
services contracts to improve competition. OERR attempted to
move in this direction with regional ESAT (RESAT) contracts.
However, disagreement between OERR and the regions regarding
additional contract support personnel caused OERR to abandon its
plans to completely regionalize the contracts.
In June 1993, OSWER established a national workgroup to develop
strategies for the RESAT contracts. The workgroup identified
procurement milestones, developed the solicitation and statement
of work, and developed a strategy to address contract
vulnerability issues. The workgroup did not take full advantage
of its opportunity to do the following:
identify performance requirements,
analyze government versus contractor performance,
determine a cost effective provider of services,
develop a detailed analytical support history,
determine whether supplying Government-furnished
property is in accordance with the FAR, and
improve contract type and method.
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In August 1993, OERR and 0AM established a workgroup to review
the LTCS. The workgroup evaluated analytical services needs
considering capacity, number of contracts required, placement and
management of contracts, and workload and resource distribution.
The workgroup concluded that the existing portfolio of contracts
was adequate, although the number of contracts would be
decreased. The workgroup generally recommended against
decentralizing the ESAT. contracts. In a June 30, 1994
memorandum, the OSWER Assistant Administrator stated that two
regional pilot ESAT contracts would be awarded. Two zone ESAT
contracts would be awarded to cover the remaining regions.
SCOPE AND METHODOLOGY
To identify Region 7 analytical support contracting strategies,
costs, management controls, and contractor work allocations, we
reviewed contract documents from October 1992 through March 1993
and interviewed key Environmental Services Division and Contract
Operations and Management personnel at Kansas City, Kansas. To
assess national strategies for Superfund analytical support, we
reviewed the LTCS and DAS files and RESAT workgroup planning
documents in Washington, D.C; the Superfund Lead Region
Coordinator's files at Region 8, Denver, Colorado; and ESAT
contract files in Research Triangle Park, North Carolina. Region
8 represented the other regions as the Superfund Lead Region for
fiscal 1993 and 1994. Also, we interviewed key personnel at the
Analytical Operations Branch and 0AM in Washington, D.C., and CMD
in Research Triangle Park, North Carolina. We performed
fieldwork from June 1994 to November 1994.
We conducted our survey in accordance with Government Auditing
Standards (1988 Revision) issued by the Comptroller General of
the United States. Issues identified in our survey of Region 7
activities concerned national analytical support strategies and
contracting activities. Accordingly, we expanded our survey and
evaluated those strategies. No other significant issues came to
our attention that warranted expanding the scope of our review.
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FINDINGS AND RECOMMENDATIONS
OERR and QAM Should Use Acquisition History and Market Research
to Plan Acquisition of Analytical Support Services
OERR and OAM have not adequately planned either the ESAT
replacement contracts or the overall analytical support services
contracting strategy. Current planning deficiencies mirror past
analytical services acquisition practices. The FAR requires
agencies to perform advance planning to develop item descriptions
and performance requirements, conduct market research, and
consider Government versus contractor performance when planning
major acquisitions.
OERR did not sufficiently evaluate its acquisition history to
define its requirements and integrate in-house and contractor
efforts or perform required market research. Instead, OERR
relied on justifications which were appropriate when it first
began contracting for analytical services, but which may no
longer be relevant. Analysis of EPA uses of analytical services
and an expanded analytical services industry should provide a
better base for decisions and allow OERR and OAM to address FAR
and EPA requirements to obtain products and services fairly and
economically.
Major acquisitions should be supported by plans that address all
significant considerations affecting the acquisition. FAR
7.104(a) recommends that EPA begin acquisition planning as soon
as the need is identified, and review and revise its plans as
significant changes occur. FAR 7.102 requires EPA to conduct
market surveys and plan its needs in the most effective,
economical, and timely manner. FAR 7.103(c) and (d) requires the
agency head to establish criteria and thresholds at which
increased detail is required as acquisitions become more complex
and costly and to establish procedures for writing plans either
on a system basis or on an individual basis, depending on the
acquisition. The FAR gives EPA latitude for acquisition
planning. FAR 7.104(b) and (c) recommend that the planner
consult appropriate personnel to determine type, quality,
quantity, and delivery requirements; and coordinate with and
secure the concurrence of the contracting officer in all
acquisition planning.
EPA's Contracts Management Manual, chapter 1, paragraphs'1.9(a)
and (b), require the contracting officer to prepare written
acquisition plans for Superfund acquisitions with a threshold of
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$25 million and to obtain input from the program office, legal
counsel, and a cost/price analyst. Also, the Manual requires:
(1) annual acquisition plans, (2) individual acquisition plans,
and (3) an individual contract management plan. The Manual
indicates that acquisition planning is applicable on a system
basis.
OERR and 0AM said they did long-term planning, but did not
complete the individual written acquisition plan for the ESAT
contract until April 1995. OERR and 0AM did not determine the
performance and delivery requirements for the replacement
contract, nor fully analyze and document technical, business, and
management issues that might affect the acquisition. OAM stated
it waited for information from OERR before it drafted an
acquisition plan. However, the need for the contract was known
as long ago as 1990 when the LTCS recommended the 1995 contracts
be decentralized.
OERR's and OAM's prior history with ESAT contracts did not
reflect better planning than the current planning. The offices
approved the 1991 written acquisition plan on February 19, 1991,
after the solicitation package was issued February 15, 1991. The
1995 acquisition plan was approved on April 6, 1995. It provided
for the issuance of the solicitation on April 17, 1995, with an
award date of December 15, 1995, over 2 months after the current
contract expires.
Tracking Historical Services Helps Quantify Needs
Although EPA issues sample protocols widely used by industry, the
1995 ESAT contracts will be a cost reimbursement level-of-effort
contracts because specific performance requirements were not
developed. The acquisition plan stated that performance
requirements were too broad, varied, and uncertain to define.
The 1995 ESAT contracts will include broad, umbrella statements
of work similar to the 1991 contracts.
FAR 7.105(b)(6) and 10.002(b) require EPA to describe the
products to be used in the acquisition and whenever practicable
to state requirements in terms of functions to be performed or
performance required. Furthermore, FAR 16.103(c) advises that
contracting officers should avoid protracted use of cost-
reimbursement contracts after experience provides a basis for
firmer pricing.
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The 1995 ESAT solicitation resembled the 1991 contracts. Similar
to the 1991 contracts, the solicitation described a broad range
of work requiring many skills, such as analytical support, data
review, quality assurance, and training, to cover the varying
regional requirements. The 1995 solicitation and the 1991
contracts listed the contractor personnel education and
experience requirements, estimated workyears by labor
classification in general terms, and obligated the contractor to
devote a specified level of effort for a stated time.
Although OERR recognized a need for long range planning in
developing the LTCS and forming the DAS task force, the results
stopped short of identifying technical, business, management, and
other significant considerations necessary to support an overall
or individual acquisition plan. OERR did not devise procedures
or systems for analyzing.type, appropriateness, or cost of
current analytical services. The DAS workgroup attempted to
gather information to determine whether current analytical
support services sources were appropriate or cost effective. It
concluded that the desired information was incomplete on in-house
and contracted activities, total quantities, and costs. OERR was
tracking the cost of analytical services provided by the CLP
contractors, but was not tracking services provided by other
contractors. Consequently, DAS did not conclude whether one
provider was more cost effective than another provider.
OERR did not develop information to make informed decisions
regarding the regions' analytical support services contract
needs. OERR did not request input on detailed regional
analytical support services specifications, products, services,
estimated quantities, contract history, categorizing or packaging
the sample work, and delivery timeframes. OERR requested the
regions to provide estimated ESAT workyears of 'effort for
analytical support. Thus, OERR could not state its requirements
in terms of required performance.
Our Region 7 review disclosed that the Region's Environmental
Services Division did not perform an in-depth analysis of the
activity and related cost among its four providers of analytical
services. We were unable to determine the cost per sample or
perform any comparative analysis because the Environmental
Services Division did not track activity and related costs on a
sample type basis.
OERR could have, used some analysis performed by the DAS task
force and information available in the regions to develop
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descriptions of analytical tests and/or functional requirements.
The DAS task force collected information on the available
analytical resources, numbers of samples, complexity of analyses,
and costs that it could have used to define contract
requirements.
OERR could benefit from Region 7's experience with its RECAP
contract and its own CLP contracts. Although we acknowledge
RECAP has problems and is a time and materials contract, it may
be a step in the right direction because the Region issued
performance-based statements of work and some fixed price
delivery orders. The contractor was given greater freedom in
choosing the most appropriate analytical method, and assumed more
responsibility to deliver analyses that met the Region's
analytical seirvices needs. OERR's procedures to identify routine
analytical services for its CLP contracts may also be a step in
the right direction. The CLP contracts are fixed price
contracts. However, OERR did not incorporate this approach into
an overall acquisition strategy to improve acquisitions. OERR
may be subject to criticism because adequate information was not
collected and analyzed to support and justify the ESAT
acquisition efforts.
Several options to specify work may better describe the sample
analysis products. Analysis could be grouped by organic and
inorganic analysis; by media such as water, solids, or gas; or by
type of equipment needed to perform analysis. Delivery
timeframes could provide another means to categorize the
requirements.
Market Surveys Help Package Requirements
OAM did not perform market research to package requirements to
appeal to expanded industry capabilities. Advance market surveys
could have helped package the contract to appeal to potential
contractors, take advantage of existing suppliers, and reduce
costs. FAR 7.102 and 7.105(b)(2)(i) require agencies to conduct
market surveys to promote and provide for full and open
competition. FAR 7.105 (b)(l) states that if all or part of the
acquisition is for commercial products, EPA should address the
results of market research and analysis and show their impact on
various parts of the plan.
In its January 1994 Competition Report, OAM committed to planning
as required by the FAR. OAM stated it would conduct market
research, package requirements to appeal to industry
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capabilities, conduct surveys of present and potential
contractors to determine how EPA could increase competition, and
take proactive measures to increase the number of proposals
received.
0AM's market research did not carry forward the recommendations
of the DAS Future Directions workgroup. In 1992, the workgroup
noted that analytical methods, instruments, and data handling
systems were continually improving, and recommended that any
effort to improve delivery of analytical services include the
flexibility to take advantage of these improvements. 0AM's
market research consisted of publishing a synopsis in the
Commerce Business Daily prior to the release of the proposal
request in order to ascertain interest among potential offerers.
A Commerce Business Daily synopsis was published on December 19,
1994, requesting small business input. OERR stated the ESAT
contract solicitation provided flexibility because the contractor
was onsite and could provide analysis on short notice. However,.
by requiring contractors to use Government facilities and
equipment, the ESAT contract solicitations did not provide the
flexibility to take advantage of improved industry technology.
Cost Comparisons Identify Economical Sources
OERR did not compare costs to support mixed use of in-house and
multiple contractor sources to do similar work. This mixture
evolved as EPA and the commercial industry grew. OERR continued
to rely on its initial justifications for mixing in-house
workyears, onsite contractors, and external contractors to
perform similar sample analysis without considering cost.
Because it did not analyze costs, OERR continued practices which
might not provide EPA the best quality service at the most
economical price.
Generally, Government policy is to rely on commercial sources to
supply the products and services it needs. When commercial
sources are available, the Government should perform a cost
comparison between contracting out and performing the work in-
house to determine who should do the work. If the cost estimates
to perform the work commercially are less than the cost to
perform the work in-house using Government personnel, equipment,
and facilities, then the work should be performed commercially.
If certain functions are inherently Governmental in nature, these
functions should be performed by Government employees. The 1993
National Performance Review supports this policy and encourages
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moving toward practices which will allow Government personnel to
choose the "be:st value" products.
OERR never justified that performing some sample analysis in-
house was less costly or that contracting out certain functions,
such as quality assurance, was not contrary to inherently
governmental functions policies. Instead, OERR originally
decided to contract for onsite contractors because it lacked the
resources to do all of the work in-house and had excess
facilities and equipment. However, it continued to use both in-
house personnel and contractors for similar analytical services.
The 1991 ESAT acquisition plan stated that because the Government
did not possess the capability to do all the work, requirements
for cost comparisons did not apply. The 1995 acquisition plan
stated a cost comparison was not anticipated because it was
believed that the contract costs would be found reasonable. The
latter judgment was not sufficient because it assumed OERR had
performed an initial cost comparison between performing the
analysis in-house or contracting for the services.
OERR did not define which work was more economical and
appropriate under which method. OERR had not requested the
regions to track the cost of performing sample analysis
activities in-house versus using the ESAT contractors and various
external commercial sources to determine their cost
effectiveness. OERR based its determination to retain some work
in-house on a desire to maintain some technical expertise. In
Region 7, cost to perform the specific sample types was not a
primary factor in determining which source to use, although
prices varied, substantially among the various sources. The
Region did not monitor the cost on a per sample basis for the
various sources to perform similar analyses. In addition, the
DAS workgroup was unable to obtain sufficient information from
the regions to perform any cost comparisons of its own.
Different contracts and in-house personnel were both identified
as the most cost beneficial by various OERR and Region 7 staff,
but none of the parties could provide a documented, detailed cost
comparison by sample type or other documented justification for
their statements.
OERR and OAM provided equipment for in-house contractors without
considering the FAR provisions governing Government-furnished
equipment. OERR and OAM did not direct recent planning efforts
toward increasing reliance on contractors to furnish equipment
and reducing equipment furnished by EPA. A General Accounting
Office report criticized the National Aeronautics and Space
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Administration for not complying with FAR provisions intended to
ensure that the Government provided equipment only when
contractors could not provide it, and EPA may be vulnerable to
similar criticism for the ESAT contract. FAR 45.302-1(a) states
that agencies shall not furnish equipment for any purpose, except
for five specific exceptions. The ESAT contract did not appear
to meet the requirements of any of the exceptions. However, EPA
has recognized there is a problem with their utilization of
Government-furnished equipment and is currently addressing this
property issue and planning corrective action
The 1995 and 1991 acquisition plans did not document how
providing equipment would reduce costs. EPA provided Government
facilities and equipment to the ESAT contractors but not to other
commercial sources for analytical support services. Decisions
related to facilities and equipment will directly impact cost
considerations related to continuing to use the support services
of onsite contractors. OERR and 0AM should justify any
decisions, such as providing facilities and equipment, which
impact the contract cost.
CONCLUSION
Although OERR expended considerable resources in developing
analytical support services strategies, results of the efforts
did not provide for improved services. In developing the
strategies, OERR recognized that it needed to identify its future
analytical needs, but stopped short of doing so. Instead, it
focused on decentralizing the services.
OAM did not develop an adequate acquisition plan to replace the
expiring ESAT contracts. The decision to break the ESAT
replacement contracts into two zone and two regional contracts
may improve competition by providing more contracts to compete
among contractors, but without further analysis, neither the
contracts nor competition can be significantly improved.
Requirements for analytical services need to be better defined to
achieve desired contract goals and reduce cost.
OERR and OAM need a strategy to develop a contract history vital
to specifying the types and quantities of analytical tests EPA
needs to support its programs. OERR and OAM did not conduct
market research and perform cost comparisons that would aid in
designing contracts to obtain better results at cheaper prices
while transferring more of the risk to the contractor.
Consequently, EPA may be wasting valuable resources by paying
more for services than necessary.
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RECOMMENDATIONS
We recommend that the Assistant Administrators for OSWER and OARM
require OERR and 0AM to:
1. Work together to develop an analytical support services
acquisition strategy. The first step should be to gather
services needs information and costs of current services
from all program offices to develop the strategy.
2. Plan future analytical services acquisitions to address the
technical, business, management, and other significant
considerations required by the FAR. Specifically,
clearly define analytical services type, quality,
quantity, and delivery requirements and develop a
system for regions to track costs to obtain these
services;
survey the analytical support industry to determine how
private industry describes its requirements in
contracts for services, and then use this information
to describe EPA heeds;
identify the services that should be performed in-house
and exclude them from contract considerations;
compare the current cost of services that can be
contracted out and identify the most economical
alternatives; and
document significant decisions such as market survey
results; service descriptions; and in-house performance
versus contractor performance, including contractor use
of Government-furnished facilities and equipment.
3. Plan to meet minimum analytical services needs with
replacement ESAT contracts until better needs determinations
can be developed.
Reconsider contract options before the end of the first
year and document justifications for extending ESAT
replacement contracts if new procurement actions are
not initiated;
analyze the work currently done by the ESAT contractor
to estimate work on a sample basis, not workyears, and
to identify work that should be done by other
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contractors, work that should be done in-house, and
work that, must be done by the ESAT contractor;
determine whether the work must be done at an EPA
facility using EPA equipment; and
develop plans to improve the contract method and type.
AGENCY COMMENTS AND QICEVALUATION
OSWER RESPONSE: OSWER disagreed with the report and stated the
OIG report did" not reflect the manner in which analytical
services acquisitions are planned and carried out, and did not
adequately acknowledge the comprehensive strategy that was
developed and implemented. OSWER stated replacement ESAT
contracts provide EPA with a cost-effective approach for
maximizing the use of regional equipment; providing needed
flexibility in sample analysis; providing the ability to use
improved methods, instruments, and data handling systems; and
minimizing the risks to data integrity.
OSWER stated estimating work on a sample basis for ESAT is not
realistic, since a very large number of variations can exist for
a particular type of analysis. The ESAT analytical support tasks
are best performed onsite to conserve cost, maximize the use of
regional laboratory facilities and equipment, and minimize the
risk to the Government for obtaining unusable data.
QARM RESPONSE: OARM disagreed with the report and stated that
the overall analytical support services strategy was extensively
planned in accordance with the FAR. OARM stated the ESAT
statement of work contained narrowly focused, analytically based
tasks. It could not define performance further, due to the
uncertainties inherent in the regions' requirements and the need
to provide flexibility in these contracts.
The RESAT workgroup considered the exact issues which the draft
report contends were not analyzed, including developing the
performance and delivery requirements. OARM further stated it
complied with requirements regarding market surveys, contract
types, and justification for providing the contractor with
facilities and equipment. OARM cited A-76 that allows continuing
existing contracts, if cost is reasonable and performance is
satisfactory.
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PIG EVALUATION: Although OSWER's and OARM's responses referenced
various planning documents including results of the DAS and RESAT
workgroups, the two offices had not adequately planned
acquisitions of analytical support services. We agree that the
RESAT and DAS workgroups identified most of the issues we
reported, but their results did not evidence the market research
and cost analysis needed to improve acquisitions. Further, the
workgroups were not held accountable for resolving identified
issues. DAS was not intended or carried out as a comprehensive
acquisition strategy. RESAT was directed more at refining the
contract terms to eliminate past criticisms, rather than to
improve contracting. OARM's market surveys did not address the
intent of our issue or our recommendation. Our issue is that
OARM should ask industry to help identify the best way to
contract for analytical services. How does private industry
categorize its sample work and define its contract requirements?
After OARM obtains this information, it will be in a better
position to help OSWER define analytical services contract
requirements.
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APPENDIX I
Page 1 of 12
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D.C. 20460
7 1995
OFFICE OF
ADMINISTRATION
AND RE SOURCES
MANAGEMENT
MEMORANDUM
SUBJECT
FROM:
TO:
OARM Response to OIG Report on Survey of Acquisition of
E1SKF4-07-0053-XXXX
nt Administrator
in and Resources Management. (3101)
Elissa R. Karpf, Deputy Assistant Inspector General
Acquisition and Assistance Audits (2421)
Thank you for the opportunity to review the subject draft
report. The attached comments reflect our response. We ask that
you give these comments careful consideration In the preparation
of the draft survey report. - •
My staff met with your staff on several different occasions
to discuss the findings ofzthe survey. There remain, however,
two broad issues of concern in the draft report. We.believe the
OIG has generally confused the issues of advanced acquisition
planning with the specific documentation requirements of the
Federal Acquisition Regulation (FAR). It also appears that the
OIG has inappropriately mixed issues regarding OMB Circular A-76
cost comparisons with other FAR-related cost benefit decisions.
Consequently, we disagree with the majority of the findings
as presented in the draft report and with the conclusion
concerning the serious.nature of the findings. While we
basically agree with the intent of the recommendations, we have
complied with those that are applicable to the current
Environmental Services Assistance Team (ESAT) solicitation, and
mechanisms are in place.to ensure that the other recommendations
are followed. .
The cover memo reflects your belief that the deficiencies
cited in the draft report related to acquisition planning
represent a significant weakness in Agency contract management.
We strongly disagree with the contention that any of the
deficiencies noted in the report represent reportable material
weaknesses for the Agency, especially since only five of
approximately 650 active contracts were reviewed. We anticipate
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contains at leas! 50% recycled fiber
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APPEMHX I
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that you will reach this same conclusion after you review our
response and the response from the Office of Solid Waste and
Emergency Response (forwarded under separate cover).
To simplify our response, the findings and recommendations
are discussed by subject in the order of appearance in the
report. We have only addressed the findings applicable to the
Office of Administration and Resources Management (OARM). We
hope that you will conclude that the report can be closed with no
further action required. . .
Should you or your staff have any questions or need
additional information regarding this response, please contact .
Betty L. Bailey, Direqtor, Office of Acquisition Management, on.
202/260-5020. -.,,
Attachment
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APPENDIX I
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OARM RESPONSE TO THE PIG'S
FINDINGS AND RECOMMENDATIONS
BACKGROUND --—
By way of clarification, it is important to note that the
ESAT contracts (both the current two existing contracts as well
as the on-going new acquisitions) include other tasks in addition
to analytical services. The ESAT contracts also provide quality
assurance support and data validation activities to the Agency.
In addition, the ESAT contracts are utilized more for the
analysis of high visibility or difficult/unusual samples (Special
Analytical Services) than for routine sample analysis. T£is has
always been the case and is not true only for the new ESAT
acquisition as the Office of Inspector General (OIG) contends in
the Background statement of its report.
ACQUISITION HISTORY AND MARKET RESEARCH SHOULD BE USED TO PLAN
ANALYTICAL SUPPORT SERVICES ACQUISITION
FINDINGS
The draft report states that the. "Office of Emergency and
Remedial Response (OERR) and the Office of Acquisition Management
.{OAM) have not adequately planned either the ESAT replacement
contracts or the overall analytical support services contracting
strategy." it further cites the FAR requirements (subparts
7.102, 7.103, and 7.104) regarding acquisition planning, and
states that OAM and OERR did not prepare a written acquisition
plan. The report states that OAM and OERR had not "determined
the performance and delivery requirements.for the replacement
contract, nor analyzed and documented technical, business, and
management issues that might affect the acquisition." , ~
RESPONSE
We believe that the overall analytical support services
contracting, strategy has been extensively planned by OERR with
input from the ten EPA Regions and OAM. Since it is our
understanding that the OSWER response will address the overall
contracting strategy in detail, we will not address it any
further here. • •
While acquisition planning for the upcoming ESAT
reprocurement could have been better documented, we are concerned
that the OIG audit team did not request, review or consider,
evidence of the extensive planning that has taken place for this
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APPENDIX I
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major acquisition effort. We believe EPA fully complied with FAR
7.104(a), which recommends that an agency begin acquisition
planning as soon as the need is identified.
The Regional Environmental Services Assistance Team was
formed in August 1993 to plan the follow-on ESAT'awards to the
current" contracts which expire September 30, 1995. Theuwjorkgroup
considered the exact issues which the draft report contends were
not analyzed, including developing various pieces of the
acquisition package which would set forth the performance and
delivery requirements. .
One of the workgroup's primary .goals was to define the
Government's requirements without restricting'competition while
addressing issues of potential vulnerability. Subgroups worked
on the statement of work (SOW) and labor classifications, the
advisory and assistance services memorandum and the technical
evaluation criteria, issues dealing with conflicts of interest,
and reporting requirements. Participants included regidna^T
proj ect officers; personnel in the Analytical Operations Branch
and the Hazardous Site Evaluation Division; contracting"officers
from headquarters, the regions and the Contracts Management
Division, Research Triangle Park (CMD-RTP); and long term
contracting strategy regional liaisons.
* V
Likewise, we believe EPA fully complied with. FAR 7,102.
regarding market surveys and enhancing competition. This is
typically accomplished by EPA (and other agencies) in accordance
with FAR 5.101. A synopsis is published in the Commerce Business
Daily (CBD) prior to the release of a Request for Proposal in
order to ascertain interest among potential offerers and to
notify them of an upcoming solicitation. In addition, when
deemed appropriate, EPA searches the market via "Sources Sought"
announcements in the CBD. This market-search mechanism
identifies potential sources to determine 'if an acquisition or
any portion thereof should be set-aside only for small business
participation. ' . .
In November 1994, the Small Business Administration
Procurement .Center representative recommended that EPA consider
the Region 4 portion of the acquisition for award to a small
business firm. A sources sought synopsis was published in the
CBD on December 19, 1994, which requested interested small
businesses to submit a statement of their capabilities to.perform
the effort. As a result of that synopsis and a review of the
capability statements received, the Region 4 requirement is
set-aside for small businesses.
The CBD announcement for the entire ESAT requirement was
published on February. 3, 1995. It should be noted that FAR
5.203(a) requires that such announcements be published at least
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APPENDIX I
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15 days prior to solicitation release. In this case, the
February CBD notice preceded the solicitation release by almost
90 days. We believe that as a result of these CBD announcements
and our efforts to break-up the requirement, we received, over 240
requests for the solicitation.
As noted by the OIG, the EPA Contracts Management-Manual
requires the preparation and approval of an individual
acquisition plan for all Superfund acquisitions in excess of
$25,000,000. It is EPA's normal practice to prepare the
individual acquisition plan after receipt of a complete .
procurement request (PR) package. Regardless of the amount of
advance planning that goes into an acquisition; it is almost
impossible to complete the formal, written acquisition plan un,til
the complete package has been approved by the program office and
sent to OAM. This is due to the fact that the acquisition plan
must include budget and funding information, the finalized SOW,
finalized technical evaluation criteria, etc. -^...
, The FAR recognizes this situation at subpart 7.105,, which
states that, "(t)he specific content of plans will vary,
depending on the nature, circumstances, and stage .of the
acquisition." Hence, the individual, written acquisition plan
that is reviewed, approved, and placed in the contract file is
simply a documentation of all the advance planning that has been
done, as well as the strategy that will be followed until award.
In this case, the final PR package was delivered to CMD-RTP in
November 1994 and the. acquisition plan was approved by the Chief
of the Contracting Office on April 6, 1995.
All actions taken by the Agency related to the creation of
an individual acquisition plan as well as the requirement to
conduct market research were-in full compliance with the FAR, the
Environmental Protection Agency Acquisition Regulations, and all
currently existing EPA policy and guidance.
- " ' if '
FAR LINKS IDENTIFYING NEEDS TO IDENTIFYING PRODUCT SOURCES
FINDINGS
. The draft report states that OERR expected the 1995 ESAT
replacement contracts to contain broad, umbrella statements of
work and that OAM expected to write a level of effort contract
because definitive analytical, service requirements were not
developed. The report also states that umbrella contracts can
lead to personal service relationships, and> although not ,
directly stated, the report implies that neither an umbrella
contract nor a level of effort contract is appropriate for this
acquisition.
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APPENDIX I
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The report further notes that the FAR "requires an agency to
describe the products to be used in the acquisition and whenever
practicable to state requirements in terms of functions to be
performed or .performance required." The report also cites FAR
11.003 which states that "the acquisition of commercial products
begins with a description pf the Government's needs stated in
functional terms in sufficient detail so that market research and
analysis can be used to help determine commercial sources."
Again, there is the implication that had we complied with these
regulations, the resultant solicitation would have been
structured differently.
There is also mention of the fact that the FAR advises that
contracting officers should avoid protracted use of
cost-reimbursement contracts. ' Although never directly stated, it
appears that the OIG's contention is that the new ESAT contracts
should be fixed price rather than cost reimbursement type.-
RESPONSE '•'*•."'
We cannot comment on whether OERR "expected" a broad,
umbrella SOW. Regardless, the use of "umbrella" contracts are
not prohibited by the FAR. In addition, the SOW for the ESAT
contracts has been reviewed and modified to eliminate many of the
perceived contracting vulnerabilities associated with such
contracts.
The current ESAT solicitation* meets the requirement at FAR
10.002 to state requirements in terms of functions to be
performed or performance required. The ESAT SOW is comprised of
narrowly focused, analytical-based tasks that complement each
other. Each task was scrutinized carefully and thoroughly to
ensure that it was well defined and that vulnerabilities such as
personal services and inherently Governmental functions were
eliminated or reduced as much as possible. Due to the
uncertainties inherent in the regions' requirements and the need
to provide flexibility in these contracts, performance cannot be
further defined. '
Moreover, we believe the OIG's reference to FAR subpart
11.003 regarding commercial products to be in error. FAR 11.001
defines a commercial product as: *v
"A product, such/as an item, material, component, subsystem,
or system, sold or traded to the general public in the
course of normal business operations at prices based on
established catalog or market prices."
We do not believe this section of the FAR applies to the
ESAT acquisition since the purpose of the ESAT contract is to
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APPENDIX I
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provide technical support services rather than items, materials,
components, etc., which are .sold or traded to the general public
in the course of normal business operations.
The OIG suggests that the new ESAT contracts should
be fixed price rather than cost type, but fails to support this
contention in any way. FAR 16.301-2 states that-
cost-reimbursement contracts are suitable for use when
uncertainties involved in contract performance do not permit
costs to be estimated with sufficient accuracy to use any type of
fixed-price contract. There are many variables in the ESAT SOW
that cannot be predicted with any degree of confidence. For
example, the ESAT contractor may be required to develop/adapt
methods for special analyses. There is no way to predict what a
particular region's needs may be in this area. We are also
unable to anticipate where the ESAT contractor'may be needed to
perform on-site field analysis, or the nature or type of support
needed. .•""-,.-
If we. force .this type of acquisition into a fixed priced
arrangement, offerers will have to build in allowances for
excessive cost risk, making prices unreasonable. We believe that
the only reasonable choice for this acquisition is a cost type
contract, and the contract file is so documented.
It should be noted that in separate contracts for routine
analytical services where we have very well-defined, standardized
requirements, we have created firm, fixed price, indefinite
delivery/indefinite quantity contracts. However, the nature of
ESAT work is such that it dannot be standardized.
FAR LINKS POLL AND OPEN COMPETITION WITH MARKET SURVEYS
FINDINGS
The draft report notes a number of actions which OAM stated
it would undertake in its January 1994 Competition Report in
order to enhance competition. The.draft report concludes that
OAM did not meet its commitments since it "did not perform any
market research to support the new ESAT acquisition." In
addition, the report contends .that recommendations from the OAS
Future Directions workgroup have not been implemented by OAM.
RESPONSE
The OIG's assertion that OAM has not met its commitments as
noted in the January 1994 Competition Report to plan the
acquisition in order to increase competition is without merit.
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APPENDIX I
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In accordance with the recommendations of the report, several
steps'were taken"to ensure that competition is enhanced to the
greatest extent .possible.
As noted above, the Agency began planning this acquisition
early in the acquisition cycle, and satisfied the FAR requirement
for market surveys to promote and provide for full and _ope_n
competition. As .a result of the synopsis published for this
acquisition, GAM received and filled over 240 requests for the
solicitation. The acquisition was broken into two zone (Eastern
and Western) and two region-specific pilots for Regions 4 and 7.
The Region 4 requirement is 100% set-aside.for small business
firms.
To eliminate any incumbent bias, the SOW and technical
evaluation criteria have been reviewed to ensure that they are
non-restrictive. Corporate experience represents only 10% of the
total evaluation criteria and is not required to be EPA-specific.
Two pre-proposal conferences are being conducted to answer- ~
questions from potential offerers. One-was held in Athens, GA,
for the Region 4 award and the other will be held in Research
Triangle Park, NC, for the other three awards.
The DIG also contends that the DAS Future Directions
workgroup recommendation that any effort to improve the delivery
of analytical services should .include the "flexibility" to take
advantage of improvements in methods, instruments and data
handling systtims as they occur, has not been implemented. The
recommendation was applied in the case of ESAT by virtue of the
fact that the SOW is not SCK rigid that these improvements cannot
be implemented during contract performance. The very fact that
we are utilizing a cost reimbursement, level of effort contract
rather than a fixed price, indefinite quantity contract allows .
the program this necessary flexibility.
COST COMPARISONS IDENTIFY ECONOMICAL SOURCES
FINDINGS ' -
The draft report states that when commercial sources are
available, the Government should perform a cost comparison
between contracting but and performing the work in-house to
determine who should do the work. The report notes that the 1991
ESAT acquisition plan stated that because the Government did not
possess the capability to do all the' work, requirements for cost
comparisons did not apply. The OIG contends that OAM personnel
made similar statements concerning the ESAT replacement
contracts.
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APPENDIX I
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Additionally, the report states that the Agency should
justify any decisions, such as providing space and equipment,
which impact the contract cost.
RESPONSE
It appears that the 1991 ESAT acquisition plan and-the
statements of 0AM employees regarding the inapplicability of cost
comparisons were in error. In accordance with OMB Circular. No.
A-76, existing contracts should be continued if the cost is
reasonable and performance is satisfactory. The circular
provides, that if contract costs obtained through competitive
solicitation are reasonable, the another contract should be
awarded. If the costs obtained are not reasonable, then a
determination should be made to see if in-house performance by
Government employees would be feasible. If in-house performance
is feasible, then the requirement should be scheduled for"a cost
comparison review. .-'"'-,.-
It appears that the OIG has inappropriately mixed issues
regarding OMB Circular A-76 cost comparisons with the cost
benefit decisions to provide government property under the
contract. We disagree with the OIG draft report's findings that
there is no justification for the decision to provide space and
equipment for its onsite contractor. The justification is
provided .in the contract files in accordance with FAR
requirements.
RECOMMENDATIONS -
i ,
That the Assistant Administrators for Administration and
Resources Management and for Solid waste and Emergency Response:
1. work together to develop an analytical support services
acquisition strategy. The strategy can be divided into a
short-term plan to serve expiring ESAT contracts needs and a
long-term plan to serve EPA's overall analytical support
service needs. The first step should be to .gather product
needs information from all program offices to develop the
long term acquisition plan.
OARM feels that an analytical support services strategy in
accordance with the FAR already exists. In the .future, OAM will
coordinate more closely with OERR and the regions in an attempt
to develop individual acquisition plans earlier in the process
whenever possible. The formation of the individual plans will be
triggered by annual acquisition plans submitted by the program
offices in accordance with Chapter 1 of the EPA Contracts
Management Manual. .
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APPENDIX I
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Each Region has already performed a needs analysis which fed
into the procurement request for the current ESAT solicitation.
This information was used to prepare the individual acquisition
plan for the new ESAT contracts which was approved April 6, 1995.
2. Plan to meet the minimum analytical service suppojrt
needs for the replacement ESAT contracts.
— Analyze the work being done by the ESAT contractor
to identify non-analytical work; work that can be done by
other contractors; work that should be done in-house; and
work that must be done by the ESAT contractor and estimate
work on a sample basis, not work years;
.-- determine whether the work must be done at an Agency
facility; and -
— justify the contract method and type. • ~
As discussed above, the ESAT SOW is narrowly focused and
contains analytical-based tasks that complement each other. At
this time, it is not considered to be in the Government's best
interest to break out any of the tasks for separate procurements
or to bring .-any of the work in-house.
Due to the uncertainty of the types' of analysis and related
support that may be required under this effort; it is not
reasonable to estimate the work on a per sample basis. .The types
of sample analysis are generally not routine and may involve any
number of standard and non-standard methods to be performed.
The determination has already been made that Task 1 must be
done at an Agency facility. This determination is in response to
a FMFIA finding and recommendation. It has also already been
determined that a cost reimbursement, level of effort, work
assignment contract is the most appropriate type for this
acquisition, and the appropriate written determinations have been
prepared, signed, and placed in the contract file. No further
justification .or action is needed or warranted. , •
I " • i
3. Flan future analytical services acquisitions to address
the technical, business, management, and other significant
considerations required by the FAR.
— clearly define analytical services type, quality,
quantity, and delivery requirements and develop a
system for Regions to track costs to obtain these services;
— conduct market surveys to determine the. best method to •
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APPENDIX I
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package requirements for contracting;
•-- identify the services that should be performed in-house
and exclude them from cost comparisons;
— compare the costs of services that can be contracted out
and identify the most economical alternatives; and
— document significant decisions such as market survey
results; product descriptions; in-house performance versus
contractor performance, including contractor use of
Government-furnished property and equipment.
As in the past, OAM will assist its customers in their-
continuous efforts to more clearly define their analytical
service requirements. OAM will also continue to conduct market
surveys to promote and provide for full and open competition.
The documentation for this will be included in contract files and
detailed in individual acquisition plans as required by the "
FAR. OMB circular A-76 procedures will be followed as
appropriate. Contractor use of Government-furnished property and
equipment will be justified in accordance with the FAR.
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UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D.C. 20460
APPENDIX II
Page 1 of 22
. JDFFICEOF
SOLID WASTE AND EMERGENCY
RESPONSE
MEMORANDUM
SUBJECT:
FROM:
TO:
Response to the Office of Inspector General Draft
Report on Survey of Acquisition of/Analytical Support
Report No; ElSKF4-07-<
Timothy Fields, Jr.
Deputy Assistant Admi'
Elissa R. Karpf
Deputy Assistant Inspector General
for Acquisition and Assistance Audits
The purpose of this memorandum is to transmit the Office of
Solid Waste and Emergency Response (OSWER) comments on the Office
of Inspector General (OIG) Draft Report on Survey of Acquisition
of Analytical Support, Report.No. E1SKF4-07-0053-XXXX. We
reviewed the OIG, draft report to insure that it is factual and is
presented in a fair and equitable.manner.
General Comments on Draft Report
In general, we disagree with the findings and recommenda-
tions that are cited in the OIG draft report. The report does
not present any in-depth analysis or statistics to support its
conclusions. It does not reflect the manner in which analytical
services acquisitions, are planned and carried out, and does not
adequately acknowledge the comprehensive strategy that has been
developed and which is being implemented in delivering analytical
services to EPA for the Superfuhd program.
The EPA Superfund analytical services support strategy is
well defined, coordinated, and serves the program in a cost-
effective manner, while providing flexibility where needed.
Superfund's analytical support strategy uses the roost diverse
types of contracts of any program in EPA. Costs, quantities,
specifications, products, packaging, and delivery time frames are
known by Headquarters for the Headquarters Contract Lab Program
Routine Analytical Services (CLP RAS) contracts, and this
information is used in fixed price CLP RAS contracts. Such
information, if applicable, is also maintained by the Regions for
their Environmental Services Assistance Team (ESAT) contracts and
Recycled/Recyclable • Primed wish Vegetable Oil BasttUnKs on 100% Recycled Paper (40% Postconsumer)
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APPENDIX II
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Delivery of Analytical services (DAS) program. According to the
General Accounting Office (GAO), the CLP RAS program pays the
lowest sample prices in the commercial marketplace and among
. other governmental agencies which perform the same work.
Each major acquisition is carefully planned to determine the
most appropriate contracting mechanism, while taking into
consideration important programmatic issues, such as analytical
flexibility and available Federal personnel resources. A
procedure exists for converting higher cost, repetitive Special
Analytical Services (SAS) analyses into lower cost, low risk CLP
.RAS analyses, and this strategy is being used as a model by other
governmental agencies. Improved methods, instruments, and data
handling systems are incorporated into the national CLP RAS
contracts, as well as in Regional DAS programs. The ESAT
contracts, which are part of the overall analytical services
strategy, have been developed to eliminate or minimize potential
.contracting vulnerabilities, and provide EPA with a cost-
effective approach -for maximizing the use of the Regional-^....
laboratories, fully utilizing state-of-the-art Regional
equipment, providing needed flexibility in sample analyses,
providing the ability to used improved methods, instruments, and
data handling systems, and minimizing the risks to data
integrity.
We are concerned that the OIG review team does not clearly
understand the Superfuhd analytical services program, including
the associated complexities. The analytical .services program has
undergone extensive acquisition planning,.taking into account
virtually all the issues that the OIG draft report identifies,
including acquisition1 history, determination of performance and
delivery requirements, and cost comparisons, as.well as
technical, business, and management issues.
: Because virtually all the concerns which are cited in the
OIG draft report are already adequately addressed by the Office
of Emergency and Remedial Response (OERR), and we have not been
able to identify any issues of concern at the national level, we
request that the OIG discontinue its review of acquisition of
analytical support at the national, level.
\
General Comments on Auditors Approach
We would also like to point out several issues regarding the
OIG draft report and audit approach that raise serious concerns
for us. First, in the entrance conference, the OIG did not
indicate that acquisition planning was the focus of the review,
but rather analytical' costs. Had the OIG indicated that it was
interested in.acquisition planning, we would have explained the
analytical services program, its history, and programmatic
issues. Had the OIG also indicated that it was focusing on items
such as sources, quantities, specifications, packaging, data
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handling, and delivery time frames, we would have provided'the
OIG with that information as well.
In fact, we first learned that the OIG review team had
changed the direction' and scope of its review at the .debriefing
meeting, after the OIG review team's field work had been
completed. In the attached document, we have provided section-
by-section factual information on the topics discussed--ia-the OIG
draft report. We request that the OIG review this information,
and reflect these facts in the appropriate sections of the OIG
report. We are willing to provide additional assistance to the
OIG staff to clarify any issues or provide further information to
ensure the final report, when published, accurately states the
facts.
Second, many of the issues that are raised in the OIG draft
report are not national issues. The division of.responsibility
between Headquarters and the Regions, which is an integral part
of the DAS strategy, has been explained previously to the^OIG
review team. Third, Region VII stated that the OIG failed to
take its comments -into consideration before issuing the, OIG draft
report. Fourth, in some cases, the OIG has not considered
legitimate issues that caused the analytical services program to
be developed in a particular manner. We are also concerned that
the OIG did not provide supporting statistics or an in-depth
analysis to support its findings that EPA may be paying more for
analytical services than necessary, other than providing
theoretical arguments', drawing unsubstantiated, conclusions, and
quoting from the Federal Acquisition Regulations (FAR)."• ;
The OIG draft report further concerns us because the review
should have been confined to Region VII, as the OIG review team
indicated, and not escalated to the national level. Both Region
VII and Headquarters were never initially questioned on
acquisition planning during the review period, It was our
understanding that the focus of the audit was on analytical
costs. All of the information that the OIG says is lacking is
maintained in Headquarters for the Headquarters contracts, but
the OIG review team never asked us for it. This same information
for Regional contracts is only maintained at the Regional level.
1 . .
Specific Comments on Findings and Recommendations
Our responses to the specific findings and recommendations
contained in the OIG draft report are presented below. - . !
OIG Finding l;
Acquisition history and market research should be used to
plan analytical support services acquisition.
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OSWER Response;
APPENDIX II
Page 4 of 22
OSWER has always built on the past acquisition history'to
plan new analytical services acquisitions. For both CLP RAS and
ESAT contracts, the contracts are continuously evaluated with
Regional input, and improvements are made to the. contracts. For
CLP RAS contracts, analytical methods and new equipment are
evaluated for technical merit, and where appropriate, are
incorporated into the contracts. For the ESAT contracts, the SOW
has been evaluated several times and improvements have been
continuously made to eliminate potential contracting
vulnerabilities. The fixed price mechanism for CLP RAS contracts
and the cost-reimbursable mechanism for the ESAT contracts have
been determined to be the best vehicles for these contracts. The
CLP RAS contracts are low cost, low risk contracts, while .the
ESAT contracts provide.essential flexibility for providing non-
routine analyses. EPA Regions also use acquisition histories to
plan their analytical support service acquisition strategies.
This information on Regional analytical acquisitions is only
maintained at the ..Regional level. • -"-
OIG Recommendation from Finding it . ''
OARM and OSWER should work together to develop an analytical
support services acquisition strategy. The strategy can be
divided into a short-term plan to serve expiring ESAT
contracts needs and a long-term plan to serve EPA's overall
analytical support service needs. The first step .should be
to gather product needs information from all program offices
"to.develop the long-term acquisition plan.
OSWER Response to Recommendation from Finding It
Superfund's analytical services strategy is not ESAT-
specific since EPA laboratory personnel and various other .
contract vehicles in addition to ESAT are also involved. The
OERR short-term analytical acquisition strategy is based, on the
Office of Acquisition Management (OAM)-mandated annual
acquisition plan. The long-term acquisition plan is based on the
DAS strategy.
- L ' i '
The short-term needs of the ESAT replacement contracts will
be met by the base period of each of the contracts. Any changes
in the•configuration of the contractor teams, including size and
composition, will be justified by the Regions. These team
configuration changes will then be incorporated into the option
years of the contracts. . '
In the future, we will coordinate more closely with OAM on
the development of the annual acquisition plan, so that these
acquisitions will be started earlier. OERR is actively
implementing the DAS strategy by decentralizing the national SAS
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APPENDIX II
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program, working with the Regions to identify the most promising .
contractual vehicles, and providing an analytical budget to each
Region to encourage only analyses of samples that are needed.
The long-term acquisition plan may not have been conveyed through
OERR's annual acquisition plan. We will also convey this
information to the Regions so that they may incorporate the
results of implementing the DAS strategy into their annual
acquisition plans.
OI6 Finding 28
FAR links identifying needs to identifying product sources.
OSWER Response:
OSWER has always made an effort to determine the .analytical
needs of the Regions before working with 0AM in determining the
most appropriate type of analytical services contract. The CLP
RAS program uses fixed price contracts, the largest number^ ..of
such-preferred contracts in a single program in the Agency., that
minimize costs and risks to the-government. The CLP RAS fixed
price contracts are based on specifications, products; services,
estimated quantities,, contract history, packaging sample work,
and delivery time frames. Because the ESAT analytical services
task is used mainly for. non-routine analyses, the ESAT contracts
are also based on the'Regions' .needs for flexibility in providing
those types of analytical services, for quality assurance and
integrity of data, and for maximizing the use of the Regional
laboratories. The above specifications are provided in .
individual work assignments.
The DAS effort amassed an enormous amount of information on
the current state, customer needs, future directions, resources,
vulnerabilities, and efficiencies, and this effort identified the
Superfund analytical needs for the long term. Superfund's long
term needs for analytical services were addressed by the future
directions workgroup, which projected future Superfund
activities, estimated future directions in the marketplace, arid
considered the impact of policy and legislative activities on
future analytical services.
The ESAT analytical services task works best on-site to
maximize the use of the Regional laboratories, to save
unnecessary equipment; costs which would be required for having
the work performed off-site, to continue the appropriate -
management that is provided by the Region, and decrease,the
likelihood of laboratory fraud. It also provides EPA with
instantaneous access to the raw data so that the contractor
cannot falsify analytical data, helps to maintain the quality and
integrity, of analytical data, allows EPA to make course
corrections during an: analytical project, and generally minimizes
risks to the government for obtaining unusable data. If we did
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not use our own facilities, our costs and risks would necessarily
increase.
RECAP is a pilot contract that is being evaluated for its
ability to provide Regional control for analytical services at
comparable or lower costs than the traditional program. While
Region VII favors it, the contract nevertheless has many
disadvantages. As a result of the OSWER decision to decentralize
the national SAS program, several Regions are learning from the
RECAP experience to develop improved Regional contracts.
OIG Rft«g>Tnnieiida,tion from Finding Z* •
Plan to meet minimum analytical service support needs for
the .replacement ESAT contracts.
• Analyze the work being done by the ESAT contractor to
identify non-analytical work; work that can be done by other
contractors; work that should be done in-house; and Work
that must be done by the ESAT contractor and estimate work
on a sample basis, not workyears;
• Determine whether the work must be done at an Agency
facility; and
>
• Justify the contract method and type.
OSWER Response to Recommendations from Finding 2;
Each Region has a decision tree that outlines the order in
which sample analyses work^ls distributed. Distribution of
sample analyses is a Regional responsibility. Generally, the
Regions provide work to their in-house employees first,, then non-
routine analyses to ESAT, routine analyses to the CLP, and non-
routine sample overflow from ESAT is accommodated by the Regional
DAS program. The specifics of information on sample distribution
is maintained in the Region. In fact/Region VII provided the
OI6 review team with its standard Operating Procedures for
selecting its sources'of analytical services. ESAT capacity in
the analytical services task is maintained by providing services
to other EPA programs through buy-ins, and by the ability to
shift technical personnel to related technical tasks.
The CLP RAS analytical service comprises fixed-price
contracts in which work is estimated on a sample basis.
Estimating work on a sample basis for ESAT or other contract
vehicles that provide-non-routine analysis is not a realistic
option, since there is a very large number of variations that can
exist for a particular type of analysis. Basing non-routine work
on a sample basis would severely restrict EPA's ability to
provide timely analyses for situations that do not perfectly fit
the corresponding SOW. These situations cannot be predicted in
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advance, and numbers of non-routine SAS samples are often not
known until work begins on a site. In some cases, in which
Headquarters attempted to convert repetitive SAS analyses to
well-defined HAS analyses, the Regional demand for the HAS
service did not materialize, and the HAS service had to be
discontinued. This situation occurred for several analytical
services. It may, however, be possible for a Region to provide a
Region-specific, multi-site analytical service for a particular
type of analysis, in which quantities, specifications, products,
packaging, demand for the service, and .delivery time frames are
more defined. This information is only maintained in the Region.
Regarding justifying the contract method and type, we will
analyze the tasks under ESAT to determine the most appropriate
contract method and type for the next procurement cycle. We will
also convey this information to the Regions, which are
responsible for justifying the contract method and type for the
analytical services contracts under their DAS programs.
PIG Finding 4; ' '*"""
Cost comparisons identify economical sources.
*
OSWER Response;
The CLP RAS analytical service is the most cost-effective
analytical service among several government agencies that perform
similar analyses. It-provides the least expensive price with the
least risk to the government. GAO. is recommending that other
governmental agencies-adopt the same 'approach.
When the SAS program was centralized in Headquarters,
several detailed compilations of SAS utilization were provided to
the Regions between 1993 and 1994, including information on
costs, quantities, analytical procedures, and delivery time
frames. This information on the Regional DAS programs is
maintained within the Region. Although this information is known
for past SAS events, requirements continually change as site
conditions change and new projects are initiated.
, While analytical costs are important, such costs may not be
the controlling factor for choosing one analytical source over
another. The controlling factor is the need to obtain data of
known and documented quality so that the responsible parties can
continue to'provide most of the costs for cleanup of hazardous
waste sites. Non-routine SAS analyses often depend on demand,
delivery time frames, Region-specific needs, the availability of
qualified laboratories, the need for appropriate management,
laboratory performance, sample matrix, flexibility, and
availability of an acceptable analytical method.,
7.
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PIG Recommendation from Finding
Plan future analytical services acquisitions to address the
technical, business, management, and other significant
considerations required by the FAR.
Clearly define analytical services type, quality, quantity,
and delivery requirements and develop a system •for_.Begions
to track costs to obtain these services;
Conduct market surveys to determine the best method to
package requirements for contracting;
Identify the services that should be performed in-house and
exclude them from cost comparisons;
Compare the cost of services that can be contracted out and
identify the most economical alternatives; and
Document significant decisions such as market survey^
results; product descriptions; in-house performance versus
contractor performance, including contractor use of
Government-furnished property and equipment.
i
is 6 to RecoynTnenda1
The CLP RAS contract, which is procured and managed by
Headquarters, is a several-hundred page document that contains
information on quantities, specifications, products, packaging,
and delivery time frames. This information is comprehensively
documented. ~
/
As stated above, each Region is responsible for making
sample distribution decisions and has a decision tree that
outlines the order in which sample analyses work is distributed.
The specifics of this information are only maintained in the
Region.
Establishment 'of'Regional analytical budgets has increased
Regional awareness of analytical costs, and the Regions are
becoming more cost conscious when determining the number of
samples and analyses to be collected.. As a result, we are seeing
more use of ESAT for non-routine analyses and some shifting of
demand to the lower cost, low risk CLP RAS service. As part of
our effort to continue to improve our analytical services-
program, we will issue guidance to the Regions, when appropriate,
requesting them to track analytical costs when obtaining
analytical services.
The fact that analytical costs are not necessarily the
controlling factor for choosing one analytical source over
8 .
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another must also be taken into account. The reasons for this
fact is described above and in Attachment I.
As stated above, the ESAT analytical support task is best.
performed on-site in order to conserve costs, to maximize the use
of Regional laboratory facilities and equipment, and to minimize
the risk to the government for obtaining unusable data. During
the next ESAT procurement cycle, we will continue to document our
key decisions.
We appreciate the opportunity of being able to provide
comments on the draft OIG report on the survey of Acquisition of.
Analytical Support. We hope that you will take our comments and
additional information into consideration as this review nears
completion. If you have any questions about our response or wish
to arrange a meeting, please have your staff contact Larry Reed,
Director, Hazardous Site Evaluation Division, at (703) 603-8850,
or Hans Crump, Chief, Analytical Operations Branch, at (703) 603-
8821. :"~z.--
Attachments . , - .
cc: Tim Fields
Johnsie Webster '
Becky Brooks
Sharon Hallinan
Hans Crump
Howard Fribush
9
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Attachment I
Superfund Analytical Services Program
. This discussion describes the overall analytical services
support strategy for the Superfund program. A knowledge of this
strategy is essential for understanding the development and flow
of information that is used to support and continually-Improve
the Superfund analytical services program.
The Superfund analytical services program is comprised of -
two major components, routine analytical services (RAS) and
specialized analytical services (SAS). These two components are
accommodated by a variety of analytical service mechanisms,
including the Regional laboratory, the Contract Laboratory
program (CLP), the Environmental Services Assistance Team (ESAT)
contracts, and various types of Regional contracts. The Regional
laboratory, which is staffed by EPA chemists, typically retains
the right of first refusal in accepting samples for analysis.
When the Regional laboratory, which serves a multitude of :-EPA
statutory programs in addition to Superfund, has reached
capacity, the sample overflow is accommodated among the various
other analytical support services which are mentioned above.
The CLP is a nationally managed program which accepts
samples for routine analyses. The CLP provides these routine
analyses for a high volume of organic and inorganic samples for
which the analyses are standardized. . The CLP RAS program uses
fixed price contracts, therlargest number of such preferred
contracts in a single program in the Agency, that minimize costs
and risks to the government. A recent review of analytical costs
by the General Accounting Office (GAO) has shown that EPA's CLP
RAS costs are as much as.220 percent lower than the costs paid by
other governmental agencies for similar analyses.
Unlike RAS, which are routine, standardized analyses, SAS
analyses are non-routine, highly specialized and depend on site-
specific conditions. As such, SAS analyses may require uncommon
analytical procedures, low detection limits-, analyses for
individual contaminants, considerations of unusual matrices, and
specialized quality control requirements. It is important to
note that SAS requirements often change as a sampling project
proceeds, since newly; collected information during the project
may require a change in the analytical approach. Therefore, SAS
analyses are best administered and managed by the Regions-, which
are most familiar.with site-specific circumstances, such as
choice of analytical method, the complexities of mixed waste
sites, and Regional enforcement policies that may require one
approach over another. In fact,- there are many differences among
Regions in their non-routine SAS analytical needs. For example,
one Region may be mainly concerned with low concentration
volatiles analysis in water matrices, another Region may be
. 10 -
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mainly concerned with low detection limits for all analyses, and
another Region may be mainly concerned with difficult sample
matrices. Due to the non-routine nature of SAS analyses,
management and procurement .of such analyses were reassigned to
the Regions by an OSWER Decision Memorandum which is dated
January 27, 1993.
The ESAT contracts are cost-reimbursable contracts""whose
primary purpose is to provide the Regions with.a cost-effective
mechanism to maximize the use of the Regional laboratories. The
ESAT contracts provide chemists to provide analytical support to
the Regional laboratory, since the Regions have insufficient
chemists to fully staff .their own laboratories. As such, the
work assigned to the on-site ESAT chemists are under Regional
control, and the Region can provide appropriate management of the
sample analyses. The overflow of samples from EPA chemists is
typically assigned to ESAT chemists for non-routine SAS analyses,
or to the CLP.for RAS analyses. In terms of the number of.
parameters which are analyzed, the CLP RAS program typically
analyzes about ten times the number of parameters in a CLP RAS
sample than is typically analyzed in a non-routine SAS -sample.
While each type of sample may be labeled as RAS or SAS, the two
types of samples are vastly different, in terms of number of
parameters analyzed, matrices, analysis requirements, analytical
procedures used, and other factors.
In addition to ESAT and CLP RAS, the overflow of SAS samples
from the Regional laboratory is directed to the various .
mechanisms of analytical services that may be maintained in a
particular Region. These sources were established as a result of
the DAS strategy, which culminated in a shift of the ratio of
Headquarters-managed services to Regionally-managed services from
50:50 to 25:75. The Regional DAS program includes subcontracting
using field contracts-(e.g., Alternative Remedial Contracts, -
Technical Assistance Team contracts), small purchase orders,
blanket purchase agreements, and interagency agreements. Some
Regions are developing their own Regional analytical support
contracts. This strategy provides the Region's with more control
and flexibility to acquire non-routine SAS analyses, which are
site-specific and which the Regions are in the.best position to
administer and manage;
Once a non-routine SAS analysis achieves a sufficient demand
by a majority of the Regions, Headquarters will convert the SAS
analysis into a fixed, price CLP RAS service,- provided the" service
can be standardized. Headquarters is currently in the process of
converting two SAS analyses into RAS services. These SAS
analyses include Low Concentration Organics and Water Quality
Parameters. Specific criteria for converting SAS analyses into
RAS services have been established by the CLP'.
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It is important to note that the Region VII analytical
support contract, Regional Environmental Collection and Analysis
Program (RECAP), is a pilot contract that was initiated by the
Region with Headquarters support. One purpose of the RECAP
contract is to determine if an alternate mechanism for providing
Regional control over, its analytical services also provides a
Region with greater flexibility in acquiring RAS and SAS_services
at comparable or lower costs than the traditional program.
We would also like to emphasize that, while analytical costs
are important, the chpice of analytical services is not
necessarily cost-driven. An emergency response, for example, may
require the Agency to expend greater financial resources to ,
acquire the analyses in a manner that is more timely than the
conventional sources. Regional enforcement policy may dictate
that EPA use the same procedure as the Potentially Responsible
Party for comparison purposes, even though a different analytical
procedure is better or'more cost-effective. These factors were
explained to the OIG review team during the entrance conference;
unfortunately, the OIG draft report does:hot take.into :
consideration these programmatic issues. Beginning in -FY 95,
however, we instituted a change in the analytical services
program that is resulting in. a greater Regional awareness of
analytical costs. This change j.s discussed below.
Acquisition History .
We disagree with the OIG finding that the ESAT replacement
contracts and the overall analytical support services have not
been adequately planned. Extensive planning was conducted
beginning about two years before the expiration of the current
. ESAT contracts, but we were not asked about it by the OIG review
team. We also disagree with the statement that EPA's planning
effort was primarily focused on decentralization. To improve
understanding for the purpose of acquisition plans, however, we
will cross-reference our planning documents' to indicate the
various steps we have taken to implement our analytical services
strategy. •
We do know that the demand for samples analyses far exceeds
our in-house capacity. Consequently, the majority of sample
analyses work needs to be performed via a variety of appropriate
contract mechanisms. The Regional laboratories would be
overwhelmed by the volume of sample analyses that need to be
performed for the Superfund program. Furthermore, non-routine
SAS analyses.comprise procedures that are not well defined, since
they are site- and project-specific as stated previously in our
response. Contracts such as ESAT or RECAP cannot be defined in
terms of quantities, specifications, products, packaging, and
delivery time frames except on a prpject-by-project basis. This
is why the RECAP contract is a delivery'order contract, and every
project must be negotiated with the laboratory before; analysis
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can begin, or why the delivery requirements for the ESAT
replacement contracts are defined in work assignments. Where SAS
analyses are similar to CLP RAS analyses, the various well-
defined CLP PAS Statements of Work (SOWs) are used as the basis
for the ESAT analysis. However, many non-routine SAS procedures
do not have highly definitive SOWs in comparison to RAS analyses.
As stated previously in our response, while analytical costs
are important, they may not be the controlling factor for
choosing one analytical source over another. Non-routine SAS
analyses often depend on capacity (demand for the service),
delivery time frames, Region-specific needs, the availability of
qualified laboratories, the need for appropriate management,
laboratory performance, sample matrix, flexibility, and
availability of an acceptable analytical method. Therefore, the
SAS program needs to have the flexibility to provide technical
direction to the contractor to change the approach during, an
analytical project if the analytical method is not amenable to
the sample matrix. . V.--
A recent change in the analytical services program-has
resulted in a greater'Regional awareness of analytical costs. j;n
the 1991 Agency Review of the Contract Laboratory Program (the
CLP FMFIA review), the Agency Task Force found that because CLP
analytical services were paid from a Headquarters account, the
CLP was viewed as a free good, and little incentive existed for
.the Regions to carefully control the number of samples and the
number of analyses completed per sample. As a result, .the Task
Force recommended that OSWER consider the use of a Regional
analytical budget to act as. an incentive to collect only needed
data. In FY 94, Regional analytical budgets were established and
were fully implemented in FY 95. Regional analytical budgets s
comprise costs associated with CLP RAS, ESAT, and the Regional
DAS program. Expenditures are provided to the Regions on a
monthly basis so that*the Regions can track their analytical >
costs. As a result, we are seeing more use of ESAT services for
non-routine analyses, and some shifting of demand to the lower
cost, low risk CLP RAS service. .
Projecting non-routine SAS -analyses on a sample basis is not
a realistic option, since a large number of variations can exist
for a particular type'of analysis. If the ESAT contracts were
based on the.sample instead of workyears, EPA would be incapable
of providing timely analyses for situations that do not perfectly
fit the corresponding SOW. ' These situations cannot be predicted
in advance, and numbers of non-routine SAS samples are often not
known until work begins on a site. In some cases, in which
Headquarters attempted to convert repetitive SAS analyses to
well-defined RAS analyses, the Regional demand for the RAS
service did not materialize, and the RAS service had to be
discontinued or cancelled. This situation occurred for ambient
air analyses, high concentration organics and inorganics, TCLP
13 • - ' . " '
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APPENDIX II
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organics and inorganics, and quick turnaround organics. It may,
however, be possible for a Region to provide a Region-specific
multi-site analytical service for a particular type of analysis,
in which quantities, specifications, products, packaging, demand
for the service, and delivery time frames are more defined. Such
specific information is only maintained at the Regional level.
Contrary to what was stated in the OIG draft report—^the
planning for ESAT did, not rely on justifications which were
appropriate when EPA was a new agency. EPA was a new agency in
1970, Superfund started in 1981,. and the first ESAT contracts
were awarded in 1987. The original ESAT contracts were carefully
planned and configured to complement the unique Regional
analytical service needs in the most cost-effective manner.
Consequently, the ESAT contracts are still relatively new
contracts, and any standardization of approach on the ESAT
contracts is only beginning to be realized. Extensive planning
was undertaken for the ESAT replacement contracts, which included
formation of a national workgroup of Regional and Headquarters
Project Officers, the, Contracting Officer, and Long-Term :.
Contracting Strategy representatives. The planning also involved
refining the ESAT SOW to minimize and eliminate, where possible,
potential contracting vulnerabilities that were identified during
the administration of the previous ESAT contracts. This effort
included narrowing the scope of the ESAT SOW, excluding certain
activities that may be construed as personal services or
inherently governmental, and moving certain functions off-site.
It is important to note that the ESAT replacement contracts are,
in effect, Regional contracts; each Region has tailored its.ESAT
to perform those tasks of the ESAT SOW that it desires. For
example, one Region activates the quality assurance task, but not
the analytical services task. Another Region uses ESAT primarily
for methods refinement. Some Regions use ESAT primarily to
provide on-site analyses, our EPA Regions depend on the ESAT
contracts as the primary contract mechanism for providing or
assisting in non-routine SAS analyses.
i . *. .
Regarding acquisition planning for other analytical service
sources, we continually evaluate the CLP RAS contracts to
determine if other contracting or packaging mechanisms are more
appropriate than the current system. This is a constant,
iterative process. Recently, for example, we undertook a
comprehensive study to determine if contracting mechanisms, other
than fixed price contracts, would provide the Regions with
increased flexibility in the CLP RAS. program. We are also
evaluating the feasibility of combining similar.CLP RAS services
in the same Invitation for Bid. In addition, we perform
technical evaluations; of laboratory results on quality control
and quality assurance1 samples in an effort to improve our
analytical procedures- so that they are more amenable to varying
sample matrices.
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APPENDIX II
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We disagree with the OIG draft report that states that OERR
relied primarily on decentralization as its method of acquisition
planning. Decentralization of SAS was undertaken to meet the
goals of the DAS strategy by shifting more of the responsibility
for analytical services from Headquarters to the Regions, since
the Regions are more familiar with the specific requirements of
non-routine analyses. Decentralization of ESAT would encourage
greater Regional responsibility for their on-site contrarrtor
teams, which is more difficult to provide at the national level.
Decentralization is not a goal in itself. Instead, it provides
more flexibility to the Regions, gives more Regional control and
responsibility over programs that are Regionally driven, reduces
organizational layers, minimizes, contracting vulnerabilities, and
encourages better management.
IdentifJLcation of Needs and Product Sources
In 1993, the International Association of Environmental
Testing Laboratories (IAETL) issued a comprehensive market .-survey
which is publicly available. The DAS Task Force and CLP have .
saved considerable money and time by using it in planning and in
designing its delivery of analytical services strategy. The
IAETL report describes in detail the projected analytical service
needs of EPA, other Federal agencies, and the private sector. It
also describes and identifies the current and projected community
of environmental testing laboratories which are and will be
available to meet future analytical service demand. Business
decisions regarding the CLP are made using the best information
available and are'based on a variety of sources, such as the
IAETL report. ..._'••
We disagree with the OIG draft report that the ESAT
contracts are broad, umbrella contracts. The ESAT contracts are
jfocused contracts that contain tasks that complement each other.
The ESAT contracts are used mainly to make full use of the
Regional laboratories, to conduct on-site measurements (field
analyses), and to perform quality assurance reviews of CLP RAS
and other analytical data. Furthermore, some Regions use the
ESAT contract to refine analytical methods to make them more'
amenable to various matrices. The analytical services and
quality assurance tasks are interrelated; technical personnel can
be shifted between tasks to keep the contract fully utilized at
.all times. In addition', the Regions use the ESAT contracts to
support other EPA programs, such as Toxic Substances, Solid
Waste, Water, and Air. These "buy-ins" also help to keep the
ESAT fully utilized. In the absence of national contracts for
SAS and quality assurance data review, these related tasks were
combined into the same SOW to both conserve scarce Federal
personnel resources and to fill an essential need at the Regional
level.
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We have also recognized the potential for the ESAT contracts
to expose the Agency to a risk of providing personal services and
performing inherently governmental functions. To ;address these
concerns, ESAT employees are segregated from EPA employees, and
ESAT employees wear .identification badges so that they may not be
mistaken for EPA employees. .In addition, the Contracting Officer
undertook a major on-site review of the Regional ESATs in 1992-
1993, and the ESAT SOW has been revised several times ^bo—
eliminate contracting vulnerabilities. Furthermore, costs are
decreasing as we have provided the ESAT contractor with automated
tools. One Region has estimated, for example, that utilizing the
EPA-developed Computer-Aided Data Review and Evaluation (CADRE)
program is saving the Agency about 50. percent of the ESAT level
of effort hours as compared to a full manual quality assurance
review.
We also disagree that the DAS Task Force did an inadequate
job of identifying analytical needs. The DAS Task Force amassed
an enormous amount of information over a two-year period -through
workgroup meetings, steering committee meetings, Regional:,visits,
interviews, surveys, and conference 'calls. This effort, collected
information on the current state, customer needs, future
directions, resources, vulnerabilities, and efficiencies.
Superfund's long-term needs for analytical services were
addressed by the future directions workgroup, which projected
future Superfund activities, estimated future directions in the
marketplace, and considered the impact of policy'and legislative
activities on future analytical services. The final product of '
the DAS Task Force was a framework for the delivery of Superfund
analytical services for the next decade.
* ~ ' • .
The DAS workgroup on customer needs stated.that the current
system provides a more reasonable pricing of analytical services,
that customers preferred less paperwork, that the future
analytical delivery system should be designed with more
flexibility, and that customers believed that the EPA Regional
laboratories deliver reliable analytical services.
This last finding is especially important because
elimination of' ESAT analytical services fx*om the EPA Regional
laboratory would have several adverse consequences. First, the
Regional laboratories would be underutilized, which is not cost-
effective. Second, the government would be responsible for costs
associated with additional laboratory facilities and equipment,
even though the equipment, including state-of-the-art EPA-
equipment, is already maintained in the Regional laboratories.
This may lead to situations in which EPA-owned equipment would
not be fully utilized. Third, there would be a decrease in the
amount of management of CLP and non-CLP labor that is provided by
the Region which, in turn, may increase the risk of laboratory
fraud. We would like'to stress that laboratory fraud was the
most significant •concern that was raised in the CLP FMFIA review.
i
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Fourth, performance of the ESAT analytical services task on-
site, provides EPA with instantaneous access to the raw data, and
makes falsification of data more difficult. Because the
Superfund program is an enforcement-based program, and due to
Superfund's actual experience with laboratory fraud cases, it is
imperative that the quality and integrity of analytical data not
be compromised. Fifth, having the ESAT analytical services task
on-,site allows EPA .to make course corrections during an-—
analytical project, for example, for unforeseen sample matrix
problems. Moving the ESAT analytical services task off-site
would, therefore, increase the costs to the government and'would
provide an increased risk to the government for obtaining
unusable data. So far, we have had no evidence of falsification
of laboratory data which were produced by the ESAT contractors.
The DAS Task Force gathered all the information on
analytical services support that existed, and utilized the best
information that the Agency had at that time. It should be noted
that 6AO is recommending that other agencies emulate the'CLP RAS
program of centralizing routine analyses, since it provides high
quality data at low costs and with the -least risk to the
government. , •
4 S
The OIG draft report states that OERR can benefit from
Region VII's experience with its RECAP contract. As stated
previously, the RECAP contract is still a pilot project to
determine if an alternative delivery of analytical services
mechanism can be utilized in ah efficient and cost-effective
manner.' Contrary to the OIG' s apparent favorable endorsement of
this contract,.Headquarters and interested Regions have
reservations about expanding the use of this contract type.
While the RECAP approach has advantages, especially in providing
Regional control over its analytical services, its disadvantages
include a commitment of large Federal personnel resources and a
high overhead on negotiating every delivery order. As a result,
most Regions ,ar.e reluctant to initiate this type of contract..
Region VII estimated that managing the RECAP contract required
2.7 FTE for writing the requirements, reviewing the contractor
work plans, negotiating the delivery orders, managing each
delivery order, and closing out each delivery order. Region VII
also disagreed with the options -that were cited in the draft OIG
review for specifying:work under the RECAP contract, since the
cited options would not,accomplish the major programmatic
objectives of achieving the data quality objectives of the
projects, facilitating cost recovery information, organizing
scheduling and close-out of tasks, and managing, the Region's
analytical funding. More specific^information on the RECAP
contract is maintained in Region VII. -_
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Market Surveys
In addition to the FAR requirement to conduct market
surveys, this section of the DIG draft report raised several
related issues. We disagree with the OIG draft report that
states that OERR did not implement the DAS recommendation,
presumably in the ESAT contracts, to improve flexibility in
choosing improved methods, instruments, and data handting-
systems. While the DAS Task Force did not specifically recommend
that these items be incorporated into the ESAT contracts, the
cost-reimbursable mechanism of the ESAT contracts allow for the
flexibility cited. In fact, some Regions are currently
evaluating new technologies through the ESAT contracts, including
the use of immunpassay test kits to perform site
characterizations and the use of portable gas chromatography/mass
spectrometry. Second> the ORD Environmental Monitoring Systems
Laboratory in Las Vegas assists the Superfund' program in
developing methods and evaluating new technologies. As these new
methods and technologies become standardized, they are , %.-
incorporated into the CLP RAS contracts. Third, extensive data
handling systems exist in the CLP RAS program. CLP RAS data are
evaluated for contract compliance using the Contract Compliance
Screening program, CLP RAS data are stored in a database, and the
Regions have been provided with the CADRE program to perform
quality assurance reviews of CLP RAS data. The CADRE program
also offers the Regions an ability to perform quality assurance
reviews of electronic data which are collected under their DAS
programs. Fourth, we have undertaken a major review to
streamline the data handling process by.shifting computer
programs from the EPA mainframe to PC-based systems. Finally,
the Regional DAS program provides the Regions with the
flexibility to choose new or improved methods, instruments, and
data handling systems. More specific information on Regional DAS
programs is only maintained at the Regional level.
Cost Comparisons := . .
We disagree with the OIG draft report that states that OERR
has not performed any cost comparisons between the various
delivery of analytical services mechanisms. The CLP RAS
analytical service is1 the most cost-effective analytical service
.among several governmental agencies that perform similar
analyses. It provides the least expensive price with the least
risk to the government. GAO is recommending that other
governmental agencies-adopt the same approach. We know the price
of a CLP RAS analyses on a per sample basis, as well as the
quantities, specifications, products, packaging, and delivery
time frames, but the OIG review team never asked us for this
information. As previously stated, the CLP RAS contract is a.
several-hundred page document that contains all the above product
specifications.
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The OIG draft report states that costs and other factors for
analytical service sources are not known. Several detailed
compilations of SAS utilization were provided to the Regions
between 1993 and 1994. These compilations include costs,
quantities, analytical procedures, and delivery time frames. We
have attached examples of these documents. Specific information
for the Regional DAS programs is only maintained at.the Regional
level. Although these factors, are known for past SAS "events,
requirements continually change as site conditions change and new
projects are initiated.
^
We disagree with.the OIG draft report regarding the extent
of justifications required for determining the source of
analytical services. We do know that the demand for s*ample
analyses far exceeds our in-house capacity. Consequently, the
majority of sample analyses needs to be procured via outside
sources. We have no other option. Unless there is a
Congressional mandate to convert contractor laboratory services
personnel to civil servants in order to perform in-house'"•*,.-
laboratory analyses, we will have to continue to contract for '
these analyses. The Superfund programme DAS strategy uses the
most diverse types of contracts of any program in EPA, and it
provides the flexibility that the Regions need for obtaining
special analytical services at reasonable costs. It should be
noted, however, that the recent contractor conversion initiative
in the Agency is intended for the conversion of those ESAT PTE
which are associated with potential contracting vulnerabilities
to Federal FTE. However, none of the .ESAT conversion FTE involve
laboratory functions, since these functions are not considered to
contain inherently governmental functions. Region VII has stated
that cost considerations are factored into its decision tree for
selecting its sources of analytical services, and the Region
provided the OIG review team with its Standard Operating
Procedures. More specific information on the Regional process
for selecting sources of analytical services is only maintained
at the Regional level.
We also disagree•with the OIG draft report's assertion that
there is no justification for the government to continue to
provide space and,equipment for ESAT. As we have stated before,
the equipment that ESAT uses in the Regional laboratory is not
government furnished. It is government-owned equipment, and the
Regions typically schedule it in 'specific shifts so that both EPA
and ESAT chemists can'use it at separate-times to perform
specialized analyses.' Also, the Regional laboratories have
state-of-the-art analytical equipment, which is used by Superfund
and all other statutory programs for which EPA is responsible.
EPA Regional laboratories fulfill a key role in delivering
analytical services to all EPA programs, maintaining the ability
to be smart purchasers of analytical services, providing an in-
house capability for performing enforcement-sensitive work,
maintaining in-house experience for providing Regional quality
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Page 21 of 22
assurance oversight, and addressing occasional conflict of
interest situations that may arise. The necessity of the
Regional laboratories to support EPA program offices in
regulatory development and enforcement was also documented in a
comprehensive August 10, 1994, report entitled "EPA Laboratory
Study."
Furthermore, in the CLP FMFIA review, it was recommended
that EPA consider the usefulness of Government-Owned Contractor-
Operated (GOCO) facilities to provide analytical services. . The
CLP FMFIA review specifically linked GOCOs with the proposed
decentralization of the ESAT contracts. The DAS Task Force
developed a number of options for analytical services, including
the use of GOCOs. They are generally recognized as effective and
cost-effective contract vehicles for procuring services by
governmental agencies. The DAS Task Force found, however, that
high start-up costs and long implementation time frame for GOCOs
.would be unsuitable for delivering analytical services for the
Superfund program. While the ESAT contracts are not truerGOCOs,
the contractor does use government space and equipment, and this
approach provides a cost-effective means for performing js ample
analyses under EPA oversight while greatly minimizing the
potential for fraud. "'Justification for utilizing EPA space and
equipment by the ESAT contractor is provided in the DAS, CLP
FMFIA and EPA Laboratory Study reports.
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APPENDIX III
ABBREVIATIONS
CLP Contract Laboratory Program
CMD Contracts Management Division
DAS Delivery of Analytical Services
EPA Environmental Protection Agency
ESAT Environmental Services Assistance Team
FAR Federal Acquisition Regulation
LTCS Long-Term Contracting Strategy
NAPA National Academy of Public Administration
OAM Office of Acquisition Management
OARM Office of Administration and Resources Management
OERR Office of Emergency and Remedial Response
OIG Office of Inspector General
OSWER Office of Solid Waste and Emergency Response
RECAP Regional Environmental Collection and Analysis
Program
RESAT Regional Environmental Services Assistance Team
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APPENDIX IV
DISTRIBUTION
Headquarters Office
Inspector General (2410)
Director, Resource Management Division (3304)
Headquarters Audit Followup Coordinator (1104)
Director, Facilities Management and Services Division (3204)
Associate Administrator for Regional Operations and State/Local
Relations (1501)
Headquarters Library (3401)
Director, Office of Emergency and remedial Response (5201)
Director, Hazardous Site Evaluation Division, Office of Emergency
and Remedial Response (Superfund) (5201G)
Audit Liaison, Office of Solid Waste and Emergency Response
(5101)
Director, Office of Acquisition Management (3801F)
Audit Liaison, Office of Acquisition Management (3801F)
Region Offices
Regional Administrators
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