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UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
OFFICE OF INSPECTOR GENERAL
NORTHERN DIVISION
IO W. JACKSON BLVD.. 4TH FLOOR
^ CHICAGO. ILLINOIS 6O6O4
PRO**0
OFFICE OF AUDIT OFFICE OF INVESTIGATION
312/3S3-2486 312/353-2SO7
September 29, 1989
SUBJECT: Audit Report No. E1SHG9-05-0403-9400046
Unannounced Site Audit of Removal Action
for the Enginuity, Inc. Site
Albany, Indiana
FROM: Anthony C. Carrollo
" Divisional Inspector General /for Audits
Northern Division
!
TO: Valdas V. Adamkus
Regional Administrator
Region 5
SCOPE AND OBJECTIVES
i
We performed an unannounced site audit of the removal action at
the Enginuity, Inc., site in Albany, Indiana. The purpose of the
audit was to determine the:
i
o Adequacy of directives and guidance used by
the On-Scene Coordinator (OSC) to control and
monitor the removal action;
o Adequacy of the OSC's controls for monitoring
the cleanup work and contractor costs; and
o Type and adequacy of the technical assistance
provided by the Technical Assistance Team
(TAT) contractor.
The audit was performed in accordance with the Standards for
Audit of Governmental Organizations. Programs, Activities, and
Functions issued by the Comptroller General of the United States,
and included tests of the records and other auditing procedures
we considered necessary. At the site, we interviewed the OSC and
TAT representatives, observed cleanup activities, and reviewed
pertinent logs and records. We also interviewed Superfund and
contract officials in Headquarters and Region 5 officials to
clarify provisions of the contract awarded to the cleanup
contractor. Our fieldwork was conducted from July 10, 1989
throucrh Julv 12. 1989.
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350R89032
SUMMARY OF FINDING
OSC guidance, project monitoring, and technical assistance were
generally adequate to control and monitor the removal action.
However, the contractor's labor charges to EPA improperly
included employee time spent commuting between the Enginuity,
Inc. site and home each weekend. This was due to the OSC
improperly suspending site work (demobilizing the site). This
condition occurred because contract language addressing
demobilization and weekend travel was not sufficiently clear.
The OSC concurred with the labor charges claimed by the
contractor. Consequently, EPA paid the contractor for employee
time that was not related to site cleanup activities. For
example, on one weekend, the cleanup contractor's labor charges
included $ 2,372 that consisted of 12 employees commuting 4 hours
from the site on Friday night to their homes and 4 hours for
travel back to the site on Monday morning.
We discussed this issue with contracting and Superfund officials
in Region 5 and in Headquarters. During our review, Region 5's
contracting officer took prompt action to issue a letter to the
cleanup contractor which clarified the contract. This
clarification will result in savings to the Government.
ACTION REQUIRED
In accordance with EPA Order 2750, the action official is
required to provide this office with a written response to the
audit report within' 90 days of the audit report date.
We have no objections to the release of this audit report. Should
you have any questions, please contact me or Audit Manager Robert
Bronstrup at FTS 353-2486.
BACKGROUND
Removal Actions
The Superfund program was established by the Comprehensive
Environmental Response, Compensation and Liability Act of 1980
(CERCLA), Public Law 96-510, enacted on December 11, 1980. The
Superfund program was created to protect public health and the
environment from the release, or threat of release, of hazardous
substances from abandoned hazardous waste sites and other sources
where response was not required by other Federal laws. CERCLA
was revised and expanded by the Superfund Amendments and
Reauthorization Act of 1986 (SARA), Public Law 99-499, enacted on
October 17, 1986. SARA authorized an $8.5 billion program for
the 1987-1991 period.
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To provide cleanup support, for the emergency response program,
the Agency awarded a indefinite quantity fixed rate service
contract for emergency response contract services (ERGS) to
MAECORP Inc. The MAECORP contract number 68-01-7360, effective
October 31, 1986, includes a combination of fixed labor and
equipment rates and cost reimbursable items. Actual cleanup
services are authorized only by individual delivery orders on a
case-by-case basis. ERGS allows for quantities of specified
labor and equipment.
Enqinuity, Inc.
Enginuity, Inc. is an inactive metal plating facility located in
a residential area in Albany, Indiana. The facility consists of
one large building which is divided into a nonoperating plating
section, a currently operating metal stamping operation, and a
cardboard manufacturing operation.
In April 1986, the owner of the facility ordered the operator of
the plating facility from the premise. Hazardous wastes were
left abandoned on the premises and remained prior to the start of
the removal action. Hazardous wastes abandoned at the site
consisted of large quantities of corrosive acids and reactive
chemicals, hydrochloric acids, and 30,000 gallons of cyanide
solutions, cyanide waste solids, acids and other chemicals in
open vats.
In October 1988, EPA conducted a site assessment that resulted in
the Agency initiating a Superfund removal action. The site
assessment documented the presence of 40 drums of cyanide, 10,200
gallons of cyanide solution, and 2,000 gallons of polychlorinated
biphenols. Also in October 1988, due to an immediate threat
posed by a leaking acid tank near a below ground cyanide solution
tank, EPA ordered the Potential Responsible Party (PRP) to
conduct a containment action on the leaking tanks. The PRP
complied with EPA's order. During the containment of the acid,
40 residences were evacuated by the local fire department as a
precautionary measure.
EPA officials estimated the cost to cleanup Enginuity, Inc. at
$589,100. EPA expects the cleanup to completely remove the
hazardous .substances from the site.
FINDING AND RECOMMENDATIONS
REGION S'S ERGS CONTRACT WITH MAECORP NEEDS CLARIFICATION
The cleanup contractor's labor charges to EPA improperly included
employee time spent commuting between the Enginuity, Inc.
(Enginuity) site and home each weekend due to the OSC improperly
suspending site cleanup work (demobilizing the site).
Consequently, EPA paid the contractor for employee time that was
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TRANSMITTAL SLIP
From Reference or
Collection Devt staff
to Cataloging
REFERENCE COLLECTION
GENERAL COLLECTION
EPAX COLLECTION
HAZARDOUS WASTE COLLEC^
REF GENERAL /EPAX
WATER COLLECTION
REF GENERAL EPAX
INTERNATIONAL COLLECTION
REF GENERAL EPAX
MANAGEMENT
POLLUTION PREVENTION
ADP
INITIALS
DATE
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not related to site cleanup activities. For example, on one
weekend, the cleanup contractor's labor charges included $ 2,372
that consisted of 12 employees commuting 4 hours from the site on
Friday night to their homes and 4 hours for travel back to the
site on Monday morning.
This condition occurred because the contract language addressing
"demobilization" and weekend travel for contractor employees was
not sufficiently clear. We discussed this issue with contracting
and Superfund officials in Region 5 and in Headquarters. During
our review, a Region 5 contracting officer took prompt action to
issue a letter to the cleanup contractor which clarified the
allowable costs for travel on weekends during which work is not
performed on sites.
ERGS Contract Provides For Travel
The Emergency Response Cleanup Services Contract (ERGS) with
MAECORP (contract number 68-01-7360) addresses travel provisions
for contractor workers commuting to, and from, a cleanup site.
Subparagraph A.7. of clause B.4 of the contract states:
a. On weekends during which work will not be performed
on the site, employees may travel to the company/home
base and be reimbursed for travel expenses not to
exceed the per diem cost they would have incurred had
they stayed at the site.
b. The OSC may authorize employees to travel to the
company/home base at Government expense once every
three (3) weeks. Per diem shall not be payable for
those days away from the site.
The ERGS contract states that travel expenses should be
determined in accordance with Federal Acquisition Regulations
subpart 31.205-46. This section explains travel expenses include
(1) the actual costs for transportation, not to exceed the per
diem rate established in the contract, and (2) lodging and
subsistence for each employee required on the site, if the work
site is in excess of 50 miles one way from the individuals place
of employment or residence. Travel expenses do not include labor
charges to;.travel home on weekends.
Contractor Bills EPA For Employee Time Travelling To And From The
Site
The Regional OSC demobilized Enginuity every Friday and restarted
cleanup activity on Monday morning. The OSC's decision to
suspend work was not for a technical reason that would prevent
additional field work. Our review of MAECORP records showed that
it generally claimed four hours of overtime for each employee on
Friday from the time the OSC demobilized the site. The OSC's
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work order also provided that work would restart on Monday.
MAECORP employees arrived on Monday morning generally at 10:00.
MAECORP claimed four hours of overtime for each employee prior to
cleanup actions commencing on Mondays at the site. For example
on Monday, July 10, 1989, the OSC's site log showed cleanup
activities began at 10 A.M. MAECORP records showed the following
employees overtime charges:
EMPLOYEE
1
2
3
4
5
6
7
8
9
10
11
12
HOURS WORKED-
CONTRACTOR RECORDS
12.75
13.25
12.75
12.25
5.00
12.25
12,75
12.25
12.75
12.75
12.25
13.25
HOURS WORKED-
SITEyS SIGN-IN LOG
8.75
8.75
8.25
8.25
5.00
7.75
8.25
7.75
8.25
8.25
7.75
8.75
The sign-in/sign-out sheets showed the employees actual arrival
time at Enginuity.
Under the ERGS contract, MAECORP supplies the previous day's
hours worked by its employees to the OSC. The OSC verifies the
information and prepares a daily Contractor Cost Report (EPA Form
1900-55) which identifies the labor charges that MAECORP will
bill to the Federal government as a result of services provided
at that site for that day. The OSC signs the form to confirm
that the hours of worked charged for personnel were correct.
Each month, MAECORP prepares a detailed invoice of the actual
costs incurred at the site, a copy of which is sent to the OSC.
The invoice is compared to the EPA Form 1900-55 by the OSC. The
OSC certifies the invoice except for any discrepancies which are
noted in a memorandum to EPA's Financial Management Division in
North Carolina.
We discussed how MAECORP could claim labor charges when work was
suspended on the weekend with Regional Superfund and contracting
officials. Contracting officials stated that, because the
contract language was unclear, the OSC misinterpreted which costs
were allowable when cleanup work was suspended for the weekend.
The OSC considered the decision not to have work performed on-
site during a weekend to be a demobilization. The OSC,
therefore, accepted MAECORP's labor charges for weekend travel as
allowable under the ERCS contract.
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Regional Contracting Officials Issued Contract Clarification
After we discussed the above issue with Region 5's contracting
officer, she issued, on August 11, 1989, a clarification to
MAECORP officials regarding allowable costs for travel on
weekends,when work is not performed on-site. The letter to
MAECORP's contract officer stated:
o The OSC's decision not to have work performed
on a site during a weekend is not considered
demobilization. If the OSC makes such a
decision, contractor employees may travel to
the company/home base and be reimbursed for
travel expenses in an amount not to exceed
the per diem costs they would have incurred
had they stayed at the site. Travel expenses
do not include labor charges for employees.
o In accordance with the contract, once every
three weeks, the OSC may authorize contractor
employees to travel to the company/home base.
EPA will reimburse the contractor for
employees actual travel expenses, but labor
charges remain unallowable.
On August 4, 1989, Region 5's Emergency Response Branch's (ERB)
project officer for the MAECORP contract issued a memorandum to
the OSCs regarding the rules to be followed when demobilizing
contractor personnel from a Superfund site. The memorandum
advised the OSCs:
1. When a site breaks for a weekend for the
convenience of the site personnel, contractor
personnel may travel but may not be paid
hourly rates for the travel. Travel costs
may be reimbursed up to the amount of the per
diem/lodging, but not over that amount.
2. Every third week, the OSC may authorize the
contractor personnel to travel, and
reasonable travel costs will be reimbursed by
the government, even if they are higher than
per/diem/lodging. The contractor travel hours will not
be charged.
3. Contractor travel hours can only be charged
for an actual demobilization. However,
demobilization is no longer defined loosely
as it was in the past. A site demobilization
will only occur for a technical reason, e.g.,
no field work can be carried out until the
disposal arrangements are finalized, etc. If
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work is stopped because no additional work
can be done, it is considered a
demobilization. If work is interrupted for a
holiday or a weekend, it is not
demobilization.
Recommendations
We believe the actions taken by the contracting officer and
project officer in Region 5 are appropriate and their actions
should correct the deficiency described in this report.
We recommend that the Regional Administrator:
o Require the Region 5 MAECORP contracting
officer and project officer to monitor
whether their instructions are adhered to by
the OSCs.
o Instruct regional contracting officers to
review and, if appropriate, clarify all other
ERGS contracts administered by Region 5 to
ensure that (1) suspending site cleanup work
for a weekend is not considered
demobilization, and (2) weekend travel time
by contract employees is not chargeable to
the contract.
o Advice Headquarters officials of the Office of
Administration, Procurement and Management Division,
that similar circumstances may exist under
other ERGS contracts nationwide.
Distribution
Regional Administrator (5RA)
Inspector General (A109)
Director, Financial Management (PM-226)
Comptroller (PM-225)
Agency Followup Official; Attn: Director, Resource Management
Division (PM-225)
Agency Followup Official (PM-208)
Associate Administrator, Regional Operations (A-101)
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