United States Office of the Inspector General ApH1995 Environmental Protection 401 M Street. S.W. (24211 Agency Washington, D.C. 20460 EPA's Office of the Inspector General Annual Superfund Report to the Congress for Fiscal 1994 ------- ------- EPA Office of the Inspector General Annual Superfund Report to the Congress for Fiscal 1994 FOREWORD This report covers fiscal 1994 activities, and is our eighth Annual Superfund Report to the Congress. The Superfund Amendments and Reauthorization Act of 1986 (SARA) requires the Office of the Inspector General (DIG) to audit the Superfund program annually and to report to Congress annually on these audits. i In addition to reviewing Agency performance, we also take a proactive role to help the Environmental Protection Agency (EPA) management prevent future problems. During fiscal 1994, we assisted EPA management in a number of ways. After we issued our audit report on the Agency's fiscal 1993 financial statements which found a significant weakness in recording and reconciling Superfund accounts receivable, the Agency requested our assistance in identifying unrecorded receivables. In response, we had the independent accounting firm which performed the audit perform a special analysis to identify these unrecorded receivables. This helped the Agency to reduce the number of unrecorded accounts receivable. In three EPA regions, we worked with EPA regional staff to improve management and oversight of assistance agreements. In Region 5, we worked with regional staff to develop our plans for reviewing Superfund cooperative agreements in a way that would identify systemic problems and help the Region prepare States for possible enhanced responsibilities. In Region 7, we participated in a work group on streamlining the Region's grants process and assisted in training staff of a State agency performing Superfund responses. In Region 8, we alerted management to possible problems in management of an interagency agreement that we found while performing a review of other issues. We have worked closely with the Agency on matters related to Superfund reauthorization. We reviewed EPA pilots in progress on Superfund administrative improvements and met frequently with Agency officials to discuss the results of our reviews and possible implications for reauthorization. In support of the Administration's efforts to streamline reporting, we worked with the Agency to identify ways its annual Superfund progress report to Congress could be streamlined. We also identified our own annual Superfund report to Congress, this report, as one that was largely duplicative and could be eliminated. The beginning of the Superfund program created new and unique cost accounting requirements. Although EPA has continued to improve its site-specific accounting and documentation of Superfund costs, significant weaknesses remained to be corrected. In our third review of the Hazardous Substance Superfund under the new Chief Financial Officers (CFO) Act requirements, we again disclaimed an opinion on the financial statements because of material weaknesses in EPA's financial management system and accounting controls. The primary reasons we could not determine whether the statements were fairly presented were weaknesses concerning accounting for property, accounts payable and accrued liabilities, grants funded from multiple appropriations, and State cost share credits. ------- EPA Office of the Inspector General Annual Superfund Report to the Congress for Fiscal 1994 ii Our reviews of the Agency's performance in managing the Superfund program indicated that the Agency has made significant improvements in some areas we have been reviewing for several years, but that continued effort is needed to rectify longstanding problems. In the area of contract management, we found that the Agency had improved procurement procedures to achieve full and open competition for Superfund contracts. However, we found limited competition for some major contracts with one major contractor, and little evidence of competition in this contractor's award of subcontracts. We also found that the Agency's Emergency Response Cleanup Services (ERCS) contractors' accounting and billing systems still did not meet Federal requirements, a longstanding problem. In addition, we found the Agency failed to close inactive contracts and deobligate unneeded funds in a timely manner. We worked with the Agency on two major reviews of the Agency requested by a Senate Subcommittee. Our review of the Agency's information resources management program found significant problems with the quality, integrity and completeness of data, and its usefulness in addressing cross-media pollution. The Agency's management, organizational structure, and planning functions in this area needed considerable improvement. Our review of the Agency's financial management found inconsistency in the priority Agency managers gave to this function. The Agency needed to improve its financial policies and procedures, and provide more regular training of financial management personnel. A separate review of the handling of Superfund bankruptcy settlements found problems which were partly a result of current bankruptcy laws and partly a lack of adequate controls to safeguard marketable securities. Our review of the Agency's site assessment process found EPA regions inconsistently implemented the Superfund Site Inspection Prioritization (SIP) program. EPA had not met the statutory goal for completion of site assessment and listing on the National Priorities List (NPL) within four years of site discovery. At its current rate, it would take EPA 27 years to reach NPL decisions on the 3,100 SIP sites expected to qualify for the NPL. Our major investigative effort into the Contract Laboratory Program (CLP) begun several years ago resulted in additional convictions and debarments from Federal contracts in fiscal 1994. In other Superfund investigative activity, a company was fined $1 million for offering a bribe to an EPA official. An owner of a company pleaded guilty to concealing assets from EPA in connection with his potential liability for a Superfund cleanup. A former EPA on-scene coordinator for Superfund removal actions who had repeatedly falsely represented his educational qualifications was debarred from Federal contracting for three years. We will continue to help Agency management deliver the most effective and efficient Superfund program through a comprehensive program of audits, investigations, fraud prevention, and cooperative efforts with Agency management. £ John C. Martin Inspector General ------- EPA Office of the Inspector General Annual Superfund Report to the Congress for Fiscal 1994 iii TABLE OF CONTENTS PURPOSE 1 BACKGROUND 2 ASSISTANCE TO EPA MANAGEMENT 4 HAZARDOUS SUBSTANCE SUPERFUND 7 RESPONSE CLAIMS 10 Agency Needs to Improve Efforts in Administering Response Claims Against the Superfund 10 More Than $1 Million of Marion Bragg Superfund Claim Questioned 12 COOPERATIVE AGREEMENTS 14 More Than $278,000 of Questioned Claims for Georgia Superfund Activities 14 More Than $227,000 of Ineligible Claims for Minnesota Superfund Site . . 16 REMEDIAL INVESTIGATIONS AND FEASIBILITY STUDIES 18 Lightning ROD Approach Speeded Site Response 18 Generally Thorough Remedial Planning Marred by Technical Deficiencies at Washington Site 19 Inadequate Site Characterization and Administrative Record Documentation at Pennsylvania Site 19 Remedial Planning Thorough at California Site 20 Site Characterization Needed Improvement at New Jersey Site 21 CONTRACTS 22 More Than $200 Million in Unliquidated and Excess Contract Obligations Including $143 Million in Superfund Obligations 23 Agency Strives to Achieve Full and Open Competition When Awarding Superfund Contracts 24 Most Large Contracts Awarded to ICF Had Limited Competition 25 Contractors Still Lack Adequate Accounting Systems . : 27 Conflict of Interest in EPA Region 9 Sample Analysis and Data Validation Activities 29 EPA's Conflict of Interest Policies and Procedures Needed Further Strengthening 30 Superfund Contractor Destroyed Source Documentation 31 ------- EPA Office of the Inspector General Annual Superfund Report to the Congress for Fiscal 1994 iv INTERNAL AUDITS AND SPECIAL REVIEWS 33 EPA's Information Resources Management (IRM) Program Needed Top Management Attention 33 Importance of Financial Management Viewed Inconsistently at EPA 35 Better Controls Needed to Protect Securities Received in Bankruptcy Cases 37 Greater Emphasis Needed by OSWER on Implementing the Financial Integrity Act 39 Superfund Initiatives Reduce Time and Save Money 41 Agreed Upon Improvements Could Accelerate Superfund Site Assessment and Cleanup 43 Further Steps Needed to Complete Improvements in Contract Laboratory Program 45 Laboratory Consolidation Would Improve Efficiency and Reduce Costs ... 47 INTERAGENCY AGREEMENTS 49 Agency for Toxic Substances and Disease Registry 49 U.S. Army Corps of Engineers 49 Coast Guard . . 50 Federal Emergency Management Agency 50 Department of the Interior Bureau of Reclamation 50 Department of the Interior U.S. Fish and Wildlife Service 50 Department of Justice 51 National Institute of Environmental Health Sciences 51 REVIEW OF AGENCY'S SUPERFUND PROGRESS REPORT 52 INVESTIGATIVE ACTIVITY 55 EXHIBIT 1: SUPERFUND REVIEW REPORTS ISSUED DURING FISCAL 1994 . . 58 APPENDIX: ACRONYMS AND ABBREVIATIONS 65 ------- EPA Office of the Inspector General Annual Superfund Report to the Congress for Fiscal 1994 PURPOSE We provide this report pursuant to section 111(k) of the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) of 1980, as amended. The Superfund Amendments and Reauthorization Act (SARA) of 1986 amended that section of CERCLA to add several annual requirements for the Inspector General of each Federal agency carrying out CERCLA authorities. These requirements include four audit areas and an annual report to Congress about the required audit work. This report covers fiscal 1994 audits of Superfund activities. We discuss the required four audit areas below. This report contains chapters on the mandated audit areas, except claims. We also summarize other Superfund audit work, assistance to EPA management and Superfund investigative work performed during fiscal 1994. We exceed the statutory requirements by providing Congress with the significant results of all of our Superfund work. i Trust Fund CERCLA requires "... an annual audit of all payments, obligations, reimbursements, or other uses of the Fund in the prior fiscal year . . .." We now meet this requirement through the financial statement audit required by the Chief Financial Officers Act of 1990. Claims CERCLA requires an annual audit to assure "... that claims are being appropriately and expeditio'usly considered ..." Since SARA did not include natural resource damage claims as allowable Fund expenditures, the only claims provided in CERCLA, as amended, are response claims. Cooperative Agreements CERCLA requires audits "... of a sample of agreements with States (in accordance with the provisions of the Single Audit Act) carrying out response actions under this title ..." We perform financial and compliance audits of cooperative agreements with States and political subdivisions. Some of our audits also review program performance. In addition, we sometimes review EPA regional management of the cooperative agreement program. Remedial Investigations/Feasibility Studies (RI/FS) CERCLA requires our "... examination of remedial investigations and feasibility studies prepared for remedial actions ..." Our RI/FS examinations review the adequacy of the studies to provide a sound technical basis for remedial action decisions. These examinations may be done as part of audits of EPA management or as special reviews by our technical staff. ------- EPA Office of the Inspector General Annual Superfund Report to the Congress for Fiscal 1994 BACKGROUND The Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA), Public Law 96-510, enacted on December 11, 1980, established the "Superfund" program. The purpose of the Superfund program is 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 other Federal laws do not require response. CERCLA established a Hazardous Substance Response Trust Fund to provide funding for responses ranging from control of emergencies to permanent remedies at uncontrolled sites. CERCLA authorized a $1.6 billion program financed by a five-year environmental tax on industry and some general revenues. CERCLA requires EPA to seek response, or payment for response, from those responsible for the problem, including property owners, generators, and transporters. The Superfund Amendments and Reauthorization Act of 1 986 (SARA), Public Law 99-499, enacted October 17, 1986, revised and expanded CERCLA. SARA reinstituted the environmental tax and expanded the taxing mechanism available for a five-year period. It authorized an $8.5 billion program for the 1987-1991 period. It renamed the Trust Fund the Hazardous Substance Superfund. The'Budget Reconciliation Act of 1990 reauthorized the program for three additional years and extended the taxing mechanism for four additional years. The basic regulatory blueprint for the Superfund program is the National Oil and Hazardous Substances Contingency Plan (NCP), 40 CFR Part 300. The NCP was first published in 1968 as part of the Federal Water Pollution Control Plan, and EPA has substantially revised it three times to meet CERCLA requirements. The NCP lays out two broad categories of response: removals and remedial response. Removals are relatively short-term responses and modify an earlier program under the Clean Water Act. Remedial response is long-term planning and action to provide permanent remedies for serious abandoned or uncontrolled hazardous waste sites. CERCLA recognized that the Federal Government can only assume responsibility for remedial response at a limited number of sites representing the greatest public threat. Therefore, EPA must maintain a National Priorities List (NPL), and must update it at least annually. The NPL consists primarily of sites ranked based on a standard scoring system, which evaluates their threat to public health and the environment. In addition, CERCLA allowed each State to designate its highest priority site, without regard to the ranking system. CERCLA section 104(c)(3) does not allow EPA to fund remedial actions unless the State in which the release occurs enters into a contract or cooperative agreement with EPA to provide certain assurances, including cost sharing. At most sites, the State must pay 10 percent of the costs of remedial action. EPA may fund 100 percent of site assessment activities (preliminary assessments, site inspections), remedial planning (remedial investigations, feasibility studies, remedial designs), and removals. For facilities operated by a State or political subdivision at ------- EPA Office of the Inspector General Annual Superfund Report to the Congress for Fiscal 1994 the time of disposal of hazardous substances, the State must pay 50 percent of all response costs, including removals and remedial planning previously conducted. CERCLA sections 104(c)(3) and 104(d) authorize EPA to enter into cooperative agreements with States or political subdivisions to take, or to participate in, any necessary actions provided under CERCLA. A cooperative agreement serves to delineate EPA and State responsibilities for actions to be taken at the site, obtains required assurances, and commits Federal funds. EPA uses cooperative agreements to encourage State participation in the full range of Superfund activities - site assessment, remedial, removal and enforcement. ------- EPA Office of the Inspector General Annual Superfund Report to the Congress for Fiscal 1994 ASSISTANCE TO EPA MANAGEMENT Besides performing audits and investigations, the OIG responds to EPA management requests for OIG input in the development of regulations, manuals, directives, guidance and procurements. These are proactive efforts to prevent problems that might later result in negative audit findings or investigative results. The OIG reviews and comments on draft documents prepared by Agency offices. Sometimes an OIG staff person attends meetings of an EPA work group to provide input. Fiscal 1994 was an active year for OIG preventive assistance to EPA management in the Superfund area. Besides helping EPA management, we coordinate with other Federal agencies. We also seek to improve Superfund audit and investigative capabilities of our OIG and of other Federal OIGs. We summarize below some of the major activities in these areas. We also responded to numerous requests for assistance from the Agency which did not develop into major projects. Streamlining of Reporting to Congress We share the Administration's concern to reduce resources devoted to duplicative, excessive or unneeded reporting requirements. EPA is required to report annually to Congress on its progress in implementing Superfund. The reporting requirement is extensive, and EPA has never been able to provide the report to Congress as soon as the law requires. We are required to review this report for reasonableness and accuracy, and the Agency is required to include our report on this review in its report. During fiscal 1994, OIG staff worked closely with Superfund program staff on possibilities during Superfund reauthorization to streamlining this report to save staff resources, while providing the Congress with needed information on a more timely basis. We also have identified our own annual Superfund report to Cpngress as one that could be eliminated. Virtually all of the information of value to Congress in this report is duplicative of information already provided in our Semiannual Reports to Congress. Financial Management Our audits of EPA's financial statements found a significant weakness in recording and reconciling Superfund accounts receivable. The Agency reported this to the President as a material weakness. EPA requested the OIG to perform additional audit work to identify Superfund accounts receivable that were unrecorded as of September 30, 1993. In response, we had the independent accounting firm with which we contracted to perform the fiscal 1993 financial statements audit perform a special analysis to identify unrecorded receivables. We concluded that all of these receivables would have been identified and recorded if existing procedures to reconcile between the Department of Justice and EPA's Integrated Financial Management System (IFMS) had been performed. We therefore planned to request management representation letters from Financial Management Officers and Regional Counsels attesting to their compliance with the procedures to support future audit opinions on EPA's financial statements. The Agency's Comptroller ------- EPA Office of the Inspector General Annual Superfund Report to the Congress for Fiscal 1994 5 requested all EPA Regions to perform the necessary accounts receivable reconciliations and to follow up on unreconciled items. Administrative Improvements We reviewed the Agency's Superfund Administrative Improvements pilots as they were being performed to assist the Agency in improving the Superfund process and to coordinate with the program regarding Superfund reauthorization issues. We performed these reviews as special reviews rather than full audits in order to provide the Agency with quicker feedback. During the course of this effort, we met frequently with Agency officials to brief them on what we were finding and to discuss with them ways to enhance their improvement efforts. Contract Management We actively participate in the Agency's Superfund Senior Regional Management Acquisition Council (SRMAC), which includes senior representatives of EPA Headquarters and regional program and contract management staff. SRMAC meetings provide a forum for participants to learn from each other, and to share success stories and good ideas. Discussions cover such issues as standardization of user guides, evaluation of future contract needs, and Agencywide issues. We discuss reports we have recently issued and their effect on Superfund procurement and contract management. We review the recommendations and programmatic impacts of their implementation. We encourage EPA officials to give us feedback on the impact our recommendations have on their day-to-da'y operations. Regional Management of Assistance Agreements In several EPA regions, our field offices worked with regional staff to improve management and oversight of assistance agreements. We worked with Region 5 Superfund staff to develop an overall plan for reviewing its Superfund cooperative agreements that would identify common systemic problems and help the Region prepare States for possible enhanced responsibilities as a result of Superfund reauthorization. We participated in a Region 7 work group devoted to improving and streamlining the Region's grants process while maintaining adequate controls. We also participated with Region 7 grants administration personnel in training program and accounting personnel of the Missouri Department of Natural Resources. We alerted Region 8 management to indicators of possible problems in Superfund site management under an interagency agreement with another Federal agency. As a result, the Region began a review of controls under the agreement to ensure accountability, responsibility, and trackability. Coordination with Other Agencies > Since EPA manages the Hazardous Substance Superfund (Trust Fund), the EPA OIG took on the task of informing the Federal OIG community (and other appropriate audit organizations) of the mandated audit requirements. The Superfund Amendments and Reauthorization Act of 1986 (SARA) requires "... the Inspector General of each department, agency or instrumentality of the United States which is carrying out any authority ..." under SARA to conduct an annual audit of uses of the Superfund. In July 1987, we formed a work group of ------- EPA Office of the Inspector General Annual Superfund Report to the Congress for Fiscal 1994 6 representatives from several OIGs and other audit organizations of those Federal departments or agencies with significant Fund-financed responsibilities under CERCLA or Executive Order 12580. The objectives of our work group are to: • Clarify the statutory requirement; • Coordinate schedules and reports under the mandatory annual audit requirement; • Discuss funding mechanisms for the mandatory audit work; and • Discuss program areas of concerns or audit findings. There was no need for a formal meeting of the work group in fiscal 1 994 due to anticipated reauthorization. However, we did assist other OIGs and audit agencies upon request. For example, we provided the Department of Defense DIG with information to assist in their audit planning. We also have considerable contact with the General Accounting Office to coordinate Superfund audit work. In fiscal 1994, this included a major meeting to discuss audit priorities and reviews in progress, and numerous telephone contacts. Superfund Orientation Course As the Superfund program has expanded and developed, the OIG has recognized a need to be sure that its auditors and investigators who review Superfund have a good understanding of the program. Therefore, we developed a special orientation course explaining the key aspects of the Superfund program, including: • Superfund and related legislation and regulations; • The removal, remedial and enforcement parts of the Superfund program; • Organizational structure and functions of EPA offices delegated specific Superfund responsibilities; and • The OIG's role and responsibilities concerning Superfund and the type of Superfund audits the OIG performs. We require all OIG employees and OIG audit services contractor employees performing Superfund audits to take this course. We also offer the course to other Federal OIGs and audit organizations who perform audits, in their own agencies. We include the course in the OIG Training and Development Sourc'es course catalog. In fiscal 1994, we updated the course and presented it twice. ------- EPA Office of the Inspector General Annual Superfund Report to the Congress for Fiscal 1994 HAZARDOUS SUBSTANCE SUPERFUND The Chief, Financial Officers (CFO) Act of 1990 requires Federal agencies to prepare annual financial statements covering their trust funds, revolving funds and commercial activities. Fiscal 1994 was the third year EPA was required to prepare audited financial statements. For EPA, the largest activity requiring an annual financial statement is the Hazardous Substance Superfund. The CFO Act also requires audits of the financial statements by the OIG or an independent public accounting (IPA) firm selected by the OIG. The EPA OIG's requirement to audit EPA's financial statements also meets our CERCLA requirement to audit annually the Superfund, which we previously called our Trust Fund audit. The summary below of our fiscal 1994 financial statement audit concentrates on. findings related to the financial statements of the Hazardous Substance Superfund. FURTHER IMPROVEMENTS IN FINANCIAL REPORTING NEEDED Findings in Brief During fiscal 1994, the Agency continued to make improvements in its financial systems and processes. However, additional improvements are needed before an opinion can be rendered on the Agency's Superfund financial statements. We Found That We could not determine if the Superfund financial statements were fairly presented primarily because of weaknesses in accounting for property, accounts payable and . accrued liabilities, grants funded from multiple appropriations, and Superfund State cost share credits. We summarize below our findings on internal controls. Financial Reporting. The Agency's financial activities could be more effectively managed if additional information was available, and if available information was provided in more useful formats and was better used to analyze the Agency's financial activity. Lack of adequate information and reports resulted in Agency officials being unable to effectively monitor some asset and liability accounts. In some cases, to obtain information needed in a timely manner, Agency officials operated systems that required them to enter information already in the Agency's Integrated Financial Management System (IFMS). Property. The procedures used to capitalize property did not identify all property that should have been capitalized and when property was taken out of service it was not deleted from the accounting records. Therefore, we were unable to determine if the Agency's property balances reported in the financial statements ($11.7 million for Superfund) were fairly presented. Accounts Payable and Accrued Liabilities. We identified a net understatement of $219,763 in accounts payable and accrued liabilities that affected the Superfund. This misstatement was caused in part by problems with the accuracy and timeliness of data from a tracking system used by two of the Agency's finance offices. In addition, we found that 17 out of 56 Superfund accounts payable/ ------- EPA Office of the Inspector General Annual Superfund Report to the Congress for Fiscal 1994 8 accrued liability accounts had a debit balance when they should have had a credit or zero balance. Grant Payments. The Agency processed disbursements for multi-funded assistance agreements using a first-in/first-out method, i.e., the oldest available funding was used first. This method could result in a misstatement of expenses during the fiscal year among the Agency's appropriations. Accounts Receivable. Emphasis by Agency management on recording receivables, and work performed by the independent public accounting firm under contract to the OIG, succeeded in reducing the number of unrecorded accounts receivable. We did identify: (1) two receivables totaling $4.7 million that were not initially recorded in the fiscal 1994 financial statements, (2) an understatement of $346,701 in the allowance for doubtful accounts, and (3) $4.7 million of marketable securities accepted in settlement of existing accounts receivable that had not been recorded. Superfund State Cost Share Credits. When EPA takes the lead in cleaning up a site, it enters into a contract with the State for the State to share in the cost of the cleanup. Rather than make payments to EPA for their share of cleanup costs, States can receive credits for amounts they incurred for remedial actions prior to entering into a contract with EPA. These credits were not being recorded in IFMS. We identified $1.4 million in such credits that were not recorded. Tests of compliance with laws and regulations. We did not identify any instances of noncompliance with laws and regulations that would materially affect the financial statements. However, as we have reported in previous audit reports, the Agency had not allocated certain support costs to the Superfund Trust Fund because budgetary ceilings had been reached. The Agency has requested the Office of General Counsel provide an opinion on whether this is proper. We Recommended That The Chief Financial Officer: • Provide finance offices with general ledger reports by office and hold them accountable for the accuracy of their account balances. • Revise the Agency's capitalization polices and procedures to assure that disbursements necessitating capitalization are being identified and properly capitalized. • Determine why liability accounts had debit balances and make any necessary adjustments to the account balances. • Require a clause in assistance agreements funded from more than one appropriation that specifies how the payments should be charged to the various appropriations. If certain work can only be paid for from a specific appropriation, the clause should require the grant recipient to include accounting information with each payment request. ------- EPA Office of the Inspector General Annual Superfund Report to the Congress for Fiscal 1994 • Provide guidance to finance offices on the need to: (1) notify Headquarters finance officials if receivables are identified after the close of the year, so adjustments can be made to the financial statements; and (2) identify potentially uncollectible receivables and include these receivables in the calculation of the allowance for doubtful accounts. • Develop procedures for recording Superfund State cost share credits in IFMS and assure that credits are properly recorded. What Action Was Taken In responding to our draft report, the CFO indicated: • EPA would provide general ledger reports by accounting point to enable resolution of errors in account balances. • EPA had formed a Quality Action Team to review current policies and procedures, and develop a plan to resolve reconciliation problems between the Agency's financial accounting and property accountability systems. Also, the Agency would issue revised property policies and procedures. • One of the two finance offices with problems with its accruals would not use its fiscal 1994 process again, and the other was conducting a revieyv of the issue. • EPA had analyzed the problems with debit balances in liability accounts and would make needed corrections. • EPA would prepare a policy on how payments are to be charged to grants funded from multiple appropriations. • EPA would include special steps in the fiscal 1995 year-end instructions to improve accounting for receivables. • EPA would identify existing State credits and determine whether additional guidance on State credits is needed. The final report (5100192) was issued to the CFO on February 28, 1995. A response to the final report is due by May 30, 1995. ------- EPA Office of the Inspector General Annual Superfund Report to the Congress for Fiscal 1994 10 RESPONSE CLAIMS Section 111(a)(2) of CERCLA, as amended by SARA, authorizes EPA to pay any claim for response costs incurred by "any other person" as a result of carrying out the NCR. Additionally, section 122(b)(1) of CERCLA, as amended by SARA, authorizes the President to reimburse Potentially Responsible Parties (PRPs) for "certain costs of actions under the agreement that the parties have agreed to perform but which the President has agreed to finance." This authority was delegated to the EPA under Executive Order 12580, January 26, 1987, and further delegated to EPA's Office of Solid Waste and Emergency Response (OSWER). Authority for decisions regarding claims against the Fund is currently delegated to the Director, Office of Emergency and Remedial Response. During fiscal 1994, we issued a follow-up report on our September 1992 review of the response claims process and a report on a claim for the Marion Bragg Dump site. We summarize these reports below. AGENCY NEEDS TO IMPROVE EFFORTS IN ADMINISTERING RESPONSE CLAIMS AGAINST THE SUPERFUND Findings in Brief While EPA had made efforts to implement some of the recommendations in our 1992 report, some corrective actions had not been implemented or had not corrected the deficiencies we noted in 1992. All six EPA regions with preauthorized mixed funding sites had been late in billing potentially responsible parties (PRPs) for oversight costs. Commitment and obligation information for two sites was still missing from the Integrated Financial Management System (IFMS). Two needed guidance documents had still not been finalized. Previous Problems and Findings Our September 1992 report concluded that there were serious problems in EPA's handling of response claims against the Superfund. We reported that significant internal control weaknesses resulted in about $35 million of commitments and obligations not being properly recorded, or not being recorded. Also, EPA paid $2.8.million for the first preauthorized response claim (for the MOTCO site in Texas) without adequate-assurance that all reimbursed costs were eligible and that the PRP complied with the settlement agreement. Finally, EPA did not bill PRPs for costs associated with the MOTCO site in accordance with the Consent Decree, so EPA did not collect about $1.1 million for oversight work performed by EPA and its contractors. Follow-up Findings While EPA had made efforts to implement some of our previous recommendations, some corrective actions agreed to in the Agency's action plan had either not been implemented or had not corrected the deficiencies noted in our 1 992 report. ------- EPA Office of the Inspector General Annual Superfund Report to the Congress for Fiscal 1994 11 All six EPA regions with preauthorized mixed funding sites were from one month to two years late in their billings for oversight costs. Four of the regions made their billings current before we began our review, but Regions 3 and 6 were still not current at the time of our review. The Agency continued to experience difficulties in ensuring that commitment and obligation information for these sites was entered into IFMS. The responsible officials did not notice that two sites were missing from IFMS because periodic reviews of preauthorized mixed funding site information covered only information from the prior month, rather than all prior information. Finally, two separate guidance documents on the commitment and obligation of funds that the Agency had agreed to finalize by December 31, 1993, continued to be in draft. The Agency advised us that both would be finalized by December 31, 1994, a year later than the original plan. Follow-up Recommendations We recommended that the Assistant Administrator for Solid Waste and Emergency Response direct the Office of Emergency and Remedial Response to: • Continue its efforts to finalize and issue procedures for the timely commitment and obligation of funds. • Ensure that the missing obligations for the two preauthorized mixed funding sites are recorded in IFMS, and review financial reports for past as well as present status of obligations. • Modify the Office of Regional Counsel perfection form to ensure that PRP compliance with the Consent Decree includes timely payment of any billed oversight costs. • Work with the Office of Enforcement and Compliance Assurance to provide for an offset provision (reimbursements to PRPs against monies owed to the Agency) in the consent decrees for preauthorized mixed funding sites. We also recommended that the Assistant Administrator for Administration and Resources Management direct the Office of the Comptroller to continue its efforts to finalize and issue Resources Management Directive System Chapter 11 on response claims. We further recommended that the Assistant Administrators for Administration and Resources Management, Enforcement and Compliance Assurance, and Solid Waste and Emergency Response direct all regions to ensure PRPs are sent current and accurate oversight cost billings before any PRP claims are paid at preauthorized mixed funding sites. ------- EPA Office of the Inspector General Annual Superfund Report to the Congress for Fiscal 1994 12 What Action Was Taken The final report (4400091) was issued to the Assistant Administrator for Solid Waste and Emergency Response and the Assistant Administrator for Administration and Resources Management on July 29, 1994. The Office of Solid Waste and Emergency Response (OSWER) responded on behalf of all involved Offices on November 21, 1994. The Agency indicated it would: • Issue final guidance on procedures for the timely commitment and obligations of funds. • Would provide account information for the two missing sites for IFMS. • Modify the Office of Regional Counsel perfection form to specify that compliance with the Consent Decree includes the payment of EPA's billed oversight costs. • Include a provision suggesting an offset in the payment of eligible claims based on outstanding, billed oversight costs in OSWER guidance, and consider including such a provision in Office of Enforcement and Compliance Assurance guidance. • Finalize and issue Resources Management Directive System Chapter 11 on response claims. • Issue a memorandum encouraging the regions to ensure current and accurate oversight cost billings before any PRP claims are paid at preauthorized mixed funding sites. MORE THAN $1 MILLION OF MARION BRAGG SUPERFUND CLAIM QUESTIONED Findings in Brief The Marion Bragg Potentially Responsible Party (PRP) Group claimed $1,079,410 of ineligible, unsupported, and unreasonable costs related to its hazardous waste cleanup. Through the combined effort of Agency officials and the OIG, EPA adjusted the claim and authorized payment to the PRPs. Background On September 30, 1987, the Regional Administrator, Region 5, signed a Record of Decision for the Marion Bragg Dump site, determining that the site was in need of remediation. EPA then reached agreement with the principal PRPs to fund the remediation of the site, with EPA reimbursing the PRPs 25% of the costs at the completion of remediation, with a maximum reimbursement ceiling of $1,775,000. ------- EPA Office of the Inspector General Annual Superfund Report to the Congress for Fiscal 1994 13 We Found That The PRPs submitted a claim for $7,563,838, and requested reimbursement for the maximum allowable amount of $1,775,000. We audited the claim and questioned costs of $1,079,410, including: '• $607,820 of unsupported project management costs because the PRPs did not procure the services using competitive bid procedures. • $224,250 of ineligible weather delay claims not allowable under the construction contractor's contract. • $117,148 of unreasonable project costs related to excessive markups. As a result, we recommended that the PRPs be reimbursed $1,621,107 of the claimed amount, $153,893 less than originally sought. We Recommended That The Director, Office of Emergency and Remedial Response, adjust the claim downward for the ineligible costs of $251,967 ($62,992 Federal share) and for the unreasonable costs of $201,855 ($50,464 Federal share). We also recommended that the Director require the PRPs to provide sufficient documentation to support the $625,588 ($156,397 Federal share) questioned as unsupported or recover these costs. What Action Was Taken The final report (4400065) was issued to the Director, Office of Emergency and Remedial Response, Office of Solid Waste and Emergency Response on May 24, 1994. On June 28, 1994, the Director authorized payment of the claim in the amount of $1,671,857. We concurred with EPA's action, and closed this report in our audit tracking system on September 19, 1994. ------- EPA Office of the Inspector General Annual Superfund Report to the Congress for Fiscal 1994 14 COOPERATIVE AGREEMENTS In fiscal 1994, we issued 12 audit and special review reports on Superfund cooperative agreements, and also a report on regional management of Superfund cooperative agreements. The combined financial results of the reviews of Superfund cooperative agreements were as follows: FINANCIAL RESULTS OF Fl COOPERATIVE AGREEME . Amount audited Ineligible costs1 Unsupported costs2 Unnecessary/unreasonable costs3 SCAL 1994 SUPERFUND [NT REVIEW REPORTS _ ^^== ^^_— — j^—^-^— -— Federal Share $93,613,295 588,946 123,309 0 i^^^^HM^HW^^^HH^HHHi^^^^B^BH^^^^^B Total Costs $97,261,300 606,817 127,730 0 1 . Costs questioned because of an alleged violation of a provision of a law, regulation, contract, grant, cooperative agreement or other agreement or document governing the expenditure of funds. 2. Costs questioned because, at the time of the audit, they were not supported by ade- quate documentation and/or had not been approved by responsible program officials. 3. Costs questioned because they were not necessary or not reasonable. We summarize two significant Superfund cooperative agreements audits below. MORE THAN $278,000 OF QUESTIONED CLAIMS FOR GEORGIA SUPERFUND ACTIVITIES Findings in Brief The Georgia Department of Natural Resources (GDNR) did not properly account for labor costs or track costs by site as required by EPA regulations. We questioned $278,756 of the costs claimed for three Superfund Cooperative Agreements. Background EPA awarded GDNR three Superfund cooperative agreements with potential costs of more than $2.1 million to develop and implement management and administration activities needed for a Superfund core program, to participate in site inspection activities, and to provide technical review of documents associated with Superfund remedial activities. Each of the cooperative agreements had been amended to extend the project period and increase EPA funds. ------- EPA Office of the Inspector General Annual Superfund Report to the Congress for Fiscal 1994 15 We Found That GDNR had major weaknesses in internal controls and did not comply with EPA regulations and cooperative agreement conditions in the areas of labor charging, timekeeping, record retention, and site-specific accounting. Labor costs were frequently charged to the wrong cooperative agreement and supervisory reviews of time sheets were inconsistent. GDNR destroyed supporting cost records even though the State had been cautioned in a 1990 audit that Superfund regulations require such records to be retained for 10 years. GDNR was not tracking costs or making letter-of-credit drawdowns by site as required because they were not maintaining a recordkeeping system that enabled site-specific costs to be tracked. In total, GDNR claimed $251,876 of ineligible costs under the cooperative agreements, including personnel and fringe benefit costs associated with mischarged labor, and training and vehicle costs which were not related to the cooperative agreement. An additional $26,880 of costs were questioned as unsupported due to the premature destruction of supporting documentation on personnel, fringe benefit, travel and equipment costs. We Recommended That The Acting Assistant Regional Administrator for Policy and Management, Region 4, disallow the questioned costs and require GDNR to: • Develop and implement specific policies, procedures and controls to make sure all personnel costs are fully documented and properly allocated; • Establish formal written timekeeping policies and maintain time sheet documentation in accordance with applicable regulations; and • Provide written assurance that it will comply with regulatory requirements on record retention. What Action Was Taken The final report (4100496) was issued to the Acting Assistant Regional Administrator for Policy and Management, Region 4, on August 22, 1994. In response to our draft report, GDNR generally agreed with our findings and recommendations and provided substantive planned or already initiated actions to correct the identified weaknesses. Region 4 issued a Final Determination Letter to GDNR on March 27, 1995, disallowing $256,825 ($244,645 Federal share), including all of the costs we had questioned as ineligible. The Region also required GDNR to submit their revised procedures for various areas of internal control weaknesses we had identified. ------- EPA Office of the Inspector General Annual Superfund Report to the Congress for Fiscal 1994 16 MORE THAN $227,000 OF INELIGIBLE CLAIMS FOR MINNESOTA SUPERFUND SITE Findings in Brief The Minnesota Pollution Control Agency (MPCA) had weak internal controls over personnel and contractor costs, and did not comply with procurement laws and regulations. As a result, we questioned $227,584 of the costs claimed for the Ritari Post and Pole site under a Superfund cooperative agreement. Background MPCA is responsible for managing remedial activities at selected Superfund sites under EPA's CERCLA authority. In 1987, a Superfund multi-site cooperative agreement was amended to provide funding of $234,005 for the Ritari Post and Pole site with two-year budget and project periods. Six additional amendments increased the award to $942,963 and extended the budget and project periods to September 30, 1995. We Found That MPCA had significant weaknesses in internal controls in the areas of leave allocation, contractor rate increase approvals, contractor indirect cost rate reviews, contractor invoice support, and time sheet reviews. We found that leave allocation procedures did not equitably distribute leave because the distribution was based upon a percentage of the quarterly budgeted time allocated for Federal and State projects, and MPCA employees were not consistently following leave allocation procedures. Contractor rate increases were approved by MPCA in excess of contract limits and without a thorough cost analysis or supporting cost documentation. The process used to review and approve indirect costs and associated rate increases did not assure that these rates were accurate, allowable, and sufficiently justifiable. Under a cost reimbursement type contract, MPCA permitted its contractor to submit supporting documentation for its invoices on an inconsistent basis, and never examined contractor time sheets to determine whether labor charges were appropriate. MPCA did not comply with regulations and cooperative agreement conditions on contract procurement and site management. MPCA awarded a full scope contract to a company that submitted only a limited scope proposal. MPCA also improperly changed the scope of the cooperative agreement by adding more tasks to it without obtaining approval from the EPA project officer. As a result, we found $227,584 ineligible out of $942,959 total claimed costs. ------- EPA Office of the Inspector General Annual Superfund Report to the Congress for Fiscal 1994 17 We Recommended That The Regional Administrator, Region 5: • Ensure MPCA implements its planned corrective actions to improve internal controls. • Clarify with MPCA that all work plans and reports are to be submitted to the EPA project officer. • Recover the questioned costs of $227,584. What Action Was Taken MPCA agreed to take corrective action for all identified weaknesses in internal controls and disagreed with our conclusions regarding compliance and questioned costs. The final report (4100488) was issued to the Regional Administrator, Region 5, on August 15, 1994. In its November 9, 1994, response to the final report, the Region .indicated it was assisting MPCA to improve its controls and train its staff. The Region also indicated it would clarify responsibilities of its own staff. The Region required MPCA to repay $148,587 of the questioned costs. While we disagreed with the Region's decision not to require repayment of $29,461 of State costs associated with monitoring work outside the contract scope, we felt the issue was not significant enough for us to appeal. As a result, we closed this audit in our tracking system. ------- EPA Office of the Inspector General Annual Superfund Report to the Congress for Fiscal 1994 18 REMEDIAL INVESTIGATIONS AND FEASIBILITY STUDIES In fiscal 1994, we issued five technical reports on remedial investigation/feasibility study (RI/FS) activities covering six sites. The reports covered the American Creosote, Louisiana, Popile, Arkansas, Frontier Hard Chrome, Washington, Palmerton Zinc, Pennsylvania, Purity Oil, California, and Vineland Chemical Co., New Jersey sites. The OIG Engineering and Science Branch conducted these reviews. The reports contained no recommendations, and required no response from the Agency. We summarize these reviews below. LIGHTNING ROD APPROACH SPEEDED SITE RESPONSE Findings in Brief Use of the Lightning ROD (Record of Decision) approach significantly speeded remedial planning and the initiation of remedial action at two sites in Region 6. • Background The American Creosote site is a former wood treating facility located in central Louisiana. The Popile site is an inactive wood preserving facility located near El Dorado, Arkansas. Remedial planning activities for the American Creosote site and the Popile site were performed as part of a pilot program. Both sites were referred to as Lightning ROD pilots. The goal of the Lightning ROD approach was to reduce the time required to complete remedy selection and initiate remedial action. The Lightning ROD pilot projects were also intended to demonstrate the use of "presumptive remedies" at wood treating facilities and landfills. We Found That Region 6 accomplished streamlining and acceleration of remedial planning and remedy selection activities for the pilot projects with only minor adverse effects. Remedial planning and initiation of remedial action at these pilot projects were achieved significantly faster than was routinely experienced. Program staff advantageously used information resulting from earlier characterization efforts and from remedial actions performed at other wood treating sites. Obtaining performance-related information on bioremediation late in the selection process lessened its value. The innovative field analysis techniques used to facilitate rapid collection, validation, and interpretation of data did not work as expected. Consequently, some useful information may not have been collected or properly used. Preplanning efforts were not adequate to fully integrate prior removal actions at these sites with subsequent remedial planning activities. Better coordination could have hastened site characterization and assisted in streamlining the RI/FS and remedial design planning process. ------- EPA Office of the Inspector General Annual Superfund Report to the Congress for Fiscal 1994 19 Concurrent, rather than sequential, execution of remedial investigation, feasibility study, and remedial design activities at wood treating sites can be expected to improve overall project performance. Ongoing communication among regional decision team members is an important element in the success of concurrent activities. In addition, if site activities performed by either the removal or remedial programs are to serve the needs of the other, the differing objectives and requirements of each program must be recognized andoaddressed. For example, inconsistent quality control requirements are an avoidable constraint on the use of field data. GENERALLY THOROUGH REMEDIAL PLANNING MARRED BY TECHNICAL DEFICIENCIES AT WASHINGTON SITE Findings in Brief The remedial planning activities at the Frontier Hard Chrome site in Vancouver, Washington were generally thorough and consistent with requirements of the National Contingency Plan (NCP). However, there were technical deficiencies in remedial planning methodology and presentation for both RODs for the site. We Found That While remedial planning was generally thorough and consistent with NCP requirements, we also noted some technical deficiencies, including: • Several potential contaminant source areas in the vicinity of the site described in Administrative Record documents were not sufficiently investigated as part of the Rl. The nature, extent, and significance of contamination at these potential sources should have been established. • Presentation in the Rl report of the highest reported chromium levels in groundwater at the site was based on improperly commingling data from two wells screened at different hydrostratigraphic zones. Although this deficiency did not appear to significantly affect the remedy selection process, the method of data presentation used for one monitoring well could lead to incorrect conclusions regarding contaminant levels and trends within the alluvial aquifer. INADEQUATE SITE CHARACTERIZATION AND ADMINISTRATIVE RECORD DOCUMENTATION AT PENNSYLVANIA SITE Findings in Brief Inadequate preplanning, site characterization, and remedial alternatives analyses resulted in ineffective remedial planning at the Palmerton Zinc site in Palmerton, Pennsylvania. The public's ability to effectively participate in the remedial planning process was limited by an inadequate Administrative Record. ------- EPA Office of the Inspector General Annual Superfund Report to the Congress for Fiscal 1994 20 We Found That The Administrative Record contained inadequate documentation to demonstrate that sufficient preplanning was performed to fully address contamination in the vicinity of the Town of Palmerton. Remediation boundaries were not specified, and site activities did not seem to address all impacted areas. This contributed to the deficiencies in the remedial planning process we observed. There was inadequate characterization of the Cinder Bank with respect to contaminants, internal fires, and stability. The remedial alternatives analysis for the Cinder Bank Operable Unit could not be effectively conducted due to a lack of sufficient information. Remedial alternatives analyses did not adequately address implementation and effectiveness criteria for several remedial alternatives. As a result, the reduction in risk to human health, the costs for implementing several of the remedial alternatives, and the technical feasibility of several alternatives were uncertain. The Administrative Record was missing critical decision documents, and its usability was diminished because of insufficient indexing of the contents. These deficiencies limited the public's ability to effectively participate in the remedial planning process. REMEDIAL PLANNING THOROUGH AT CALIFORNIA SITE Findings in Brief The remedial planning activities at the Purity Oil Sales site in Fresno, California were generally thorough and consistent with NCR requirements. We Found That The remedial planning activities at the site were generally thorough and consistent with NCR requirements. The following two aspects of the planning process were particularly commendable: • The clarity and thoroughness with which the baseline risk assessment report was written. • The decision to conduct soil treatability tests prior to issuing a Record of Decision for soils. The presentation and documentation of several issues in the RI/FS reports could have been improved. However, these areas for improvement did not appear to have impacted the overall remedial alternatives analysis or remedy selection for the site. ------- EPA Office of the Inspector General Annual Superfund Report to the Congress for Fiscal 1994 21 SITE CHARACTERIZATION NEEDED IMPROVEMENT AT NEW JERSEY SITE Findings in Brief Shortcomings in site characterization during remedial planning at the Vineland Chemical Co. site in Vineland, New Jersey resulted in additional activities being needed after the ROD was signed. We Found That Remedial planning at the site was performed in a manner consistent with NCR requirements. We did, however, identify shortcomings in characterization of the distribution of arsenic-contaminated sediment and characterization of groundwater hydrology. While we do not believe that the remedy evaluation and selection were seriously compromised by these weaknesses, better information would result in increased confidence in remedial planning for this site. The ROD identified additional activities to be undertaken prior to final design that could account for the identified weaknesses. In comments on our draft report, Region 2 stated that additional information had been gathered. ------- EPA Office of the Inspector General Annual Superfund Report to the Congress for Fiscal 1994 22 CONTRACTS The OIG is responsible for conducting and supervising independent and objective audits of Superfund programs and operations. To carry out this responsibility, the OIG performs financial and compliance audits of EPA contractors. Each Public Law authorizing EPA to award contracts provides the Agency authority to audit and examine the books and records of the contractors and subcontractors receiving Federal funds. Each EPA contract also contains audit provisions. Our primary audit objectives are to determine (1) whether the controls exercised by the contractors and subcontractors through their accounting, procurement, contract administration, and property management systems are adequate to account for costs claimed; and (2) costs claimed are reasonable, allowable, and allocable, in accordance with applicable laws and regulations, to the sponsored project. Audits of contracts not only yield financial benefits to the Agency, but also aid in improving Agency management. We expect to devote increased resources to auditing EPA contractors and subcontractors given the increased size of the program and EPA's conduct of more actual cleanups. These audits also play an integral part in supporting EPA's cost recovery actions. Of the 177 contract review reports we issued in fiscal 1994, 60 covered incurred costs under EPA contracts. The financial results of these reviews were as follows: FINANCIAL RESULTS OF FISCAL 1994 SUPERFUND INCURRED COST CONTRACT REVIEW REPORTS Amount audited Ineligible costs1 Unsupported costs2 Unnecessary/unreasonable costs3 Federal Share $368,769,174 1,896,146 8,928,974 0 Total Costs $371,992,126 1,902,057 8,928,974 0 1 . Costs questioned because of an alleged violation of a provision of a law, regulation, contract, grant, cooperative agreement or other agreement or document governing the expenditure of funds. 2. Costs questioned because, at the time of the audit, they were not supported by ade- quate documentation and/or had not been approved by responsible program officials. 3. Costs questioned because they were not necessary or not reasonable. Another 45 of our reviews were initial pricing reviews in which we reviewed costs proposed by offerers or bidders seeking EPA contract awards. Because these are only proposed costs, our reviews do not question costs but rather recommend as ------- EPA Office of the Inspector General Annual Superfund Report to the Congress for Fiscal 1994 23 efficiencies costs that we believe EPA should not incur. The combined financial results of the initial pricing reviews were as follows: Total Costs Audited $ 909,760,488 Total Recommended Efficiencies $ 4,682,680 We also issued 22 reports on proposed indirect cost rates, 47 system survey reports, and 3 program review reports on EPA contractors. The OIG can choose to have the reviews performed by in-house staff, independent public accounting firms or another Federal audit agency. During fiscal 1994, our Superfund contract reviews were performed as follows: Reviews Performed by OIG staff 18 Reviews Performed by Independent Public Accountants 31 Reviews Performed by Defense Contract Audit Agency 127 Reviews Performed by another Federal agency 1 Exhibit I contains a listing of all Superfund review reports issued by the OIG during fiscal 1994. We also conduct performance reviews of EPA's management of contracts and procurement. During fiscal 1994, we issued six reports on such performance reviews. ' We summarize the performance reviews and a particularly significant contract review report on an EPA Superfund contractor below. MORE THAN $200 MILLION IN UNLIQUIDATED AND EXCESS CONTRACT OBLIGATIONS INCLUDING $143 MILLION IN SUPERFUND OBLIGATIONS Findings in Brief EPA did not close almost 2,000 inactive contracts (886 were Superfund) or deobligate $7 million ($4.4 million Superfund) in excess funds on more than 100 closed contracts. This left more than $200 million ($143.4 million Superfund) in unliquidated obligations that could have been used for other environmental purposes or returned to the U.S. Treasury. Background During the past 23 years, the Agency's total contract obligations have exceeded $12 billion for work performed under 14,500 contracts. Legislation enacted in 1990 requires payments needed to finalize old contracts to come from current year funds. This legislation made timely contract closeout, deobligation of unexpended monies, and receipt of refunds due the Agency even more important in helping the Agency avoid using current financial resources on old contractual issues. ------- EPA Office of the Inspector General Annual Superfund Report to the Congress for Fiscal 1994 24 We Found That Closing almost 2,000 (886 Superfund) inactive contracts in a timely manner could have allowed EPA to deobligate more than $200 million, the majority of which is Superfund money. Some of these funds should have been deobligated almost 12 years ago and then used to either pay for other Government programs or EPA projects or initiatives. We also found more than 100 contracts (70 Superfund) were closed as many as 11 years ago, and $7 million was not deobligated because Agency personnel did not prepare the necessary documentation. The Agency could have reprogrammed $4.4 million for use in EPA Superfund programs and returned $2.6 million to the U.S. Treasury. We Recommended That The Assistant Administrator for Administration and Resources Management: • Emphasize the importance of timely contract closeout to all personnel responsible for this function. • Close completed contracts in accordance with the time frames specified by the Federal Acquisition Regulation (FAR) and deobligate excess funds in a timely manner. • When closing contracts, direct initial efforts to those contracts with fiscal 1989 appropriations. • Deobligate excess funds on all closed contracts as required by FAR. What Act/on Was Taken The final report (4100462) was issued to the Assistant Administrator for Administration and Resources Management on July 21, 1994. In responding to our draft report, the Agency agreed with our recommendations and provided an acceptable action plan to correct the identified weaknesses, including setting annual goals for closing contracts and dedicating personnel to this function to the greatest extent possible. As a result, we closed this audit in our tracking system and all corrective actions will now be tracked in the Agency's Management Audit Tracking System. AGENCY STRIVES TO ACHIEVE FULL AND OPEN COMPETITION WHEN AWARDING SUPERFUND CONTRACTS Findings In Brief We found that the Agency had improved procurement procedures to achieve full and open competition for Superfund contracts. Nineteen of 26 Superfund contracts selected for review were competitively awarded amounting to $534.5 million or 99.6 percent of the total value of all contracts. Of the 19 competitively ------- EPA Office of the Inspector General Annual Superfund Report to the Congress for Fiscal 1994 25 awarded contracts, 15 went to non-incumbent companies or companies not previously involved in Superfund contracts. Background Prior OIG audits of Agency contracting activities disclosed several conditions that limited competition in many EPA contracts. One such condition was the issuance of large umbrella contracts that often allowed one company or a small number of companies to control all of the activity in a specified program area for an extended period of time. This and other conditions created a perception that incumbent contractors were more than likely to be awarded follow-on contracts. We Found That The Agency actively sought ways to increase competition for Superfund contracts. For example, the Agency eliminated many of the restrictive technical requirements in the statement of work. Multi-tasked jobs for the larger Superfund contracts, such as Emergency Response Cleanup Services (ERGS) contracts were divided into separate tasks and awarded as separate contracts. Four of seven ERCS contracts reviewed were awarded to non-incumbents or companies new to the Superfund program. The four solicitations that resulted in seven ERCS contracts averaged nearly four proposals and three companies in the competitive range. What Action Was Taken The final report (4100111) was issued to the Assistant Administrators for Administration and Resources Management and Solid Waste and Emergency Response on December 7, 1993. Since adequate action had been taken in response to prior audit reports, we made no recommendations for action in this report and no response was required from the Agency. The information in the report was incorporated into our consolidated report on competition in contracting throughout the Agency (4100232). MOST LARGE CONTRACTS AWARDED TO ICF HAD LIMITED COMPETITION Findings in Brief There was limited competition in EPA's award of over half of the larger contracts to ICF, Inc., and in ICF's award of subcontracts. In addition, EPA did not evaluate ICF's performance on cost-plus-award-fee contracts timely. As a result, EPA did not receive the full benefits of competition. Background As of March 1992, ICF, along with its subsidiary, Clement Associates, was the Agency's second largest contractor and had 25 active contracts potentially worth $388 million. EPA uses ICF {o support various activities of Agency program offices. ------- EPA Office of the Inspector General Annual Superfund Report to the Congress for Fiscal 1994 26 We Found That EPA complied with Federal regulations when soliciting competition for contracts awarded to ICF, and adequate competition existed in the award of most of the smaller ICF contracts. However, the level of competition lessened as the value of the contract reached $10 million. In three of the eight contracts exceeding $10 million (one of which was a Superfund contract), ICF was awarded the contract because its price and technical proposals were more favorable than those of its competitors. However, in the other five awards (one of which was for a Superfund contract), ICF was the only firm to either submit a proposal or have its proposal make the competitive range. On two of the three contract awards (one of which was a Superfund award) in which only ICF made the competitive range, ICF was the incumbent contractor or a subcontractor on the predecessor contract. As a result, EPA did not receive the full benefits of competition in the award of these contracts. There was little evidence of competition in the award of subcontracts by ICF under its three largest EPA prime contracts (one of which was a Superfund contract). ICF routinely awarded subcontracts on a sole source basis, and EPA contracting personnel had various interpretations of what constituted competition in the assignment of work to subcontractors assembled by ICF to work on the contracts. EPA's management of the award fee process was inadequate. In the four ICF cost- plus-award-fee contracts (two of which were Superfund contracts) we reviewed, EPA experienced difficulty and delays, ranging from less than 2 months to more than 2 years (less than 2 months to 8 months for the Superfund contracts), in evaluating ICF's performance. However, rather than improve its administration of the award fee process, EPA converted three (one Superfund) of the contracts into cost-plus-fixed-fee contracts. We Recommended That The Assistant Administrator for Administration and Resources Management have the Director, Office of Acquisition Management: • Issue guidance instructing Contracting Officers (COs) to conduct post-award efforts to determine reasons why only one proposal made the competitive range. • Require the CO to review the awards of all significant subcontractors under EPA prime contracts to ensure selection on a competitive basis. • Require prime contractors to obtain CO approval of all significant subcontractor budgets and any subsequent budget revisions. • Emphasize to the EPA personnel involved in the award fee process that completing timely evaluations is essential to the objectives of the process. • Inform COs that the type of contract should be changed only when justifiable, rather than simply to remedy administrative problems. ------- EPA Office of the Inspector General Annual Superfund Report to the Congress for Fiscal 1994 27 What Action Was Taken The final report (4100233) was issued to the Assistant Administrator for Administration and Resources Management on March 31, 1994. In responding to our draft report, the Agency provided responsive action plans and milestone dates to correct the identified weaknesses. As a result, we closed this audit in our tracking system and all corrective actions will now be tracked in the Agency's Management Audit Tracking System. CONTRACTORS STILL LACK ADEQUATE ACCOUNTING SYSTEMS Findings in Brief Emergency Response Cleanup Services (ERGS) contractor accounting system deficiencies noted in past OIG reports still exist because of inadequate enforcement by EPA personnel. EPA also rarely exercised sanctions for contractor non- compliance. Background Prior audits of EPA's management of ERCS contracts reported that ERCS contractors generally did not have adequate accounting systems to provide accurate cost and equipment utilization data. ERCS contracts awarded after March 31, 1992, include a new mandatory clause addressing accounting system requirements. We Found That EPA's Office of Acquisition Management (0AM) and its regional contracting officers (COs) continued to allow contractor non-compliance with the Federal Acquisition Regulation and contract accounting systems requirements contract clauses because they believed complete enforcement would drive away ERCS contractors. Despite a decade of doing business with EPA, the ERCS contractors reviewed still did not have approved accounting and billing systems needed for cost reimbursement contracts. Except for one instance, sanctions for contractor non-compliance were not exercised. 0AM and regional procurement personnel also allowed ERCS contractors to use EPA's internal Removal Cost Management System (RCMS) as a billing mechanism, despite requirements for ERCS contractors to generate invoices from, and reconcile them to, their internal accounting systems. Moreover, EPA's historic reliance on the RCMS to validate the contractors' claims did not provide the necessary internal controls to reasonably assure proper accounting for the Agency's contract expenditures because there was no assurance that billed charges were actually incurred and paid by the contractor. ------- EPA Office of the Inspector General Annual Superfund Report to the Congress for Fiscal 1994 28 We Recommended That The Assistant Administrator for Administration and Resources Management require: • 0AM and regional ERCS contracting officers (COs) to enforce FAR and contract clause accounting system requirements for all current and future ERCS contacts. Significant remedies should be pursued when contractors are not making sufficient, timely progress toward clause compliance. • Contractors to correct inadequate accounting systems before EPA awards the contract. • 0AM to provide the needed oversight and assistance to ensure consistent and uniform regional implementation and enforcement of FAR and contract accounting system requirements. • Contractors to generate invoices from, and support invoices by, contractor accounting systems. The RCMS should not be used as a substitute for required contractor accounting systems. The Assistant Administrator for Solid Waste and Emergency Response require that: • EPA Forms 1900-55 certified by On-Scene Coordinators (OSCs) not be used in a manner that could be reasonably interpreted to satisfy contract documentation requirements. To neutralize this possible interpretation, the historical significance of EPA Form 1900-55 as a cost report should be de-emphasized and affirmation of its use as a receiving report should be emphasized. • The EPA Form 1900-55 be modified by supplementing the OSC certification language with a clear disclaimer of the authenticity and acceptance of the costs recorded thereon. What Action Was Taken The final audit report (4400112) was issued to the Assistant Administrators for Administration and Resources Management and Solid Waste and Emergency Response on September 29, 1994. On February 16, 1995, the Assistant Administrator for Administration and Resources Management responded, indicating: • OAM would provide guidance regarding alternative sanctions COs may use to enforce contract compliance. Regions had used such sanctions as reducing the award fee for contract management for two contracts and partially suspending program management costs. • Cost accounting for equipment charges was the single area where removal contractors were still not able to demonstrate full cost accounting. The Agency would pursue a strategy of using time and materials contracts with fixed rates for labor and equipment to verify that rates will be fair and reasonable. ------- EPA Office of the Inspector General Annual Superfund Report to the Congress for Fiscal 1994 29 • 0AM issued a memorandum to COs reminding them of their fiduciary responsibilities to manage contracts prudently, and encouraging them to aggressively pursue remedies permitted under the contract to cure failures or violations. • 0AM reminded COs that the use by contractors of RCMS and EPA Form 1900- 55 to invoice the Agency was improper. CONFLICT OF INTEREST IN EPA REGION 9 SAMPLE ANALYSIS AND DATA VALIDATION ACTIVITIES Findings in Brief Region 9's use of the Environmental Services Assistance Team (ESAT) contract for both sample analysis and data validation activities created an organizational conflict of interest and the opportunity for biased data validation that could have improperly influenced Superfund actions. Background EPA's ESAT contract Inc., provided personnel to perform analytical and technical tasks as directed under specific work assignments for six EPA Regions and Headquarters. ESAT task areas included hazardous waste chemical analysis, review and validation of Contract Laboratory Program data, and review of site specific quality assurance, site investigation and sampling plans. We Found That Region 9 had assigned an increasing amount of its sample analyses to the Region 9 Laboratory staffed by ESAT rather than using the Contract Laboratory Program. The analytical data was sent to the regional office for data review and validation by ESAT contract personnel. For the 10-month period ended July 1993, about 38 percent of all data reviews conducted by the ESAT contractor were on analyses performed in the Region 9 Laboratory. Region 9's practice of using the Regional Laboratory for sample analyses and the same contractor to conduct data validations for the same samples created an organizational conflict of interest as described in the Federal Acquisition Regulation. The situation jeopardized the independence of the data validation portion of the Region's quality assurance/quality control program. Although our limited review did not disclose any evidence of bias in the ESAT contractor's data validation activities, the opportunity existed for'impairment of the contractor's objectivity in performing sample analysis and data validation activities. ------- EPA Office of the Inspector General Annual Superfund Report to the Congress for Fiscal 1994 30 We Recommended That The Regional Administrator, Region 9, eliminate the organizational conflict of interest with the ESAT contract, considering the following options: • Conducting data validations using either Region 9 personnel or another contractor; and • Initiating additional quality control reviews of ESAT-conducted data validations until the conflict of interest is eliminated. What Action Was Taken The final report (4400025) was issued to the Regional Administrator, Region 9, on January 31, 1994. Region 9 responded to the final report on May 2, 1994. The Region indicated that the ESAT contract task providing for data validation on data generated by ESAT chemists had been discontinued, eliminating the conflict of interest. The Region proposed alternative data validation measures relying upon EPA staff. ERA'S CONFLICT OF INTEREST POLICIES AND PROCEDURES NEEDED FURTHER STRENGTHENING Findings in Brief EPA did not have a formal process for identifying and prioritizing contracts most vulnerable to conflict of interest (COI) problems, or for planning and conducting reviews of contractors' COI prevention systems. EPA had not performed an on-site review of the COI identification system of a contractor performing sensitive site ranking work. Background A government contractor has a COI when the nature of the work to be performed under a contract may result in an unfair competitive advantage to the contractor or may impair the contractor's objectivity in performing the work. EPA's Contracting Officers handle COI issues under Agency contracts. The Office of Solid Waste and Emergency Response (OSWER) lists and ranks the Nation's worst hazardous waste sites on the National Priorities List (NPL). Sites proposed to the NPL are evaluated using the Hazard Ranking System (MRS), a mathematical model which serves as the primary tool for determining which sites are placed on the NPL. Under a contract with EPA, Dyncorp Viar, Inc. provides technical assistance with quality assurance reviews of the analyses supporting MRS scores. This special review was the result of a request from the Chairman, Committee on Governmental Affairs, United States Senate. ------- EPA Office of the Inspector General Annual Superfund Report to the Congress for Fiscal 1994 31 We Found That 0AM has no formal process for planning or conducting reviews of contractors' COI prevention systems, although EPA officials stated in response to a 1989 General Accounting Office report that such checks would be appropriate and could be done as part of existing contractor performance reviews. Although NPL listings are extremely sensitive, 0AM had not performed an on-site review of the COI prevention system of Dyncorp Viar, Inc. (Viar) or Dyncorp (Viar's parent company). Although Viar's COI procedures appeared to meet regulatory requirements, we believed that the Agency should verify that Viar was following those procedures. We Recommended That The Assistant Administrator for Administration and Resources Management direct 0AM to: • Develop a process to assure annual testing of contractors' COI identification systems. • Review Viar's and Dyncorp's COI identification systems. What Action Was Taken The final report (4400076) was issued to the Assistant Administrator for Administration and Resources Management on June 27, 1994. He responded to the report on September 29, 1994, indicating that 0AM: • Would establish a method for prioritizing contracts most vulnerable to COI concerns and develop procedures for conducting on-site COI compliance reviews at contractors' facilities. • Had conducted an on-site review of Viar's and Dyncorp's COI identification systems and their compliance with EPA requirements, which uncovered no COIs pertaining to the HRS contract. SUPERFUND CONTRACTOR DESTROYED SOURCE DOCUMENTATION Findings in Brief OHM Remediation Services Corp., an EPA Emergency Response Cleanup Services (ERCS) contractor, was destroying original source documentation. EPA's ERCS contracts specifically stated that source documentation was to be maintained in order to support cost recovery actions by EPA. Background OHM Remediation Services Corp. held several ERCS contracts during the period of 1987 to 1991. Section H of these contracts specifically stated that the contractor shall not destroy original records relating to the contract until: (1) ten years have ------- EPA Office of the Inspector General Annual Superfund Report to the Congress for Fiscal 1994 32 passed from the date of final payment, (2) litigation involving the records has been instituted, and (3) approval of the contracting officer is obtained. We Found That The contractor had not been complying with this contract provision. The contractor had been destroying original source documentation for a period prior to 1987 though March 1992. Additionally, the contractor did not have written, formal procedures for record retention and storage. These conditions were disclosed during our review of direct costs billed under these contracts for fiscal years 1987 through 1991. The lack of compliance with this contract term significantly impeded the extent to which an audit could be conducted because the original invoices, stamped with the applicable delivery order number, are the auditor's principal means of testing the allocability of costs to the delivery order under which the costs were billed. This could prolong resolution and definitization of delivery orders by EPA. In addition, cost recovery could be severely hampered should Potential Responsible Parties request original source documentation in order to determine their liability at a Superfund site. We Recommended That EPA's Financial Administrative Contracting Officer (FACO) take action to formally notify OHM that it was in noncompliance with contract terms on record retention. We also recommended that if the contractor failed to come into compliance, the FACO should pursue administrative action against OHM. What Action Was Taken The final report (4400064) was issued to the Chief, Cost Policy and Rate Negotiations Branch, Cost Advisory and Financial Analysis Division, Office of Acquisition Management, on May 20, 1994. On June 16, 1994, EPA notified the contractor that it must comply with its contract terms, or be faced with administrative action. On June 29, 1994, the contractor responded to EPA, stating that it no longer destroys original source documentation, and that it uses microfilming as an additional security measure. We concurred with EPA's action, and closed this report on September 19, 1994. ------- EPA Office of the Inspector General Annual Superfund Report to the Congress for Fiscal 1994 33 INTERNAL AUDITS AND SPECIAL REVIEWS In addition to reviews required by CERCLA, as amended, we conducted other reviews of EPA's management of the Superfund program. We summarize below internal audits and special reviews completed in fiscal 1994 not summarized elsewhere in this Report. EPA'S INFORMATION RESOURCES MANAGEMENT (IRM) PROGRAM NEEDED TOP MANAGEMENT ATTENTION Findings in Brief EPA had systemic deficiencies in IRM management and organizational structure, resource planning and performance measurement, information systems development, and data management. EPA did not treat information as a valuable, strategic resource. Background Sound, efficient, and responsive information systems are critical to EPA's achievement of its mission. For example, EPA's information systems must provide accurate and reliable data on management and oversight of the Superfund program and on nationwide air and water quality. On September 27, 1993, the Chairman and Ranking Minority Member of the Senate Subcommittee on Superfund, Recycling, and Solid Waste Management, Committee on Environment and Public Works, requested the Inspector General to perform a comprehensive management review of EPA's information systems. At the Inspector General's request, EPA agreed to participate in this review which was performed by a joint OIG/Agency team working cooperatively to identify the root causes of EPA's IRM problems. We Found That EPA had significant IRM problems concerning the quality, integrity, and completeness of its data and its usefulness in addressing cross-media pollution problems due to weaknesses in four key areas. IRM Management and Organizational Structure. EPA staff perceived upper management as not recognizing the criticality of or being accountable for IRM. The IRM Steering Committee had not fulfilled its important role as an executive-level decision-making body, and EPA's formal lines of authority and communication for IRM matters were confused. Also, the organizational placement, numbers, and apparent qualifications of the EPA employees with significant IRM responsibilities were inconsistent among Headquarters program offices. Resource Planning and Performance Measurement. The Agency had neither an Agency-wide IRM Strategic Plan nor a "Business Plan," although both were being developed. Not integrating its long-term IRM planning with its single-year budgeting process had historically contributed to funding shortages for systems development projects. IRM planning was greatly complicated by EPA's unbalanced ------- EPA Office of the Inspector General Annual Superfund Report to the Congress for Fiscal 1994 34 emphasis on short-term vs. Jong-term results. EPA's IRM was generally reactive as a result of continually changing Congressional information needs, new and changing environmental regulations, and poor communications with Congressional staff. Also, EPA's information systems did not have sufficient capability to measure environmental successes, accomplishments, and economic benefits. Further, EPA could not account for its IRM expenditures on a system by system basis. Information System Development. Developers of EPA's systems did not always work effectively with EPA program officials, Congress, and the States (their users and customers) to understand the programs and define their information needs. Most national systems appeared designed to meet Headquarters needs, but were not very useful and "friendly" to the regions and the States and could not answer some valid questions by the Congress about Agency accomplishments. In addition, EPA offices usually did not use a standard software development approach, primarily due to the extensive use of many contractors with widely varying methodologies which did not always meet Federal requirements. Data Management. Data sharing was crucial to the Administrator's four top priorities: ecosystems protection, pollution prevention, environmental justice/equity, and partnership development. Yet EPA did not have the IRM "structure" to link or share data Agency-wide, due partly to insufficient resources and EPA's media- based organizational structure. Data quality problems in many EPA information systems were often due to frequently changing definitions of data and lack of data "ownership" by those who input it. We Recommended That The Administrator: • Establish a separate Chief Information Officer at the Assistant Administrator level with authority and responsibility for the Agency's IRM program .and strengthen a number of components of the IRM program. • Closely link the IRM planning process with EPA's Business Plan and integrate it with the Agency's budget process. • Strengthen EPA's process for developing information systems and increasing user involvement during the development process. • Develop an Agency-wide data architecture and data standards and establish a centralized data administration function. What Action Was Taken The final report was issued to the Administrator on March 24, 1994. The Office of Administration and Resources Management (OARM) responded to the report on ------- EPA Office of the Inspector General Annual Superfund Report to the Congress for Fiscal 1994 35 July 21, 1994, and supplemented that response with further information on September 29, 1994. Among the actions taken or planned by OARM were: • Asking the Administrator to name the Assistant Administrator of OARM as the Agency's Chief Information Officer. • Linking the IRM Strategic Plan with the Agency Strategic Plan and the IRM budget process. • During development of the Agency's new life cycle management policy, addressing identification and involvement of primary and secondary users, detailed needs analyses including the needs of primary and secondary users, and cost-benefit analyses. • Undertaking an initiative in fiscal years 1995 and 1996 on Agency data requirements and a data architecture study. IMPORTANCE OF FINANCIAL MANAGEMENT VIEWED INCONSISTENTLY AT EPA Findings In Brief Some EPA staff viewed financial management as subservient to program management, while others believed these functions were mutually supportive. These differing viewpoints and perceptions made it difficult for EPA to effectively manage and improve its financial management activities. Background On September 27, 1993, the United States Senate Committee on Environment and Public Works, Subcommittee on Superfund, Recycling, and Solid Waste Management requested a comprehensive review of EPA's financial management program, with as much attention as possible to the Superfund program. Working cooperatively with EPA's Financial Management Division (FMD), we highlighted current issues and developed solutions based on input from representative EPA managers and staff through a series of focus group meetings and extensive interviews. We also analyzed over 130 OIG reports and over 60 General Accounting Office reports to identify financial management concerns. We Found That Although the Chief Financial Officer position was created to raise the visibility of financial management throughout the Agency, this had not yet been fully realized. EPA financial management in the program offices suffered from: (1) an overall lack of understanding of the importance of financial management, (2) lack of the data and reporting tools that managers needed to effectively manage their programs, (3) a weak link between budgeting and planning, and (4) too many financial codes with interpretations that were confusing to program staff. ------- EPA Office of the Inspector General Annual Superfund Report to the Congress for Fiscal 1994 36 Agency personnel were concerned about the principal EPA finance and reporting systems. The Agency's Integrated Financial Management System (IFMS) could not always be relied on to effectively meet their financial management requirements. Overall, there was a lack of integration and incompatibility of financial and reporting systems. Duplicate or alternate personal computer based systems were developed locally to meet regional financial management needs not provided by the Agency's systems. EPA financial policies and procedures were often difficult to locate, out of date, incomplete, and confusing; and therefore difficult to use. EPA staff did not believe the Agency's policies and procedures were effective. With respect to Superfund activities, cost recovery from responsible parties for the cleanup of hazardous waste sites was not always given the support or resources needed and was viewed as secondary to the mission of cleaning up hazardous waste sites. The Agency did not have information readily available to determine a feasible target or amount for cost recovery. Further, the Agency did not routinely analyze results to compare recoveries against established targets. Some costs were not allocated to their specific sites, preventing the Agency from tracking and recovering the costs later from responsible parties. These costs were often recorded differently in IFMS and the Comprehensive Environmental Response Compensation and Liability Information System (CERCLIS), leading headquarters to sometimes ask the regions to manually collect data for external reports. EPA did not regularly offer courses essential for training Agency employees to effectively accomplish their financial management responsibilities. This resulted in inexperienced and untrained personnel performing financial management duties. We Recommended That The Administrator, EPA: • Identify and implement best or bench mark practices for financial management operations Agency-wide to help set standards of service and performance. • Establish a joint effort between FMD and the program offices with client/customer teams to work out the interface problems associated with IFMS and other Agency finance and reporting systems. • Review, update and consolidate EPA's financial management policies and procedures electronically and make them more user friendly. • Ensure that clear and consistent EPA cost recovery goals and targets are established and assign a higher priority to Superfund financial management, specifically cost recovery. • Have FMD establish an Agency-wide core of training courses that are mandatory for Agency employees involved in financial management activities. ------- EPA Office of the Inspector General Annual Superfund Report to the Congress for Fiscal 1994 37 What Action Was Taken The special review report (4400042) was issued to the EPA Administrator on March 31, 1994. The Agency responded to the report on August 10, 1994. The Agency's response outlined a comprehensive series of actions taken or planned to implement report recommendations. These actions included: • Upgrading the Financial Managers Quality Assurance (QA) Program for financial operations Agencywide. This includes periodic QA reviews by FMD of the finance offices. The QA Program will identify best practices and share them among all finance offices. • FMD working with its clients through several management and user groups to identify and address interface problems and needs. • Establishing a schedule for addressing the Agency's most pressing needs for Resources Management Directives, and providing accounting and financial management policies on an electronic bulletin board. • Increasing focus on setting goals and communicating the successes of the cost recovery program. • Establishing the Financial Management Career Development Committee to review current financial management training programs and develop options for ensuring that the workforce receives needed education and training. BETTER CONTROLS NEEDED TO PROTECT SECURITIES RECEIVED IN BANKRUPTCY CASES Findings In Brief EPA had limited controls in place to safeguard marketable securities received as a result of Superfund cost recovery efforts. Also, current bankruptcy laws hinder EPA's cost recovery efforts. Background Some responsible parties from whom EPA has sought to recover Superfund Trust monies filed for bankruptcy protection. In such cases, EPA may receive marketable securities in the reorganized companies as payment of debts. During fiscal years 1992 and 1993, EPA received 2.4 million shares of marketable securities worth $22.4 million which were transfered to the Treasury Department to be sold and proceeds returned to the Superfund Trust Fund. We Found That EPA had not established central receiving points, restricted access, maintained records, or assigned custodial responsibility for securities. The Agency could not be assured securities were adequately safeguarded against theft and forwarded timely to Treasury, and there were no procedures to follow up with bankrupt ------- EPA Office of the Inspector General Annual Superfund Report to the Congress for Fiscal 1994 38 responsible parties or their trustees to ensure receipt of all securities. In the two regions we visited, accounts receivable for Superfund bankruptcy settlements were recorded an average of seven months after agreements were reached with responsible parties, and securities received were not recorded in the Agency's accounting system until Treasury sold the securities. Bankruptcy cases handled by Headquarters attorneys were not always entered into the Comprehensive Environmental Response, Compensation and Liability Information System (CERCLIS), the Agency's main Superfund tracking system. We identified six bankruptcy cases valued at over $96.6 million that were settled during fiscal years 1992 and 1993, but were not recorded in CERCLIS. Further, EPA was not tracking marketable securities transferred to the Agency, the amount of securities received, and the total proceeds from their sale. Two key issues involving bankruptcy law need to be resolved to improve the Agency's ability to recover Superfund cleanup costs. First, some reorganizing companies have argued that EPA's claim should include all environmental liability, even future cleanup costs EPA might incur, and that the bankruptcy settlement should discharge all of their environmental liability. Second, it is unclear how much information responsible parties should include in their bankruptcy notices to creditors, and where the notices should be filed, which could cause the Agency to miss its opportunity to participate in bankruptcy proceedings. We Recommended That The Chief Financial Officer establish central receiving points for marketable securities, designate employees to be responsible for securities, and develop procedures for properly handling and recording marketable securities. The Assistant Administrator for Enforcement and Compliance Assurance: • Assign responsibility for following up with reorganized companies to help ensure EPA receives all of the securities it is entitled to receive, and develop procedures to ensure Superfund bankruptcy settlements are recorded in CERCLIS. • Include provisions in the Agency's bankruptcy guidance to follow up with the Department of Justice when final bankruptcy orders are not forwarded timely to EPA; and forward bankruptcy orders timely to the appropriate financial management office so an account receivable can be established. • Develop procedures to track collections, including form of payment for bankruptcy settlements; and revise,the Superfund enforcement performance measurement reporting to reflect the impact bankruptcies have on the Superfund cost recovery program. What Action Was Taken The final report (4100579) was issued to the Chief Financial Officer and the Assistant Administrator for Enforcement and Compliance Assurance on September 30, 1994. The Chief Financial Officer responded to the draft report on ------- EPA Office of the Inspector General Annual Superfund Report to the Congress for Fiscal 1994 39 October 5, 1994 (after the final report was issued) and to the final report on January 25, 1995. He indicated EPA would: • Issue instructions on the central receiving point for securities, assign custodial responsibilities for handling and safeguarding marketable securities, and incorporate securities handling procedures into a revision of Resources Management Directive 2550D. • Create bankruptcy policy and procedure revisions to settle EPA claims. • Conduct a needs analysis of CERCLIS which would include tracking information on bankruptcy cases. GREATER EMPHASIS NEEDED BY OSWER ON IMPLEMENTING THE FINANCIAL INTEGRITY ACT Findings in Brief The Office of Solid Waste and Emergency Response (OSWER) had not ensured that managers scheduled and conducted evaluations necessary for properly assessing and improving management controls over resources available for accomplishing their missions. Background The Federal Managers' Financial Integrity Act (FMFIA) requires agencies to evaluate the adequacy of their accounting and administrative control systems and report their conclusions annually to the President and Congress. OSWER is among the 22 major organizational components responsible for administering FMFIA at EPA. We Found That OSWER trained managers and properly included management control responsibilities in their performance standards, making them aware of FMFIA's requirements. Several managers properly used strategic plans, work plans, and priorities to identify vulnerabilities and schedule control evaluations. Also, OSWER managers planned and tracked corrective actions for weaknesses reported in annual assurance letters and established validation strategies to ensure reported weaknesses were corrected. However, OSWER had not organized control evaluation efforts so that managers assessed vulnerabilities for all programs and functions and then scheduled control evaluations based on vulnerabilities. Some managers did not know how vulnerability assessments, management control plans, and control evaluations related. As a result, managers did not properly plan and conduct control evaluations. In addition, OSWER did not properly evaluate interactions with the regions to ensure overall mission accomplishment. OSWER needed to work with the regions to develop model management principles to ensure that the regions are fulfilling ------- EPA Office of the Inspector General Annual Superfund Report to the Congress for Fiscal 1994 40 OSWER strategic plans and program goals. OSWER also needed to use the regions' management control evaluation results as early warnings of potential program-wide problems and weaknesses that could affect successful mission accomplishment. We Recommended That The Assistant Administrator for OSWER: • Establish procedures to ensure that all managers integrate Integrity Act requirements into management activities, identify best practices and encourage managers to share them. • Require managers to assess annually the effectiveness of their management control systems and document the results. Advise managers to consider all programs and functions when assessing controls. • Share model management practices with regional program offices for their use in developing management controls consistent with the OSWER mission and goals. • Obtain the results of regional management control assessments to identify potential Agency-wide weaknesses and advise regions and other program offices when appropriate. For potential Agency-wide weaknesses, strengthen controls in written policies and procedures. What Action Was Taken The final audit report (4100224) was issued to the Assistant Administrator, OSWER on March 28, 1994. OSWER responded to the report on July 1, 1994. OSWER indicated it: • Had issued integrity guidance and OSWER implementation strategy to the OSWER Office Directors. • Would develop and implement a systematic review strategy for assessing how well its program guidance and procedures protect its programs and resources from fraud and mismanagement, and support the achievement of mission goals. • Would develop program-specific integrity principles for program areas that are most visible, vulnerable, or susceptible to mismanagement; and share those principles with regional program offices and throughout OSWER. • Would request from the regions lists of reviews conducted in areas program- specific to OSWER. [This was completed on August 4, 1994.] ------- EPA Office of the Inspector General Annual Superfund Report to the Congress for Fiscal 1994 41 SUPERFUND INITIATIVES REDUCE TIME AND SAVE MONEY Findings in Brief EPA conducted a variety of successful initiatives which demonstrated the potential for reducing the time and cost of cleanups, and for making the process more equitable. However, improvements were needed in analyzing, measuring, and publicizing the results of pilot projects to replicate successful techniques nationwide. Background In July 1993, the Deputy Administrator announced the Agency's plan to improve the Superfund program within the current statutory authority. This plan, known as the "Superfund Administrative Improvements" (SAI), focused on enhancing four areas of most concern to the Administration, Congress, and the public: • Enforcement fairness and reduced transaction costs. • Cleanup effectiveness and consistency. • Meaningful public involvement. • The States' role in the Superfund program. The Superfund Revitalization Office (SRO) in the Office of Solid Waste and Emergency Response (OSWER) provided overall coordination of the SAI effort. The OIG initiated a number of reviews of SAI pilot projects. We summarize below nine SAI review reports we issued during this reporting period. We Found That Regions 1 and 8 conducted enforcement pilot projects which showed potential to accelerate the Superfund process and reduce costs. However, SRO needed to improve the transfer of knowledge gained from pilots. In addition, the Regions did not always adequately plan for using available funds or report important project activities to Headquarters. Region 3 conducted an "Innovative Data Validation Approach" to reduce the cost and turnaround time associated with validating analytical results of samples taken at Superfund sites. The initiative proved to be a worthwhile concept which deserved more emphasis by Regional management. Region 5 successfully completed three pilot projects focusing on accelerating the Superfund cleanup process. The pilots streamlined the traditional Superfund process by accelerating cleanup actions and integrating site assessments. However, summary reports providing Headquarters quantitative and qualitative results of the pilots were not completed. Region 5 also introduced pilot projects under the Allocation Tools and Mixed Funding initiatives to promote fairer settlements. Limited progress was achieved ------- EPA Office of the Inspector General Annual Superfund Report to the Congress for Fiscal 1994 42 using allocation tools due to contract delays, and the Region had not developed measures of success for the mixed funding initiative. Region 6 used a Regional Decision Team at the National Zinc site to effectively coordinate the simultaneous collection and use of data for multiple purposes. It appeared that this pilot would be successful in achieving its objectives of accelerating cleanup and increasing efficiency in the Superfund process. Region 7 initiated 12 pilot projects for six different initiatives. Although the Region completed three projects and started work on nine others, it could not measure the projects' success because measurable performance objectives had not been established. Region 10 demonstrated the use of removal authorities at two sites to accelerate site cleanups. The removal actions achieved permanent site remedies which saved time and, at least for one of the sites, costs by eliminating the need to perform longer term remedial actions. We Recommended That • The Acting Regional Administrator, Region 1, direct program staff to prepare cost estimates prior to requesting funds from Headquarters, direct program staff to discuss with the SRO the guidelines for reporting on innovative pilot activities, and include expenditure of extramural funds in pilot report sheets. • The Acting Regional Administrator, Region 8, contact SRO on pilot report content and format, documentation of cost/time savings, potential pilot sites, the expenditure of pilot funds, and significant changes in pilot status. • The Assistant Administrator for Solid Waste and Emergency Response request SRO to coordinate with division directors to determine the best way to disseminate pilot results and coordinate presentations by regional personnel at Agency professional conferences on successful pilot approaches; re-evaluate the system for regional goal setting to provide comparable credit for successful innovative approaches; and request the regions to document cost estimates, report the status of extramural funds, consult with SRO before reprogramming pilot funds, report significant pilot activity, and consult with SRO on documentation of time/cost savings. • The Regional Administrator, Region 5, complete final pilot reports and coordinate with Headquarters to develop performance measures for the mixed funding initiative. • The Regional Administrator, Region 7 establish measurable performance objectives for each of the pilot projects. What Action Was Taken • Region 1 agreed to consult with Headquarters regarding funding and reporting issues, and to report the status of extramural funds in progress reports to Headquarters. ------- EPA Office of the Inspector General Annual Superfund Report to the Congress for Fiscal 1994 43 • Region 8 agreed to consult with SRO on report format and content, and on documentation of cost/time savings, respond to SRO requests for accounting of pilot funding expenditures, and advise SRO of significant changes in pilot status. ^ • OSWER indicated it had taken several steps to disseminate pilot results, would clarify performance measures to be reported, and would provide guidance to the regions on monitoring pilot funding and results. • Region 5 agreed to complete final project reports and work with Headquarters to develop measures of success for the mixed funding initiative. • Region 7 obtained specific guidance and direction from EPA Headquarters on performance objectives, and compared its regional project results against thosev objectives. AGREED UPON IMPROVEMENTS COULD ACCELERATE SUPERFUND SITE ASSESSMENT AND CLEANUP Findings in Brief Without program guidance from EPA Headquarters, regions implemented the Superfund Site Inspection Prioritization (SIP) program inconsistently, performed SIPs on some sites unnecessarily, and did not ensure that the worst sites were given priority in assessment. Background EPA uses the site assessment process to identify the highest priority sites posing threats to human health and the environment for listing on the National Priorities List (NPL) and to ensure accomplishment of EPA's policy to cleanup "worst sites first". The process consists of investigations of the threats posed by a site and whether the site qualifies for Federal funding. The SIP program is one step in the site assessment process and involves reevaluating nearly 6,500 hazardous waste sites for possible inclusion on the NPL. These sites were initially evaluated prior to the implementation of the revised Hazard Ranking System. We Found That EPA did not issue SIP program guidance until August 1993, almost two years after implementation of the program. Although the August 1993 guidance reiterates EPA's policy to propose worst sites first for listing on the NPL, the guidance does not provide a planned implementation approach with measurable goals. Information about SIP program results input into Comprehensive Environmental Response, Compensation and Liability Information System, the Superfund program's automated information system, was inconsistent and inaccurate, hindering effective program management. The program's management control documentation did not include adequate control techniques to ensure national consistency in program implementation. ------- EPA Office of the Inspector General Annual Superfund Report to the Congress for Fiscal 1994 44 Despite its efforts to accelerate site assessment and cleanup, EPA had not met the CERCLA goal to list sites on the NPL within four years of site discovery and will likely be unable to meet this goal in the near future. Further, the SIP program is expected to identify over 3,100 sites that qualify for inclusion on the NPL, which presents significant funding problems. At EPA's current budget rate, it will take over 27 years and about $105 million to make NPL decisions on these 3,100 sites. EPA may have to reevaluate sites that remain in the backlog for an extended time period. Based on past EPA cleanup costs per site, it will cost $74.5 billion to clean up these 3,100 sites. Although extremely important to the public, Congress, and responsible parties, EPA does not include information on the cost of cleaning up potential NPL sites in its annual Superfund report to Congress. As one possible solution, EPA initiated a State deferral pilot program that may reduce the NPL backlog, conserve site assessment resources, accelerate site cleanups, and help EPA meet CERCLA site assessment goals. States would be allowed to clean up sites that otherwise would be candidates for listing on the NPL. An even broader deferral policy could permit other Federal authorities and responsible parties to clean up sites awaiting NPL listing. EPA had previously proposed a deferral policy but still needed to consider and respond to comments on the proposal. We Recommended That The Assistant Administrator for Solid Waste and Emergency Response: • Ensure that regions conduct SIPs on high priority sites and account for SIPs consistently. • Analyze the resources required to meet CERCLA's site assessment goals and report to Congress the estimated cost of cleaning up those sites that, upon completion of the SIP program, will likely be listed on the NPL. • Consider elements identified by EPA and State officials as essential to a successful deferral policy and determine the proper Federal role when establishing oversight responsibilities before implementing a broader deferral policy. What Action Was Taken Our final audit report (4100180) was issued to the Assistant Administrator for Solid Waste and Emergency Response on January 31, 1994. The Office of Solid Waste and Emergency Response (OSWER) responded on May 16 and June 20, 1994. OSWER agreed to implement recommended improvements to the SIP program concerning high priority sites, provide an analysis of the resources needed to meet CERCLA timeliness goals, and pursue deferral of sites to States. ------- EPA Office of the Inspector General Annual Superfund Report to the Congress for Fiscal 1994 45 FURTHER STEPS NEEDED TO COMPLETE IMPROVEMENTS IN CONTRACT LABORATORY PROGRAM Findings in Brief EPA initiated significant actions to address weaknesses in the Contract Laboratory Program (CLP) in response to prior audits and an Agency task force review. However, EPA would benefit from additional management attention to contract actions against poorly performing laboratories and a re-evaluation of its policy on applying the contractual Warranty of Services clause. Background Under the CLP, EPA awards contracts to private laboratories to provide analytical services to support Superfund site investigations and cleanups. During the period of our review, EPA contracted with more than 100 laboratories which analyzed over 100,000 samples a year. The National Program Office directing the CLP is located in the Office of Solid Waste and Emergency Response (OSWER). We Found That The Agency initiated significant actions to address weaknesses in the CLP. These actions responded to previous OIG reports on the CLP and an internal Federal Managers' Financial Integrity Act task force review of the CLP. For example, data acquired during this review indicates that the program was now very conscientious about performing pre-award evaluations prior to the award of new CLP contracts. When fully implemented, OSWER's new and revised policies, procedures and tracking system should significantly improve program management and controls. We found two areas, however, which we believe would benefit from some additional management attention. In our opinion, the program should (1) increase its use of contract actions against poorly performing laboratories, and (2) re- evaluate its policy on applying the Warranty of Services clause in the CLP contracts. Additional emphasis on the use of contract actions in cases of poor performance could improve program effectiveness in assuring receipt of high quality data analyses. We found a few instances of sanctions imposed on contractors with indications of poor performance during the period of our review. The review did show, however, that the CLP consistently withheld payments for incomplete or late submissions identified during the contract compliance screening activities conducted by the Sample Management Office. The Agency issued a CLP procedure which appears to provide only 90 days for the Agency to apply the Warranty of Services provision in the CLP contracts. This provision allows EPA to revoke acceptance of data if it finds latent defects, fraud or gross mistakes. Past experience indicates these conditions are often not discovered within 90 days. Neither the Federal Acquisition Regulations nor EPA's Contract Administration Manual required a time limitation for application of the ------- EPA Office of the Inspector General Annual Superfund Report to the Congress for Fiscal 1994 46 Warranty of Services. The Agency procedures could limit the Government's ability to recover for defective or fraudulent data. We Recommended That The Assistant Administrator for Solid Waste and Emergency Response: • Remind Administrative Project Officers (APOs) of their responsibilities to initiate timely and sufficient actions against poorly performing CLP laboratories as delineated in OSWER program guidance documents. • Remind APOs of the need to fully document contract related actions and corrective actions in order to protect the Agency's interests. • Remind the regions of the importance of accepting only analytical data which fully complies with contract requirements and their responsibilities for recommending actions when CLP contractors submit unacceptable data analyses. • Review, in consultation with the Office of Administration and Resources Management and the Office of General Counsel, the 90-day revocation period specified in OSWER Directive 9200.9-02 to assure that Agency rights are not unduly limited; and revise the Directive as appropriate. What Action Was Taken The final report (4400115) was issued to the Assistant Administrator for Solid Waste and Emergency Response on September 29, 1994. OSWER responded to the report on January 17, 1995, indicating it would: • Annually send a memorandum to APOs reminding them of their responsibilities in initiating actions against poorly performing laboratories. • Send a memorandum to APOs reminding them of the need to fully document contract actions and corrective actions. • Annually send a memorandum to APOs reminding them of the importance of accepting data which fully comply with contract requirements, and of their responsibilities for recommending actions when CLP laboratories submit unacceptable data. • Work with the Office of Administration and Resources Management and the Office of General Counsel to determine if the Agency's Warranty of Services policy unduly limits the Agency's rights to revoke acceptance of data, and revise the policy if needed. ------- EPA Office of the Inspector General Annual Superfund Report to the Congress for Fiscal 1994 47 LABORATORY CONSOLIDATION WOULD IMPROVE EFFICIENCY AND REDUCE COSTS Findings in Brief The Office of Research and Development (ORD) could improve efficiency and reduce costs by relocating personnel and consolidating functions of its Risk Reduction Engineering Laboratory-Releases Control Branch (RREL-RCB) in Edison, New Jersey with the Cincinnati, Ohio, Risk Reduction Engineering Laboratory (RREL). Background The Edison, New Jersey, RGB staff performed basic small scale research operations until fiscal years 1987 and 1988, when Congress approved funding for a research facility at Edison to develop and evaluate commercial-scale innovative technologies. However, local objections during 1991 and 1992 resulted in Congress canceling the project and RGB's principal research facility was closed due to a lack of funds. We Found That The RGB function could be consolidated into RREL, Cincinnati, Ohio, which would provide an improved management structure where the laboratory director could have greater direct knowledge and control of daily operations, planning, and administrative matters. In addition, cost savings would be achieved in areas such as payroll, equipment and supplies, and time and money spent on travel from RGB to Cincinnati, and RREL to Edison, for meetings or conferences. Rather than conducting hands-on research, RGB scientists were primarily writing and publishing technical papers, making presentations at meetings and conferences, and monitoring extramural activities as Project Officers or Work Assignment Managers. Consolidation would provide RGB personnel with the opportunity to conduct hands-on research as RREL would have more flexibility in assigning administrative work. We Recommended That We recommended that the Acting Assistant Administrator for Research and Development: • Formulate a plan to relocate the RGB and two other RREL functions from Edison, New Jersey to the RREL in Cincinnati, Ohio in phases and in coordination with recommendations made by an external study of EPA laboratories and facilities. • Gradually phase out functions instead of relocating the entire office at one time, allowing some individuals to temporarily remain at Edison to complete a specific project. ------- EPA Office of the Inspector General Annual Superfund Report to the Congress for Fiscal 1994 48 What Action Was Taken The final report (4400100) was issued to the Acting Assistant Administrator for Research and Development on August 25, 1994. ORD responded to our report on December 6, 1994. The response indicated our recommendations would be implemented in conjunction with the recommendations in an Agency study of the ORD laboratory structure to respond to current and future roles and missions. The Administrator accepted the study's recommendation to functionally consolidate EPA's 12 research laboratories into 4 national laboratories. The research and development functions in Edison, New Jersey, are to be functionally incorporated into one of these laboratories, centered in Cincinnati. However, the Administrator decided to postpone consideration of physical consolidation of laboratories until at least June 1996 due to the attendant human and financial costs. RGB's physical location and mission will be evaluated as part of the detailed implementation of the study recommendations. ------- EPA Office of the Inspector General Annual Superfund Report to the Conqress for Fiscal 1994 49 INTERAGENCY AGREEMENTS EPA enters into interagency agreements (lAGs) with several other Federal agencies to perform Superfund tasks. The Offices of Inspector General or other audit organizations of the receiving agencies audit the cost records for these agreements and/or their agency's performance. The EPA DIG also issues these audit reports to EPA with a cover letter, which includes recommendations for EPA action if appropriate. In fiscal 1994, we issued nine of these reports to EPA management, including one that was a reissue of a defective copy of a report. We summarize the audits below by agency audited. We did not recommend EPA action on any of these audits. CERCLA requires other Inspectors General, like EPA's, annually to audit their agency's use of the Superfund and report on that audit to the Congress. AGENCY FOR TOXIC SUBSTANCES AND DISEASE REGISTRY The Department of Health and Human Services (HHS) OIG performed an audit of the fiscal 1992 Superfund financial activities of the Agency for Toxic Substances and Disease Registry (ATSDR), which is part of the Public Health Service (PHS). For fiscal 1992, the HHS OIG found that, in general, ATSDR administered the fund in accordance with CERCLA, as amended. However, the HHS OIG determined that the Centers for Disease Control and Prevention (CDC), which provides administrative services to ATSDR, and ATSDR did not have procedures in place to ensure that all Superfund grantees had obtained independent audits. As a result, CDC and ATSDR were not aware whether audit requirements were being met. They also were not aware whether some grantees who did not submit the required audit reports should have been sanctioned. / In its response to the audit report, the PHS agreed that procedures should be established to ensure that the appropriate audit reports are submitted by grantees. However, it did not believe it was responsible for ensuring they were received. It did agree to ask CDC to ensure that audit reports are submitted for Superfund grantees and to take appropriate action should any grantee refuse to submit a required audit report. U.S. ARMY CORPS OF ENGINEERS The U.S. Army Audit Agency audited the fiscal 1992 Superfund financial transactions of the U.S. Army Corps of Engineers. The Corps is responsible for managing the design and construction of Federal cleanup sites. It found that financial transactions were properly supported and accurately recorded. However, the New York District did not promptly record obligations for contracts and contract modifications. It also found that the Corps submitted its Superfund minority contractors utilization report on time, and the report was properly supported by feeder reports from the districts and divisions. However, the feeder reports did not include all Superfund obligations and, in one case, did not include all obligations to business concerns or other organizations owned or controlled by socially and economically disadvantaged individuals, including women (small disadvantaged businesses). ------- EPA Office of the Inspector General Annual Superfund Report to the Congress for Fiscal 1994 50 COAST GUARD The Department of Transportation (DOT) OIG performed an audit of fiscal 1992 Superfund costs incurred by the Coast Guard. The DOT OIG found that the Coast Guard had improved its administration of Superfund activities, encouraged minority firms to participate in Superfund-related contracts, and submitted the required annual report on minority contractor participation to EPA. However, the DOT OIG identified $491,226.29 of costs billed to EPA but not supported by required documentation, overbilled EPA a net of $128,640.44, and did not bill EPA for $355,202.92 of valid incurred Superfund reimbursable costs. The Coast Guard generally concurred with the findings and recommendations, and took or planned actions meeting the intent of the recommendations. The EPA OIG noted that the Coast Guard reported that the unsupported costs were supported by imaged documentation. The unsupported costs would be resolved by a Memorandum of Understanding being finalized between the Coast Guard and EPA authorizing the use of imaged documents as support for Superfund costs. FEDERAL EMERGENCY MANAGEMENT AGENCY The Federal Emergency Management Agency (FEMA) OIG audited FEMA's administration of the permanent and temporary relocation components of the Superfund program for fiscal 1992. The FEMA OIG found that FEMA had effectively administered the permanent and temporary relocation program. Generally, FEMA spent funds for eligible purposes and supported expenditures with documentation. The FEMA OIG questioned only $72,690 of the $2.3 million in expenses incurred. In addition, FEMA recorded $15,749 in the wrong Superfund account. FEMA management agreed with the findings and recommendations for corrective actions. DEPARTMENT OF THE INTERIOR BUREAU OF RECLAMATION The DOI OIG audited the Bureau of Reclamation's accounting for fiscal 1992 Superfund expenditures. The Bureau provides technical assistance to EPA in responding to releases of hazardous substances into the environment. The technical assistance included managing remedial investigations and feasibility studies, preparing specifications, and managing and overseeing construction. The DOI OIG selected 25 of the 53 lAGs under which the Bureau had incurred a total of $21,144,134 in costs. The audit reviewed $18,353,947 of the $20,846,656 in costs incurred under these 25 lAGs. The DOI OIG questioned a total of $121,197: $27,461 of unsupported direct costs and $93,736 of costs in excess of amounts authorized by the lAGs. The Bureau also submitted its fiscal 1992 Minority Business Utilization Report late and was inconsistent in meeting the required level of spending for contracts with minority businesses. The Bureau resolved all recommendations made by the DOI OIG. DEPARTMENT OF THE INTERIOR U.S. FISH AND WILDLIFE SERVICE The DOI OIG audited the U.S. Fish and Wildlife Service's accounting for fiscal 1991 and 1992 reimbursable Superfund expenditures. The Service provides ------- EPA Office of the Inspector General Annual Superfund Report to the Congress for Fiscal 1994 51 technical assistance to survey damages to natural resources from releases of hazardous substances, pollutants, and contaminants into the environment. The DOI DIG judgmentally selected 20 lAGs for review and audited $80,762 of the $356,071 in costs claimed for fiscal 1991, and $124,657 of the $529,058 claimed for fiscal 1992. The Service could not support costs totaling $3,251. The Service timely reported negative Minority Business Utilization Reports to EPA. The DOI DIG resolved its recommendations with the Service. DEPARTMENT OF JUSTICE The Department of Justice (DOJ) OIG conducted an audit of the DOJ Environment and Natural Resources Division's (ENRD) implementation of its IAG with EPA for fiscal 1992. The DOJ conducts all Superfund litigation. The direct and indirect costs charged to the IAG were allowable, allocable, and reasonable; and the accounting procedures and controls applied were consistent with IAG requirements and DOJ standards. However, the ENRD incurred costs which exceeded the IAG by $808,252 because of untimely reporting and accounting of expenses. In addition, the Minority Business Utilization Report was incomplete and inaccurate. ENRD included in the Report five businesses with subcontracts totaling over $215,000 which did not qualify as disadvantaged business enterprises and estimated the subcontract amounts for two prime contractors. In response to the draft audit report, ENRD concurred with the recommendations of the DOJ OIG and was taking steps to implement them. NATIONAL INSTITUTE OF ENVIRONMENTAL HEALTH SCIENCES The HHS OIG performed an audit of the fiscal 1992 Superfund financial activities of the National Institute of Environmental Health Sciences (NIEHS). The NIEHS carries out training activities and studies of chemical exposure effects mandated by CERCLA, as amended, through funding provided by lAGs with EPA. The NIEHS is a component of the National Institutes of Health (NIH), an agency of the PHS. The HHS OIG found that NIEHS generally administered the fund according to Superfund legislation. However, NIH and NIEHS had not implemented recommendations in the prior year's audit report to establish procedures to ensure that all Superfund grantees submit audit reports and sanction grantees unwilling to have a proper audit conducted and submitted. PHS agreed that such procedures should be established, but did not believe it was PHS' responsibility. It agreed to ask NIH to ensure that audit reports are submitted. It also agreed to take appropriate action should any grantee refuse to submit a required audit report. ------- EPA Office of the Inspector General Annual Superfund Report to the Congress for Fiscal 1994 52 REVIEW OF AGENCY'S SUPERFUND PROGRESS REPORT Section 301 (h) of CERCLA, as amended by SARA, requires that, "On January 1 of each year the Administrator of the Environmental Protection Agency shall submit an annual report to Congress of such Agency on the progress achieved in implementing this Act during the preceding fiscal year." The provision also requires the inclusion of seven specific areas in the report. CERCLA requires the Inspector General to review this report ". . . for reasonableness and accuracy and submit to Congress, as a part of such report a report on the results of such review." The sixth Annual Report was due to Congress on January 1, 1993, covering fiscal 1992 activities. This report was ready for final signature as of April 11, 1995. Our reviews of data integrity for the accomplishments to be included in the Agency's fiscal 1992 report were summarized in the OIG Annual Report for fiscal 1993. The Agency's seventh Annual Report was due to Congress on January 1, 1994, covering fiscal 1993 activities. It was at the Office of Management and Budget for review as of April 11, 1995. During fiscal 1994, we issued several reports on the Agency's claimed accomplishments to be reported in its fiscal 1993 Annual Report. These review reports are summarized below. EPA TAKING ACTIONS TO IMPROVE CRITICAL SUPERFUND DATA QUALITY Findings in Brief EPA Headquarters and regions are implementing actions that could effectively correct problems with the accuracy and reliability of data in the Comprehensive Environmental Response, Compensation, and Liability Information System (CERCLIS) critical to the implementation of the Superfund program. Background CERCLIS maintains information about activity at Superfund sites. Information is usually entered by regional staff, using a regional data base system called WasteLAN. The Agency uses CERCLIS data in its financial statements and its Superfund Annual Report to Congress. CERCLIS should contain complete, current, and accurate information. We Found That Eighty-six percent of pur sample of fiscal 1993 Superfund accomplishments and settlements recorded in CERCLIS by EPA Regions 1, 5, 6 and 7 were correct. Subsequent Agency actions increased the percentage of correct entries in that sample to 91 percent, and actions were taken to prevent similar errors from recurring. The questioned accomplishments and settlements in our sample either were not in compliance with criteria in the program office manual, duplicated other ------- EPA Office of the Inspector General Annual Superfund Report to the Congress for Fiscal 1994 53 reported accomplishments, were not supported by settlement documents, or lacked compliance by responsible parties. Our review of internal controls over CERCLIS data entry and quality in EPA Regions 1, 5, 6 and 7 showed the risk of material data errors, which would not be promptly detected, varied from low,to moderate. The location with the weakest controls, Lexington laboratory in Region 1, had the largest number of significant problems in its CERCLIS data. Region 5 had improved its internal controls, after our review of CERCLIS data entry and Superfund accomplishments recorded for fiscal 1992, and had a low rate of questioned accomplishments for fiscal 1993. In Region 6, we found that some required management letters accepting actions has not been prepared. Region 7 officials took corrective action on problems during our review of fiscal 1993 data. At the national level, WasteLAN programming still allowed individuals to attempt entry into the system an unlimited number of times, which created a risk of alteration of data by unauthorized persons. The Agency began the process of instituting an intruder lockout system to correct this problem before we issued our final report. We also found that settlements amounts recorded in CERCLIS were sometimes not documented or did not agree with the documentation. Headquarters had not provided the regions with guidance on estimating the cost of future work to be performed by responsible parties. We Recommended That The Assistant Administrator for Solid Waste and Emergency Response provide final guidance on preparing and documenting the estimated settlement amounts for responsible parties!! The Regional Administrator, Region 1, continue to improve administration of controls and correct erroneous information in CERCLIS. The Assistant Regional Administrator for Management, Region 6, strengthen internal controls. What Action Was Taken We issued final audit reports to each of the four Regions we reviewed: Region 1 (4100212, March 18, 1994), Region 5 (4100196, March 3, 1994), Region 6 (4100213, March 21, 1994), and Region 7 (4100201, March 4, 1994). We issued our final consolidated audit report (4100229) to the Assistant Administrator for Solid Waste and Emergency Response on March 30, 1994. The Office of Solid Waste and Emergency Response (OSWER) responded on July 18, 1994, reporting that supplemental guidance to the Superfund Program Implementation Manual (OSWER Directive 9200.3-14-1 a) was issued on April 11, 1994. This guidance outlined the sources for estimated settlement amounts, and required that the basis for estimated settlement amounts be documented in the site/case files. ------- EPA Office of the Inspector General Annual Superfund Report to the Congress for Fiscal 1994 54 Region 1 responded to our final audit report on May 11, 1994. The Region reported that it had corrected data entry errors. It also reported it had drafted internal control procedures and had taken other steps to improve internal controls. Region 6 responded to our final audit report on May 11, 1994. The Region had formed a CERCLIS data quality work group to address audit recommendations. ------- EPA Office of the Inspector General Annual Superfund Report to the Congress for Fiscal 1994 55 INVESTIGATIVE ACTIVITY During fiscal 1994, our Superfund investigative efforts resulted in eight indictments and four convictions. In addition, OIG investigations led to 11 administrative actions, including the debarment of companies and their personnel. At the end of fiscal 1994, we had 46 active Superfund investigations, 29 percent of all active OIG investigations at EPA. The OIG Office of Investigations (Ol) has undertaken a major proactive investigative effort with respect to the Superfund program. As part of this initiative, Ol held a conference in Chicago bringing together Ol managers and investigators from various locations nationwide. The group met to develop proactive investigative plans based on a review of Superfund program vulnerabilities identified at a previous task force meeting. The plans developed focus on all stages of Superfund activities including contracting, removals, and remediation. As a result of this conference, several of the plans developed have been initiated nationwide as open proactive investigations. Ol also has had a major investigative initiative directed at fraud in the Contract Laboratory Program (CLP). Laboratory analyses under the CLP are the empirical basis for the entire Superfund program. Based on testing for the presence of hazardous chemicals by these laboratories, the Superfund program decides which cleanups to initiate and how to carry them out. Fraudulent analyses could result in a danger to the public health and safety as well as the unnecessary expenditure of cleanup funds. In addition, fraudulent analyses could hinder the Department of Justice's efforts to collect the cost of cleanups from the responsible parties. Three contract laboratory investigative cases are described below. Firm and President Convicted of 41 Counts T. Head and Company, Inc., known as THI, and Toney Head, Jr., the firm's owner, president and chief executive officer, were convicted in August 1994 of filing 41 false claims. THI of Herndon, Virginia, was to establish and monitor national shipping accounts for the shipment of laboratory samples of hazardous waste and other materials to certain contract laboratories for analysis. Under the cost plus fixed fee subcontract, with a value of greater than $2 million/ EPA was to pay THI for certain percentages of THI's direct and indirect costs. The investigation revealed that Head personally directed four former THI employees to falsify records which showed the number of hours that these employees worked on the EPA contract. Mr. Head used the false information to inflate numerous THI invoices submitted to EPA. Louisiana Company Debarred for 25 years; Managers for 50 Years On March 9, 1994, EPA debarred National Environmental Testing (NET) Gulf Coast, Inc., (with the exception of its Baton Rouge, Louisiana laboratory) for 25 years. Also, EPA debarred two of the company's managers, Joan Lutkenhaus and Cynthia Placko-Moore, for 50 years. As a result of an earlier investigation, NET Gulf Coast, Inc., pleaded guilty to making false, fictitious, and fraudulent claims under EPA's ------- EPA Office of the Inspector General Annual Superfund Report to the Congress for Fiscal 1994 56 contract for laboratory analyses of inorganic compounds. The two managers accepted responsibility for knowing of and participating in fraudulent manipulation of data and instructing subordinates to falsify data on CLP sample analyses in order to meet EPA CLP criteria. California Lab Indicted Eureka Laboratories, Inc., of Sacramento, California and 2 of its principal managers were indicted on 71 counts of making false documents and filing false claims. Each count carries a maximum penalty of five years imprisonment and a $250,000 fine. An analytical services laboratory, Eureka was hired by government agencies including EPA, the Army, the Air Force, and the Navy, to test water, soil, and air samples for environmental pollutants in connection with the remediation of hazardous waste sites. The government contracts required the tuning, calibration, and performance testing of laboratory equipment to make sure the data produced were accurate and reliable. The indictment alleged that the defendants routinely used sophisticated computer software commands to falsify its analytical test results so that it falsely appeared that Eureka properly calibrated and maintained its laboratory equipment. The indictment also alleged that Eureka concealed its fraudulent manipulations of data by removing various computer-generated "flags" or identifiers from the documents it delivered to government clients. The alleged fraudulent practices compromised the accuracy and reliability of the test results. The Eureka investigation was conducted by the EPA OIG, the U.S. Army Criminal Investigation Command, the U.S. Air Force Office of Special Investigations, and the California Environmental Protection Agency. OTHER INVESTIGATIVE ACTIVITY In addition to the CLP activity, EPA OIG investigations related to Superfund resulted in the prosecutive activity and administrative actions described below. Battery Company Owner Pleads Guilty Charles L. Guyton, owner of C&R Battery, Inc., of Richmond, Virginia, pleaded guilty in November 1993 to making a false statement to EPA. He concealed personal assets from EPA in connection with his potential liability for the costs of Superfund cleanup of contamination at the battery company location. Former Section Chief and On-scene Coordinator Debarred for 3 Years On January 28, 1994, EPA debarred Robert E. Caron for three years. Mr. Caron was formerly employed as chief of the EPA Region 3 Emergency Response and Preparation Section and as an on-scene coordinator at hazardous waste sites for Superfund removal actions. Over an eight-year period, Mr. Caron falsely represented his educational qualifications on numerous occasions. In his guilty plea, Mr. Caron admitted to making false declarations for purposes of Federal employment and security clearances. On October 2, 1992, the U. S. District Court for the District of Maryland convicted Mr. Caron on one count of making false ------- EPA Office of the Inspector General Annual Superfund Report to the Congress for Fiscal 1994 57 declarations. The Court sentenced Mr. Caron to home confinement for three months followed by three years probation and a $2000 fine. Employee Reprimanded for Inflated CERCLIS Accomplishments The OIG Hotline office received a complaint alleging that Region 9 employees had backdated site inspection reports, misrepresented site assessment records, and made false entries in the CERCLIS database. Our review found Region 9 had claimed 212 invalid preliminary assessments and 63 invalid site inspections within three Superfund mega-sites between 1988 and 1991 in CERCLIS. The Region also claimed them as Superfund Comprehensive Accomplishment Plan accomplishments to be included in EPA's Superfund Annual Report to the Congress. As a result of the review, the invalid accomplishments were removed from CERCLIS and a senior- level EPA employee received a written reprimand. ------- EPA Office of the Inspector General Annual Superfund Report to the Congress for Fiscal 1994 58 EXHIBIT 1 1 OF 7 SUPERFUND REVIEW REPORTS ISSUED DURING FISCAL 1994 INTERNAL AND MANAGEMENT AUDITS AND SPECIAL REVIEWS Final Report Number Description Audit Control Number Date Report Issued Reviews Related To Statutory Requirements (other than IG Act) 4100229 AGENCY FY93 RE PORT -CONSOLIDATED CERCLIS DATA 4100212 AGENCY FY93 REPORT-REGION 1 CERCLIS DATA 4100196 AGENCY FY93 REPORT-REGION 5 CERCLIS DATA 4100213 AGENCY FY93 REPORT-REGION 6 CERCLIS DATA 4100201 AGENCY FY93 REPORT-REGION 7 CERCLIS DATA 4100231 FINANCIAL STATEMENTS - FISCAL 1993 4400065 RESPONSE CLAIM - MARION BRAGG LANDFILL, IN 4400094 RI/FS REVIEW - AM. CREOSOTE, LA/POPILE, AR 4400032 RI/FS REVIEW - FRONTIER HARD CHROME, WA 4400070 RI/FS REVIEW - PALMERTON ZINC, PA 4400014 RI/FS REVIEW - PURITY OIL, CA 4400018 RI/FS REVIEW - VINELAND CHEMICAL CO., NJ Other Performance Audits 4100579 BANKRUPTCY SETTLEMENTS 4100111 COMPETITION IN SUPERFUND CONTRACTING 4100462 CONTRACTS NOT CLOSED 4100522 FMFIA ADMINISTRATION - CAPPING REPORT 4100224 FMFIA ADMINISTRATION - OSWER 4100233 ICF CONTRACTS COMPETITION 4100218 REGION 5 ADMIN. OF MICHIGAN COOP. AGREEMENTS 4100180 SUPERFUND SITE ASSESSMENTS Follow-Up Review 4400091 RESPONSE CLAIMS FpLLOW-UP Other Special Reviews 4400092 ALLOCATION TOOLS/MIXED FUNDING PILOTS-REG. 5 4400103 ADMINISTRATIVE IMPROVEMENTS - REGION 7 4400076 CONFLICT OF INTEREST POLICIES /PROCEDURES 4400115 CONTRACT LABORATORY PROGRAM MANAGEMENT 4400017 ENFORCEMENT PILOTS - REGION 1 4400024 ENFORCEMENT PILOTS - REGION 8 4400037 ENFORCEMENT PILOTS - SF REVITALIZATION OFC. 4400112 ERCS CONTRACTS AUDITS ANALYSIS 4400025 ESAT CONTRACT USE - REGION 9 4400042 FINANCIAL MANAGEMENT REVIEW-CONG. REQUEST 4400038 INFORMATION RESOURCES MGMT.-CONG. REQUEST 4400059 INNOVATIVE DATA VALIDATION PILOT-REGION 3 4400100 RISK REDUCTION ENG. LAB. CONSOLIDATION 4400011 SACM PILOT - NATIONAL ZINC, OK 4400080 SACM PILOTS - REGION 5 4400073 SACM PILOTS - REGION 10 4400110 VEHICLE USE BY REG. 3 ON-SCENE COORDINATORS E1SFF3-11-0029 E1SFL4-01-0032 E1SFL4-05-0017 E1SFL4-06-0033 E1SFL4-07-0015 P1SFL3-20-8003 E9HGP2-23-0369 E1SGG3-14-0015 E1SGG3-14-0009 E1SGG3-14-0013 E1SGG3-14-0008 E1SGGO-14-0010 E1SFF3-20-8004 E1SFF3-11-0020 E1SFF3-03-0162 E1SFE3-07-0101 E1SFE3-07-0101 E1SKF3-03-0161 E1SGF2-05-0269 E1SFF3-08-0021 E1SFG4-11-5015 E1SFG4-05-0175 E1SFG4-07-0047 E1SFG4-13-0063 E1SKG3-09-0021 E1SJG3-01-0138 E1SJG3-01-0138 E1SJG3-01-0138 E1SHG3-18-0045 E1SKG3-09-0258 E1SFG3-11-0026 E1SKG3-15-0098 E1SKG4-03-0122 E1SKF4-02-0059 E1SGG3-06-0097 E1SFG4-05-0129 E1SGG4-06-0056 E6FHG4-03-0266 3/30/94 3/18/94 3/ 3/94 3/21/94 3/ 3/94 3/31/94 5/24/94 8/ 4/94 2/24/94 6/16/94 12/21/93 2/ 4/94 9/30/94 12/ 7/93 7/21/94 9/16/94 3/28/94 3/31/94 3/23/94 1/31/94 7/29/94 7/29/94 9/ 7/94 6/22/94 9/29/94 12/22/93 1/31/94 3/ 9/94 9/29/94 1/31/94 3/31/94 3/15/94 5/10/94 8/25/94 12/10/93 7/ 7/94 6/20/94 9/22/94 ------- EPA Office of the Inspector General Annual Superfund Report to the Congress for Fiscal 1994 59 EXHIBIT 1 2 OF 7 SUPERFUND REVIEW REPORTS ISSUED DURING FISCAL 1994 Final Report Number Auditee Audit Control Number Date' Report Issued COOPERATIVE AGREEMENTS 4300011 4100530 4300033 4400046 4100167 4100496 4400111 4100488 4400061 4300026 4300006 4100017 AR DEPT. POLL. CONTROL & ECOLOGY-MIDLAND PR. AZ DEPT. OF ENV. QUAL .- INDIRECT CSTS-FY90-91 CA DEPT. OF HEALTH- INDIRECT COSTS-FY88- 91 CA DEPT. OF HEALTH -ACCT'G & INT. CONTROLS CO DEPARTMENT OF HEALTH-REMEDIAL/CORE/PA/SI GA DEPT. OF NAT. RES . -PA/SI/CORE/ENF . SUPP . IL ENVIRON. PROTECTION AGENCY-CORE PROGRAM MN POLLUTION CONTROL AGENCY-RITARI POST/POLE MN POLLUTION CONTROL AGENCY-RITARI PROCUREMT OK DEPT. OF HEALTH-TAR CREEK & OK REFINING TX WATER COMMISSION-REMEDIAL ACTIVITIES TX WATER COMMISSION-SIKES E5BGN3 E5DGL4 S5DGN2 S5AGP4 P5BGL2 E5BGL4 E5FGS4 E5FGF4 E5FGT4 E5BGN3 E5BGN3 P5BGL2 -06- -09- -09- -09- -08- -04- -05- -05- -05- -06- -06- -06- 0182 0202 0047 0147 0089 0097 0261 0138 0138 0090 0083 0193 11/30/93 9/21/94 3/31/94 3/31/94 I/ 4/94 8/22/94 9/23/94 8/15/94 5/13/94 2/ 2/94 11/15/93 10/15/93 INTERAGENCY AGREEMENTS 4100514 41001661 4100188 4100190 4100508 4100165 4100189 4100164 4100509 AGENCY FOR TOXIC SUBST . & DISEASE REG.-FY92 ARMY CORPS OF ENGINEERS -FISCAL 1992 ARMY CORPS OF ENGINEERS -FISCAL 1992 BUREAU OF RECLAMATION- FISCAL 1992 COAST GUARD-FISCAL 1992 FEDERAL EMERGENCY MGMT. AGENCY- FISCAL 1992 FISH & WILDLIFE SERVICE- FISCAL 1991-92 JUSTICE DEPARTMENT- FISCAL 1992 NAT'L INST. OF ENV. HEALTH SCIENCES-FY92 H5BFL4 M5BFL4 M5BFL4 M5BFL4 M5BFL4 M5BFL4 M5BFL4 M5BFL4 H5BFL4 -11- -11- -11- -11- -11- -11- -11- -11- -11- 0034 0012 0017 0019 0032 0011 0018 0013 0033 8/31/94 I/ 4/94 2/22/94 2/22/94 8/26/94 I/ 4/94 2/22/94 I/ 4/94 8/26/94 Reissued as 4100188. The original issuance had missing pages. ------- EPA Office of the Inspector General Annual Superfund Report to the Congress for Fiscal 1994 60 SUPERFUND REVIEW REPORTS ISSUED DURING FISCAL 1994 EXHIBIT 1 3 OF 7 CONTRACT AUDITS Final Report Number Auditee Initial Pricing Reviews 4100422 ACUREX, PA 4100506 AE ENVIRONMENTAL SERVICES, 4100410 ARTHUR ANDERSON, IL 4100172 BATTELLE MEMORIAL INSTITUTE, 4100024 BOOZ, ALLEN & HAMILTON, 4100552 BROWN AND ROOT ENVIRONMENTAL 4100447 CACI, INC., VA 4100286 C.C. JOHNSON, MD 4100554 C.C. JOHNSON & MALHOLTRA, 4100273 CDM FEDERAL PROGRAMS CORE 4100038 CF SYSTEMS, ID (MORRISON 4100269 CF SYSTEMS, ID.(MORRISON 4100225 CH2M HILL INC., OR-ARCS I 4100142 CH2M HILL INC., OR-CATALOG 4100500 DESA, INC., SC-ACCOUNTING 4100403 DYNCORP, VA 4100404 DYNCORP, VA 4100364 DYNCORP VIAR, VA-SAMPLE V. 4100013 ENERGY & ENVIRONMENTAL RE 4100310 FOSTER WHEELER U.S. CORP. 4100515 FOSTER WHEELER U.S. CORP. 4100064 HYDROGEOLOGIC, INC., VA 4300008 INDUSTRIAL ECONOMICS, INC. 4100040 INTERNATIONAL TECHNOLOGY 4100011 KIBER ENVIRONMENTAL, GA 4100049 LOCKHEED ENVIRONMENTAL S 4100220 LOCKHEED ENVIRONMENTAL S 4100264 LOCKHEED ENVIRONMENTAL S' 4100235 MANTECH RESEARCH, NC 4400001 OHM REMEDIATION, -OH-ERCS 4400002 OHM REMEDIATION, OH-ERCS 4400004 OHM REMEDIATION, OH-RISK 4100028 PEER CONSULTANTS, MD-SUB 4400117 PRC ENVIRONMENTAL MGMT., 4400074 PRC ENVIRONMENTAL MGMT., 4100009 PSARA TECH, OH 4100010 RE WARNER, OH 4100279 RESOURCE TECHNOLOGY CORP 4100288 ROY F. WESTON, PA 4100536 ROY F. WESTON, PA 4100014 SCIENCE APPLICATIONS INT 4100296 SCIENCE APPLICATIONS INT 4100027 SCICOMM, INC., MD 4100283 SYSTEMS RESEARCH & SYSTEMS, 4300036 UNIVERSITY OF IDAHO, ID ; , INC . , wv ITE , OH CD rTAL, MD- SUBCONTRACT MD 'ORATION, VA KNUDSEN SUBSIDIARY) KNUDSEN SUBSIDIARY) V TERM. SETTLEMENT )G PRICING ! SYSTEM SURVEY [GMT OFFICE MOD. ISEARCH, CA , NJ-SUB.-DYNAMAC , NJ-SUB. -WESTON :. , MA CORP . , CA 'STEMS , TX 'STEMS , TX 'STEMS , TX 2 Z2 FY90 EQUIP. 2 21 FY90 EQUIP. REDUCT. ENG. LAB. TO SAIC IL-SUB TO WESTON IL-TECH. SUPPORT , WY L CORP . , . CA L CORP . , CA IS,. VA - Audit Control Number D9AKL4-09-0193 D9AFL4-03-0453 D9AFL4-05-0211 D9AFL3-05-0362 D9AKL3-03-0292 D9AKL4-03-0454 D9AJL3-03-0247 D9AFL4-03-0189 D9AFL4-03-0451 D9AFL4-03-0190 D9AGL3-10-0119 D9AGL4-10-0072 P9AGL2-10-0089 D9AGL3-10-0033 D9AJL4-04-0237 D9AKL4-03-0277 D9AFL4-03-0276 D9AFL4-03-0273 D9AGL3-09-0226 D9AFL4-02-0112 D9AFL4-02-0173 D9AJL3-03-0441 D9AFN3-C1-0275 D9AGL3-09-0250 D9AKL3-04-0312 D9AKL3-06-0153 D9AKL4-06-0072 D9AKL4-06-0090 D9AKL4-04-0117 P9AHP2-23-0022 P9AHP2-23-0021 E9AKP3-23-0013 D9AKL3-03-0380 E9AKP4-05-0291 E9AKP4-05-0241 D9AKL3-05-0330 D9AKL3-05-0333 D9AKL4-08-0048 D9AFL4-03-0188 D9AKL4-03-0450 D9AGL3-09-0227 D9AGL4-09-0153 D9AKL3-03-0375 D9AFL4-03-0146 H9AGN4-10-0082 Date Report Issued 6/23/94 8/25/94 6/17/94 1/10/94 10/19/93 9/23/94 7/14/94 5/16/94 9/23/94 5/10/94 10/21/93 5/ 3/94 3/28/94 12/21/93 8/24/94 6/14/94 6/14/94 6/ 7/94 10/13/93 5/20/94 9/ 8/94 ll/ 9/93 11/15/93 10/21/93 10/13/93 10/27/93 3/24/94 4/29/94 3/31/94 10/ 1/93 10/ 7/93 10/15/93 10/19/93 9/30/94 6/21/94 10/12/93 10/12/93 5/10/94 5/16/94 9/22/94 10/13/93 5/18/94 10/19/93 5/16/94 6/ 7/94 ------- EPA Office of the Inspector General Annual Superfund Report to the Conqress for Fiscal 1994 61 EXHIBIT 1 4 OF 7 SUPERFUND REVIEW REPORTS ISSUED DURING FISCAL 1994 CONTRACT AUDITS (continued) Final Report Number Auditee • Audit Control Number Date Report Issued Interim Audits 4100031 4400050 4100106 4100021 4100130 4100352 4100314 4100396 4400019 4100566 4100436 4100560 4100512 4100398 4100309 4100417 4100489 4100045 4100272 4400035 4400036 4100532 4100308 4100136 4100492 4100371 4100372 4100373 4100295 4100156 4100293 4100016 4100019 4100299 4400003 4100365 4100085 4100086 4100083 4100094 4100071 4100090 4100413 4100354 4100353 AEROSPACE, CA-FISCAL 1991 ALLIANCE TECHNOLOGIES CORP.', MA- SUBCONTRACT ARTHUR YOUNG AND CO., DC-MGMT. SUPP . SERV. BECHTEL NATIONAL, INC., CA-FISCAL 1990 BOO2, ALLEN & HAMILTON, VA-4/89-3/90 C.C. JOHNSON & MALHOTRA, MD-FISCAL 1989 CDM FEDERAL PROGRAMS CORPORATION, VA-1939 CDM FEDERAL PROGRAMS CORPORATION, VA-ARCS CET ENV. SERVICES, WA-ERCS EQUIP. RATE REV. CH2M HILL, INC., OR-ARCS REGION 3-1988-89 CH2M HILL, INC., OR-ARCS REGION 5-1988-89 CH2M HILL, INC., OR-ARCS REGION 6-1988-89 CH2M HILL, INC., OR-ARCS WEST-1989 CH2M HILL, INC., OR-REM/FIT-1987-89 CH2M HILL, INC., OR-REM IV-1987-89 CH2M HILL, INC., OR-TECH 1-1987-88 CH2M HILL, INC., OR-TECH 11-1988-89 DEV. PLANNING & RES. ASSOC., INC., KS-CAS DEV. PLANNING & RES. ASSOC., INC., KS-FY91 DONOHUE, WI-ARCS REG. 5 REM. PLANNING COSTS DONOHUE, WI-ARCS REG. 5 PROG. MGMT. COSTS DYNAMAC, INC., MD-FISCAL 1989 ENVIRONMENTAL MGMT SUPPORT, MD-FY1987-88 GENERAL SCIENCES CORP., MD-8/89-7/91 H+GCL, INC., NM-FY90 DIRECT & INDIRECT COSTS KENDRICK AND CO., DC-FISCAL YEARS 1984-86 KENDRICK AND CO., DC-FISCAL YEAR 1987 KENDRICK AND CO., DC-FISCAL YEARS 1989-90 KEYDATA SYSTEMS, INC., VA-7/89-9/92 LAWRENCE JOHNSON- & ASSOCIATES, MD-7/88-6/89 LOS ALAMOS TECH. ASSOC., NM-ARCS SUBCONTRACT MONTGOMERY WATSON AMERICAS, INC., CA-FY89 MONTGOMERY WATSON AMERICAS, INC., CA-FY90 NUS CORP. , MD-1988 OHM REMEDIATION, OH-ERCS 2, ZONE 2-FY91 RESOURCE APPLICATIONS, INC., VA-FY 1990-91 ROY F. WESTON, PA- ARCS REGION 1 ROY F. WESTON, PA- ARCS REGIONS 9 & 10 ROY F. WESTON, PA- CALENDAR 1990 ROY F. WESTON, PA- CALENDAR 1990 ROY F. WESTON, PA-OHMSETT, HWERL, CINC. ROY F. WESTON, PA-SERVICE FEES-1990 SHANNON & WILSON, WA-1990 DIRECT & INDIRECT TECHNICAL RESOURCES, INC., MD-FISCAL 1988 TECHNICAL RESOURCES, INC., MD-FISCAL 1989 D9BGL4-09-0036 E9BHP3-01-0123 D9BFL3-03-0302 D9BGL2-09-0223 D9BFL3-03-0319 D9BFL4-03-0338 D9BFL4-03-0328 D9BFL2-03-0295 D9BHP3-10-0093 P9BGL4-10-0147 P9BGL4-10-0124 P9BGL4-10-0149 P9BGL4-10-0132 P9BGL4-10-0107 P9BGL4-10-0083 P9BGL4-10-0117 P9BGL4-10-0129 D9BJL3-07-0144 D9BJL4-07-0065 P9BGP3-23-0309 P9BGP3-23-0309 D9BFL4-03-0502 D9BFL4-03-0317 D9BFL2-03'-0203 D9BKL4-06-0151 D9BFL4-03-0363 D9BFL4-03-0364 D9BFL4-03-0365 D9BKL2-03-0599 D9BFL2-03-0460 D9BKL4-06-0102 D9BGL4-09-0031 D9BGL4-09-0035 D9BKL4-03-0148 P9BHP2-23-0405 D9BFL2-03-0584 D9BFL2-03-0272 D9BFL2-03-0274 D9BFL2-03-0146 D9BKL4-03-0109 D9BFL2-03-0275 D9BFL4-03-0104 D9BGL4-10-0119 D9BFL4-03-0339 D9BFL2-03-0471 10/19/93 4/ 4/94 12/ 6/93 10/18/93 12/17/93 6/ 1/94 5/23/94 6/ 9/94 1/19/94 9/28/94 6/29/94 9/26/94 8/30/94 6/10/94 5/19/94 6/22/94 8/16/94 10/25/93 5/10/94 3/ 4/94 3/ 4/94 9/22/94 5/18/94 12/21/93 8/17/94 6/ 7/94 6/ 7/94 6/ 7/94 5/18/94 I/ 3/94 5/18/94 10/14/93 10/15/93 5/18/94 10/13/93 6/ 7/94 li/19/93 11/19/93 11/19/93 11/30/93 11/15/93 11/24/93 6/21/94 6/ 1/94 6/ 1/94 ------- EPA Office of the Inspector General Annual Superfund Report to the Congress for Fiscal 1994 62 EXHIBIT 1 5 OF 7 SUPERFUND REVIEW REPORTS ISSUED DURING FISCAL 1994 CONTRACT AUDITS (continued) Final Report Number Audi tee Interim Audits (continued) 4100146 UNISYS, VA-1989 RTF FAC . MGMT/NPDP SUPPORT 4100471 URS CONSULTANTS, INC., WA-ARCS FISCAL 1989 4100311 VERSAR, INC., VA-7/87-6/89 4100548 VIGYAN RESEARCH ASSOCIATES, VA-FISCAL 1990 4100502 WADE MILLER & ASSOCIATES, VA-FY 1991-92 4100538 WESTINGHOUSE REMEDIATION SERVICES, GA-FY91 4400039 WW ENGINEERING CO., MI-ARCS 1-FISCAL 1992 Final Audits 4100226 CH2M HILL, INC., OR- ARCS -REGION 4 4100397 ECOLOGY & ENVIRONMENT, NY-NIAGARA FALLS 4100498 HDR ENGINEERING, INC., NE-ARCS SUBCONTRACT 4100092 ROY F. WESTON, PA-REMEDIAL SERVICES 4100297 ROY F. WESTON, PA-ARCS-9/28/89-9/30/91 4100439 SCIENCE APPLICATIONS INT'L CORP., CA-R&D 4100228 VIAR, VA-CONTRACT NO. 68-01-6702 4100529 WILLIAMS -RUSSELL & JOHNSON, GA-REM V Indirect Costs 4100227 ALLIANCE TECHNOLOGIES CORP., MA-7/88-6/89 4100292 ALLIANCE TECHNOLOGIES CORP., MA-7/89-6/90 4100329 ALLIANCE TECHNOLOGIES CORP., MA-7/90-6/91 4400034 DONOHUE, WI-FISCAL 1991 4300021 'GUARDIAN ENVIRON. SERVICES, DE-11/90-10/91 4100041 INSTITUTE FOR TECHNOLOGY DEV. , MS-FY86 4100042 INSTITUTE FOR TECHNOLOGY DEV., MS-FY87 4100043 INSTITUTE FOR TECHNOLOGY DEV., MS-FY88 4100044 INSTITUTE FOR TECHNOLOGY DEV., MS-FY89 4100400 MANTECH TECHNOLOGY, NC-1990 4100419 MANTECH TECHNOLOGY, NC-1991 4100251 MIDWEST RESEARCH INSTITUTE, MO 4100252 MIDWEST RESEARCH INSTITUTE, MO 4100542 NUS CORP., MD-FY94 PROVISIONAL BILLING RATES 4400097 PRC ENVIRONMENTAL MGMT ., IL-BONUSES 1990-92 4100078 ROY F. WESTON, PA-CALENDAR 1992 4100362 ROY F. WESTON, PA-CALENDAR 1993 RATES 4100244 SEAWARD SERVICES, INC., FL-FISCAL 1991 4100474 TRC .COMPANIES, INC., CT-CORPORATE G & A 4100266 WESTINGHOUSE REMEDIATION SERVICES, GA-FY91 4400040 WW ENGINEERING CO., MI-ARCS 1-FISCAL 1992 Audit Control Number D9BFL2-03-0235 D9BGL3-10-0088 D9BFL2-03-0220 D9BFL2-03-0438 D9BFL2-03-0598 E9BGL3-04-0234 P9BGP3-23-0133 P9CGL2-10-0127 P9CGL2-02-0283 D9CGL4-07-0035 D9CKL4-03-0105 •D9CFL3-03-0283 D9CGL4-09-0077 D9CKL2-03-0316 D9CKL4-04-0215 P9DGL2-01-0247 P9DGL2-01-0247 P9DGL2-01-0247 P9DGP3-23-0287 P9DFN3-03-0126 D9DKL4-04-0038 D9DKL4-04-0039 D9DKL4-04-0040 D9DKL4-04-0041 D9DKL2-04-0375 D9DKL2-04-0376 D9DGL4-07-0058 D9DGL4-07-0059 D9DFL4-03-0508 E9DKP4-05-0070 D9DFL2-03-0398 D9DFL4-03-0368 D9DKL2-04-0314 P9DGL2-01-0220 E9DHL3-04-0253 P9DGP3-23-0132 Date Report Issued 12/22/93 8/ 2/94 5/23/94 9/23/94 8/25/94 9/22/94 . 3/18/94 3/29/94 6/ 9/94 8/24/94 11/24/93 5/18/94 7/ 7/94 3/30/94 9/19/94 3/29/94 5/16/94 5/26/94 3/ 4/94 I/ 5/94 10/22/93 10/22/93 10/22/93 10/22/93 6/13/94 6/23/94 4/18/94 4/18/94 9/23/94 8/12/94 11/19/93 6/ 7/94 4/ 7/94 8/ 3/94 5/ 3/94 3/18/94 ------- EPA Office of the Inspector General Annual Superfund Report to the Congress for Fiscal 1994 63 EXHIBIT 1 6 OF 7 SUPERFUND REVIEW REPORTS ISSUED DURING FISCAL 1994 CONTRACT AUDITS (continued) Final > Report Number System 4100389 4100134 4100219 4100393 4400067 4400049 4400055 4400082 4400031 4400048 4300042 4100242 4400028 4400064 4400027 4400008 4100210 4400013 4400060 4100140 4100435 4100144 4100065 4100066 4100337 4100069 4100077 4100087 4100067 4100068 4100070 4100374 4100074 4100082 4100091 4100392 4100073 4100081 4100072 4100080 4100084 4100116 Auditee Surveys BOOZ, ALLEN & HAMILTON, VA- TIMEKEEPING CHEMICAL WASTE MANAGEMENT, INC., WV CH2M HILL, INC., OR- PROJECT CONTROL SYSTEM CH2M HILL, INC., OR- SUBCONTRACT ADM. SYSTEM COMPUTER SCIENCE CORP . , VA-LABOR TRANSFERS ECOLOGY & ENVIRONMENT, NY-BILLING SYSTEM ECOLOGY & ENVIRONMENT, NY- COST IMPACT . ECOLOGY & ENVIRONMENT, NY-DISCLOSURE STATE. ECOLOGY & ENVIRONMENT, NY- ESTIMATING SYSTEM ECOLOGY & ENVIRONMENT, NY- INTERNAL CONTROLS ICF CORP., VA-CAS 405, SUBCONTRACT BILLING MANTECH RESEARCH, NC-DISCLOSURE STATEMENT OHM REMEDIATION, OH-COST ACCOUNTING ' OHM REMEDIATION, OH-DESTRUCTION OF RECORDS OHM REMEDIATION, OH-DISCLOSURE STATEMENT OHM REMEDIATION, OH-FAR COMPLIANCE PRC ENVIRONMENTAL MGMT., IL-ACCT'G SYSTEM REIDEL ENV. SERVICES, OR-REV. CAS DISCL. REIDEL ENV. SERVICES, OR- FIN. CAPABILITY RESOURCE APPLICATIONS, INC., VA-EST. SYSTEM RESOURCE APPLICATIONS, INC., VA-TIMEKEEPING ROY F. WESTON, PA-BILLING SYSTEM ROY F. WESTON, PA-CALENDAR 1992 ROY F. WESTON, PA-CAS 404 COMPLIANCE ROY F. WESTON, PA-CAS 406 COMPLIANCE ROY F. WESTON, PA-CAS 408 COMPLIANCE ROY F. WESTON, PA-CAS 409 COMPLIANCE ROY F. WESTON, PA-CAS 410 COMPLIANCE ROY F. WESTON, PA-CAS 412 COMPLIANCE ROY F. WESTON, PA-CAS 413 COMPLIANCE ROY F. WESTON, PA-CAS 414 COMPLIANCE ROY F. WESTON, PA-CAS 415 COMPLIANCE ROY F. WESTON, PA-CAS 416 COMPLIANCE ROY F. WESTON, PA-CAS 420 COMPLIANCE ROY F. WESTON, PA- COMPENSATION SYSTEM ROY F. WESTON, PA- EDP CONTROLS ROY F. WESTON, PA-ESTIMATING SYSTEM ROY F. WESTON, PA- FLOOR CHECK ROY F. WESTON, PA- INTERNAL CONTROLS ROY F. WESTON, PA-LABOR PRACTICES ROY F. WESTON, PA-TRAVEL PROCUREMENT TECHLAW, INC., VA-ACCOUNTING SYSTEM CHANGE Audit Control Number D9EFL4-03-0154 D9EFL3-03-0054 P9EGLO-10-0037 P9EGL4-10-0077 D9EFP2-03-0312 P9EFP3-02-0192 P9EFP4-02-0040 E9EFP4-02-0155 P9EGP1-02-0157 P9EFP2-02-0267 E9EFN4-22-0149 D9EKL4-04-0110 E9EHP3-23-0008 E9EHT4-23-0016 E9EHP3-23-0008 E9EHP3-23-0004 E9EKL3-05-0174 E9EGP3-10-0111 E9EHP4-10-0044 D9EFL4-03-0102 D9EFL4-03-0353 D9EFL3-03-0295 D9EFL3-C3-0074 D9EFL3-03-0186 D9EFL4-03-0352 D9EFL3-03-0187 D9EFL3-03-0128 D9EFL3-03-0182 D9EFL3-03-0184 D9EFL3-03-0185 D9EFL3-03-0183 D9EFL4-03-0361 D9EFL2-03-0100 D9EFL2-03-0099 D9EKL4-03-0106 D9EFL3-03-0093 D9EFL2-03-0098 D9EFL3-03-0296 D9EFL3-03-0188 D9EFL3-03-0143 D9EFL2-03-0135 D9EFL3-03-0175 Date Report Issued 6/ 8/94 12/21/93 3/23/94 6/ 8/94 6/ 7/94 4/ 4/94 4/26/94 7/20/94 2/24/94 4/ 1/94 8/15/94 4/ 5/94 2/ 4/94 5/20/94 2/ 4/94 12/ 3/93 3/18/94 12/20/93 5/11/94 12/21/93 6/28/94 12/22/93 11/15/93 11/15/93 6/ 1/94 11/15/93 11/19/93 11/19/93 11/15/93 11/15/93 11/15/93 6/ 7/94 11/15/93 11/19/93 11/24/93 6/ 8/94 11/15/93 11/19/93 11/15/93 11/19/93 11/19/93 12/ 8/93 ------- EPA Office of the Inspector General Annual Superfund Report to the Congress for Fiscal 1994 64 EXHIBIT 1 7 OF 7 SUPERFUND REVIEW REPORTS ISSUED DURING FISCAL 1994 CONTRACT AUDITS (continued) Final Report Number Auditee System Surveys (continued) 4100387 VIAR, VA-ADVISORY & ANALYT. ASST. CONTRACT 4100302 VIAR, VA-CAS 410 NONCOMPLIANCE 41001,73 VIAR, VA-CAS 418 COMPLIANCE 4100138 VIAR, VA-CAS DISCLOSURE STATEMENT ADEQUACY Audit Control Number D9EFL3-03-0230 D9EFL4-03-0311 D9EFL4-03-0150 D9EFL3-03-0138 4100131 VIAR, VA-CAS DISCLOSURE STATEMENT COMPLIANCE D9EFL3-03-0367 Program Reviews 4100222 REIDEL ENV. SERVICES, OR-BILLING SYSTEM 4400109 REIDEL ENV. SERVICES, OR-DISCLOSURE STATE. 4400051 WESTINGHOUSE REMEDIATION SERVICES, GA-1990 P9FGL2-10-0123 E9FGP4-10-0074 E9FKG4-04-0159 Date Report Issued 6/ 8/94 5/18/94 1/10/94 12/21/93 12/17/93 3/25/94 9/22/94 4/13/94 ------- EPA Office of the Inspector General Annual Superfund Report to the Congress for Fiscal 1994 65 APPENDIX: ACRONYMS AND ABBREVIATIONS Acct'g Accounting Adm. Administration Analyt. Analytical APO Administrative Project Officer (EPA) AR Arkansas ARCS Alternative Remedial Contracting Strategy Assoc. Associates Asst. Assistance ATSDR Agency for Toxic Substances and Disease Registry (HHS) AZ Arizona CA California CAS Cost Accounting Standards CDC Centers for Disease Control and Prevention (HHS) CERCLA Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended CERCLIS Comprehensive Environmental Response, Compensation, and Liability Information System, the Superfund management information system CFO Chief Financial Officer(s) Cine. Cincinnati CLP Contract Laboratory Program Co. Company CO Contracting Officer or Colorado COI Conflict of interest Cong. Congressional ------- EPA Office of the Inspector General Annual Superfund Report to the Congress for Fiscal 1994 66 Corp. Corporation CT Connecticut DC District of Columbia DE Delaware Dept. Department Dev. Development Disci. Disclosure DOI Department of the Interior DOJ Department of Justice DOT Department of Transportation EDP Electronic data processing EHRT Environmental Health, Research and Testing, Inc. Enf. Enforcement Eng. Engineering ENRD Environment and Natural Resources Division (DOJ) Env. Environmental Environ. Environmental EPA Environmental Protection Agency Equip. Equipment ERCS Emergency Response Cleanup Services (EPA contracts) ESAT Environmental Services Assistance Team (EPA contracts) ESD Explanation of Significant Differences Est. Estimating Fac. Facilities FACO Financial Administrative Contracting Officer (EPA) FAR Federal Acquisition Regulation ------- EPA Office of the Inspector General Annual Superfund Report to the Congress for Fiscal 1994 67 FEMA FIT FL FMD FMFIA FY GA G & A GDNR HHS HRS HWERL IAG ID IFMS IG IL. IN Inc. Inst. Int. Int'l IBM KS Lab. MA Federal Emergency Management Agency Field Investigation Team Florida Financial Management Division (EPA) Federal Managers' Financial Integrity Act Fiscal year Georgia General and administrative Georgia Department of Natural Resources Department of Health and Human Services Hazard Ranking System Hazardous Waste Engineering Research Laboratory (EPA) Interagency agreement Idaho Integrated Financial Management System (EPA) Inspector General Illinois Indiana Incorporated Institute Internal International Information resources management Kansas Laboratory Massachusetts ------- EPA Office of the Inspector General Annual Superfund Report to the Congress for Fiscal 1994 68 MD Maryland Mgmt. Management Ml Michigan MN Minnesota MO Missouri Mod. Modification MPCA Minnesota Pollution Control Agency MS Mississippi Nat'l National NC North Carolina NCR National Oil and Hazardous Substances Contingency Plan, 40 CFR Part 300 NDPD National Data Processing Division (EPA) NET National Environmental Testing, Inc. NIEHS National Institute of Environmental Health Sciences (HHS) NIH National Institutes of Health (HHS) NJ New Jersey NM New Mexico No. Number NPL National Priorities List OAM Office of Acquisition Management (EPA) OARM Office of Administration and Resources Management (EPA) OH Ohio Ol Office of Investigations (EPA OIG) OIG Office of the Inspector General OK Oklahoma ------- EPA Office of the Inspector General Annual Superfund Report to the Congress for Fiscal 1994 69 OR Oregon ORD Office of Research and Development (EPA) OSC On-Scene Coordinator (EPA) OSWER Office of Solid Waste and Emergency Response (EPA) PA Pennsylvania or Preliminary Assessment PA/SI Preliminary Assessment/Site Inspection PHS Public Health Service (HHS) Poll. Pollution Procuremt Procurement \ Prog. Program QA Quality assurance Qual. Quality R&D Research and development RGB Releases Control Branch (EPA) RCMS Removal Cost Management System Reg. Region 'Res. Research Rev. Revision Rl Remedial Investigation RI/FS Remedial Investigation/Feasibility Study ROD Record of Decision RREL Risk Reduction Engineering Laboratory (EPA) RREL-RCB Risk Reduction Engineering Laboratory-Releases Control Branch (EPA) RTP ' Research Triangle Park, NC SAI Superfund Administrative Improvements ------- EPA Office of the Inspector General Annual Superfund Report to the Congress for Fiscal 1994 70 SARA sc SI SIP SRMAC SRO State. Subst. Supp. Tech. THI TX VA WA Wl WV WY Superfund Amendments and Reauthorization Act of 1986 South Carolina Site Inspection Site Inspection Prioritization Superfund Senior Regional Management Acquisition Council (EPA) Superfund Revitalization Office (EPA) Statement Substances Support Technical T. Head and Company, Inc. Texas Virginia Washington Wisconsin West Virginia Wyoming ------- |