United State* Office of the Inspector General September 1991
Environmental Protection 401 M Street, S.W.
Agency Washington, D.C. 20460
EpA's Office °f the
Inspector General
Annual
Superfund Report
to the Congress
for Fiscal 1990
Printed on Recycled Paper
-------
EPA Office of Inspector General Annual Suoertund Report to the Congress for Fiscal 1990 I
FOREWORD
This is our fourth Annual Superfund Report to the Congress,
covering fiscal 1990 activities. The Superfund Amendments and
Reauthorization Act of 1986 (SARA) requires the Office of
Inspector-General (OIG) to audit the Superfund program annually
and to report to Congress annually on these required audits.
The beginning of the Superfund program created new and
unique cost accounting requirements. EPA has responded to these
new requirements over the years by significantly improving its
accounting and documentation of Superfund costs on a site-
specific basis. However, in our fiscal 1990 Trust Fund audit, we
found continuing problems with the reporting of Superfund
accounting information. The Agency's Integrated Financial
Management System (IFMS) did not have a reporting function to
provide complete and accurate reports for EPA management. Also,
EPA did not transfer complete and accurate accounting information
from the Contract Payment System to IFMS.
SARA requires the EPA Administrator to submit to Congress an
annual Superfund progress report each January 1 covering
activities during the prior fiscal year. EPA submitted its third
such report, due January 1, 1990, on November 19, 1990. SARA
requires the OIG to review that report for reasonableness and
accuracy. SARA also requires that the Agency report include our
report.
Our review of the Agency's report found that information in
the report on several topics was reasonable and accurate.
However, we expressed concern about the accuracy of some data in
the report from the Comprehensive Environmental Response,
Compensation, and Liability Information System (CERCLIS).
Problems with the reliability of CERCLIS data found in earlier
reviews had not been fully resolved.
Our reviews of the Agency's performance in managing the
Superfund program also found significant deficiencies. We
performed several reviews of EPA's enforcement efforts. In
reviews of cost recovery collections, we found EPA did not
usually record cost recovery receivables timely and did not act
promptly to collect amounts owed. We followed up on our fiscal
1986 audit of cost recovery actions and found continued problems.
EPA was still (1) not using alternative dispute resolution
procedures to collect amounts under $200,000, (2) not centrally
tracking bankruptcy cases and actions, (3) taking too long to
complete negotiations with responsible parties, (4) not always
taking cost recovery action before the end of the statute-of-
limitations period, and (5) not including some key information in
automated management information systems. We reviewed the
Agency's oversight of responsible party cleanup activities under
-------
EPA Office of inspector General Annual Suoerfund Report to the Congress tor Fiscal 1990 II
settlement agreements. In Region 2, we found EPA (1) took 6-36
months to review settlement deliverables, thus delaying cleanups,
(2) did not assess stipulated penalties for missing settlement
milestone dates, (3) did not adequately oversee its enforcement
support contractors, and (4) did not timely bill responsible
parties for EPA oversight costs.
We performed two reviews in the contract management area.
We audited the award fee process for Superfund cost-plus-award-
fee contracts. We found that EPA (1) often rewarded performance
that was less than satisfactory, (2) used different evaluation
procedures under different contracts, and (3) sometimes did not
inform contractors timely of needs for performance improvement.
We reviewed the Agency's bidding and award process for the
Alternative Remedial Contracting Strategy (ARCS) contracts. We
found that EPA succeeded in increasing competition, generally
awarded the contracts timely and followed most applicable Federal
acquisition regulations. However, EPA did not (1) prepare
required independent cost estimates, (2) adequately document its
resource requirements, and (3) establish criteria and procedures
to define and evaluate a contractor's efforts to use small and
disadvantaged businesses.
During .fiscal 1990, we initiated a major investigative
effort into the Contract Laboratory Program (CLP). This complex
investigation is finding fraud committed by a number of EPA
contractors which are part of the CLP. In fiscal 1990, one major
consent judgment was filed as a result of this investigative
effort. This effort continued in fiscal 1991, when it produced a
number of indictments and several guilty pleas.
In addition to reviewing Agency performance, we also take a
proactive role to help EPA management prevent future problems.
This includes review of draft documents and participation in EPA
work group meetings. During fiscal 1990, we continued to help
Agency work groups on technical assistance grants to citizens'
groups and cooperative agreements with States.
We are addressing difficulties in providing timely and
adequate audit and investigative coverage of major EPA contracts,
many of which support the Superfund program. We are requesting
additional resources to timely respond to audit requests from
Agency contract managers, and to identify contractor fraud, abuse
and mismanagement. We are improving coordination with other
Federal audit organizations responsible for auditing many EPA
contractors. For several major Superfund contractors, we are
assuming Federal audit responsibilities formerly carried by
others. We are putting auditors on site at some major
contractors to provide ongoing audit coverage. We intend to
audit major EPA cost-type contracts on a regular schedule to
identify problems for correction during the terms of the
contracts.
-------
EPA Office of Inspector General Annual Suoerfund Report to the Congress for Fiscal 1990
We are preparing a new long range strategic plan for
Superfund audits and investigations. Our new plan will address
current and anticipated needs in Superfund, and will coordinate
audit and investigative efforts.
We will continue to help Agency management deliver the most
effective and efficient Superfund program through a comprehensive
program of audits, investigations and fraud prevention.
John C. Martin
Inspector General
US EPA
Headquarters and Chemical Libraries .
EPA West Bldg Room 3340 H8Q08HOFV
Mailcode 3404T nv/rw 4>^|.nAij*.
1301 Constitution Ave NW PftrPfianBrfl UOll8CllOi
Washington DC 20004 ' on
202-566-0556
-------
EPA Office of Inspector General Annual Simerfund Report to the Congress for Fiscal 1990 jy
TABLE OF CONTENTS
PURPOSE 1
BACKGROUND 3
HAZARDOUS SUBSTANCE SUPERFUND 5
COOPERATIVE AGREEMENTS 10
ALABAMA DEPARTMENT OF ENVIRONMENTAL MANAGEMENT 10
CALIFORNIA DEPARTMENT OF HEALTH 12
CALIFORNIA STATE WATER RESOURCES CONTROL BOARD 16
GEORGIA DEPARTMENT OF NATURAL RESOURCES 19
KENTUCKY NATURAL RESOURCES AND ENVIRONMENTAL PROTECTION
CABINET 21
MISSISSIPPI DEPARTMENT OF ENVIRONMENTAL QUALITY .... 23
NEtf YORK STATE DEPARTMENT OF ENVIRONMENTAL
CONSERVATION 25
NORTH CAROLINA DEPARTMENT OF HUMAN RESOURCES 26
OREGON DEPARTMENT OF ENVIRONMENTAL QUALITY 28
SOUTH ADAMS COUNTY, COLORADO 31
TEXAS WATER COMMISSION - BIOECOLOGY SITE 33
TEXAS WATER COMMISSION - HIGHLANDS SITE 35
TEXAS WATER COMMISSION - SIKES SITE 36
REGION 8 ADMINISTRATION OF SUPERFUND COOPERATIVE
AGREEMENTS - FOLLOW-UP REVIEW 37
REMEDIAL INVESTIGATIONS AND FEASIBILITY STUDIES 41
BAIRD & McGUIRE COMPANY SITE, HOLBROOK, MA 41
IRON HORSE PARK SITE, NORTH BILLERICA, MA 42
NYANZA CHEMICAL SITE, ASHLAND, MA 43
SELMA PRESSURE TREATING SITE, SELMA, CA 46
PERFORMANCE AUDITS AND SPECIAL REVIEWS 48
COST RECOVERY COLLECTIONS 48
COST RECOVERY ACTIONS FOLLOW-UP REVIEW 52
OVERSIGHT OF POST-SETTLEMENT ACTIVITIES 56
REGION 4 REMOVIAL ACTIVITIES 60
SUPERFUND INNOVATIVE TECHNOLOGY EVALUATION
DEMONSTRATION PROGRAM 66
COST-PLUS-AWARD-FEE CONTRACTS 71
ARCS CONTRACTS BIDDING AND AWARD 74
CERCLIS REPORTING 79
CERCLIS POST-IMPLEMENTATION STUDY SPECIAL REVIEW .... 82
REGION 5 CONFIDENTIAL DISCLOSURE STATEMENTS 84
INVESTIGATIVE-DERIVED WASTES SPECIAL REVIEW 86
ENVIRONMENTAL RESPONSE BRANCH SITE-SPECIFIC TIMEKEEPING
SPECIAL REVIEW 87
BETTER BRITE ZINC SHOP SITE, WI, UNANNOUNCED SITE
REVIEW 88
-------
EPA Office of Inspector Ganafal Annual Stiparfund Raoort to the Conorsss for Fiscal 1990 y
BUNKER HILL SITE, ID, SPECIAL REVIEW 89
OLIN CORPORATION, OH, SPECIAL REVIEW 92
XNTERAGENCY AGREEMENTS 95
U.S. ARMY CORPS OF ENGINEERS 95
DEPARTMENT OF ENERGY 95
FEDERAL EMERGENCY MANAGEMENT AGENCY 95
DEPARTMENT OF THE INTERIOR 96
INTERNAL REVENUE SERVICE 98
DEPARTMENT OF JUSTICE 98
CONTRACTS 99
CHEM-TLE'S TERMINATION SETTLEMENT PROPOSAL 100
KAAREN JOHNSON ASSOCIATES TRAINING SUPPORT SERVICES
CONTRACT 101
ASSISTANCE TO EPA MANAGEMENT 103
REVIEW OF AGENCY*S SUPERFDND PROGRESS REPORT 106
INVESTIGATIVE ACTIVITY 108
EXHIBIT I 109
EXHIBIT II 113
EXHIBIT III 116
APPENDIX: ACRONYMS AND ABBREVIATIONS 119
-------
EPA Office of Inspector General Annual Suoerfund Report to the Congress for Fiscal 1990 1
PURPOSE
This report is provided pursuant to section lll(k) of the
Comprehensive Environmental Response, Compensation, and Liability
Act (CERCLA) of 1980, as amended. The Superfund Amendments and
Reauthorizat'ion 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 1990 audits of Superfund activities. The required four
audit areas are discussed below.
This report contains chapters on the three mandated areas in
which we performed reviews. We are also summarizing other
Superfund audit work, assistance to EPA management and Superfund
investigative work which we performed during fiscal 1990. We go
beyond the statutory requirements to provide the Congress with
significant results of all of our Superfund work.
Trust Fund
CERCLA requires ". . .an annual audit of all payments,
obligations, reimbursements, or other uses of the Fund in the
prior fiscal year . . . ." We call this our Trust Fund audit.
It is a financial and compliance audit of EPA obligations and
disbursements from the Hazardous Substance Superfund during the
fiscal year.
Claims
CERCLA requires an annual audit to assure ". . . that claims
are being appropriately and expeditiously 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. No claims were submitted during
fiscal 1990. In future years, we will audit claims large enough
to be considered material.
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. In some instances, our
audits also review program performance. In addition, we
sometimes review EPA regional management of the cooperative
agreement program.
-------
EPA Office of Inspector General Annual Suoerfund Report to the Congress for Fiscal 1990
Remedial Investigations/Feasibility Studies (RI/FS)
CERCLA requires our "... examination of remedial
investigations and feasibility studies prepared for remedial
actions . . . ." Our RI/FS examinations provide a technical
review of 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 Inspector General Annual Stmerfund Report to the Congress for Fiscal 1990 2
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 response is not required by other Federal
laws. CERCLA established a Hazardous Substance Response Trust
Fund to provide funding for responses ranging from control of
emergency situations 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.
CERCLA was revised and expanded by the Superfund Amendments
and Reauthorization Act of 1986 (SARA), Public Law 99-499,
enacted October 17, 1986. 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 has been
substantially revised 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
on the basis of 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.
-------
EPA Office of Inspector General Annual Suoarfund Report to the Congress for Fiscal 1990 4
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 preremedial 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 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 - preremedial, remedial,
removal and enforcement.
-------
EPA Office of Inspector General Annual Suoerfund Report to the Congress for Fiscal 1990 5
HAZARDOUS SUBSTANCE SUPERFUND
SCOPE AND OBJECTIVES
We contracted with an independent public accounting (IPA)
firm to perform an audit of EPA's Schedules of Obligations and
Disbursements for the Hazardous Substance Superfund (Superfund)
for the fiscal year ended September 30, 1990. The IPA examined,
on a test basis, financial management records at EPA's Servicing
Finance Offices and accounting points located at six of the ten
regional offices, three major laboratory facilities, and
Headquarters. The four regional offices excluded from audit
field work accounted for less than five percent of fiscal 1990
obligations and disbursements.
As part of the audit, the IPA selectively tested (using
statistical and non-statistical samples) obligation and
disbursement transactions. The objectives of this audit were to
determine if EPA:
a. Presented the Schedules of Obligations and Disbursements
fairly, in all material respects, in accordance with
applicable laws, regulations and guidelines;
b. Complied with laws and regulations which, if not followed,
might have a material effect upon the Schedules of
Obligations and Disbursements; and
c. Established an adequate internal control structure to ensure
the reliability of applicable financial management records.
The audit also included a review of the status of findings
and recommendations included in the prior audit reports for
fiscal years 1988 and 1989. In addition, the IPA performed
agreed-upon procedures regarding certain financial management and
personal property records for fiscal 1990.
It was not within the scope of this audit to determine the
allowability and allocability of the general support services
cost pools that EPA accumulated and allocated to Superfund or to
verify the bases for these allocations.
FINDINGS
1. financial Results of Audit
During fiscal 1990, EPA obligated over $1.5 billion and
disbursed almost $1.1 billion. The IPA questioned obligations
and disbursements as shown below for reasons that we summarize in
-------
EPA Office of Inspector General Annual Superfund Report to the Congress tor Fiscal 1990 g
the remaining findings. We detail the financial results of this
audit in Exhibits I and II.
Total Accented Ineliaible1 Unsupported2
Obligations $1,550,587,893 $1,536,775,234 $ 0 $13,812,669
Disbursements $1,093,339,957 $1,085,414,782 $ (141,126) $8,066,301
2. Internal Control Weaknesses Existed in IFMS
A material internal control weakness existed in the
reporting capabilities of the Integrated Financial Management
System (IFMS). The IFMS did not have a reporting function to
provide complete and accurate reports for EPA management. Also,
complete and accurate accounting information was not transferred
from the Contract Payment System to IFMS. In addition, EPA had
not updated the Agency's accounting procedures into the Resources
Management Directives System since the implementation of IFMS in
March 1989.
3. Accounts Receivable
EPA needed to improve the recording and managing of accounts
receivable and collections. Our audit showed that EPA did not
record in a timely manner 51 receivables, totalling $4,620,547,
due for cost recovery actions, fines and penalties, and State
cost shares. Also, EPA did not record in the correct fiscal year
five receivables, totalling $562,288. In addition, the Agency
did not assess interest, totalling $181,468, on 13 receivables
and did not record 23 collections, totalling $2,258,165, against
their corresponding receivables. Furthermore, EPA did not
consistently apply Agency guidance for assessment of interest on
Superfund State Contracts.
Problems in the conversion from the previous system to IFMS
resulted in an $18.7 million difference in the reconciliation of
the general ledger control account to the subsidiary accounts
receivable ledger. Until EPA reconciles this difference, it
cannot determine the correct amount to report. As a result, EPA
cannot manage and monitor accounts receivable.
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 adequate documentation and/or had not been
approved by responsible program officials.
-------
EPA Office of Inspector General Annual Suoerfund Report to the Congress for Fiscal 1990 2
EPA classified $56,897,266, or 90 percent of the total
receivables, as delinquent. Of this amount, $23,649,439 was more
than one year overdue. This may indicate that the Agency is not
aggressively pursuing collections of receivables.
4. Personnel Compensation
The IPA questioned ($97,366) of the $117,942,517 of recorded
personnel compensation disbursements. The questioned costs
resulted from errors in recording redistribution of hours,
unrecorded redistributions of hours, lack of documentation to
support transactions, account number data and hours not in
agreement with source information, incorrect pay rates, and input
and adjustment errors. The audit showed a difference of
$11,266,158 between the total Personnel Compensation costs
reported in the Schedule of Disbursements and the detailed
payroll records.
Certain payroll redistributions were recorded twice in the
Paymerge File, resulting in negative dollars and hours charged to
certain account numbers and overcharges to other account numbers.
The problem shows a weakness in the design of the internal
controls, allowing these errors to occur. In addition, the
operating of control procedures did not ensure that EPA personnel
detected these errors.
5. Nonpayroll Documentation and Recording Errors
Based upon the results from statistical and non-statistical
sampling, the IPA questioned $13,812,659 of nonpayroll
obligations and $8,022,541 of nonpayroll disbursements. The
reasons for questioned costs included: obligating and disbursing
documents not located, no Superfund justifications on or attached
to obligating documents, errors in correcting entries,
documentation not available because another accounting point
recorded the transactions, amounts recorded in IFMS not agreeing
with the obligating and disbursing documents, account numbers
entered incorrectly into IFMS, and disbursements recorded in the
wrong fiscal year.
6. Accounting for and Controlling Personal Property
The audit showed 129 property and equipment items costing
$1,466,884 not recorded in the Personal Property Accounting
System (PPAS). The IPA identified these 129 items from a non-
statistical sample of 412 items costing $2,139,993 purchased
during fiscal 1990. The IPA found considerable improvements in
fiscal 1990 in compliance with Agency policies and procedures on
designating property officials, taking annual physical
inventories and physically securing property items purchased
-------
EPA Office of Inspector General Annual Suoerfund Report to the Congress for Fiscal 1990 8
during the fiscal year. Despite these improvements, not all
accountable property was recorded in PPAS.
The primary reason why property items were not recorded in
PPAS was that contracting officers, custodial officers, or
receiving personnel did not send documentation of property
purchased and received to the right Property Accountable
Officers. Agency policies and procedures required them to send
this documentation.
AGENCY RESPONSE
In response to the draft audit report, the Agency
essentially agreed with the recommendations and indicated they
would:
Enhance Agency software to provide for complete and
accurate transfer and audit trail of data between the
Contract Payment System and IFMS.
Complete guidance for recording and supporting
transactions in IFMS and for reconciling data in
internal and external records and reports.
Issue a memorandum to FMOs noting the audit's concerns
on the assessment and accrual of interest on delinquent
SSC amounts.
Research and analyze the causes for the understatement
of Personnel Compensation costs in the Schedule of
Disbursements, and take appropriate action to prevent
similar occurrences.
Analyze causes for the negative hours and amounts in
the Paymerge File, and take appropriate action to
prevent similar occurrences.
Resolve questioned transactions, and make appropriate
correcting entries.
Implement a process restricting IFMS users from
accessing and changing documents outside of their own
accounting points.
Re-emphasize requirements for retention of
documentation for all accounting entries at the
recording accounting point and provision of copies of
the documentation to other affected accounting points.
Evaluate the adequacy of existing guidance for
maintaining documentation when making correcting
-------
EPA Office of Inspector General Annual Suoerfund Report to the Congress for Fiscal 1990 i
entries in IFMS, and issue revised or clarifying
guidance, as appropriate.
Obtain certifications from appropriate Regional
Administrators and Assistant Administrators that
corrective actions have been taken to record
accountable property in PPAS.
The Agency's proposed corrective actions were responsive to
the draft report's recommendations. Therefore we made no
additional recommendations in the final report.
We issued the final audit report, Audit Report Number
P1SFFO-11-0032-1100385, on September 16, 1991. The Assistant
Administrator for Administration and Resources Management has 90
days to respond to the report.
-------
EPA Office of Inspector General Annual Sunerfund Report to the Congress for Fiscal 1990 10
COOPERATIVE AGREEMENTS
In fiscal 1990, we issued thirteen audit reports on
Superfund cooperative agreements and one audit report on a
contractor used by a State under several Superfund cooperative
agreements. We also issued a follow-up report to a prior report
on Region 8's administration of Superfund cooperative agreements.
The combined financial results of the financial audits of
Superfund cooperative agreements were as follows:
Federal Share Total Costs
Amount audited $46,802,470 $50,056,073
Amount accepted $35,990,151 $39,205,027
Ineligible costs3 $ 2,673,022 $ 2,677,634
Unsupported costs4 $ 6,292,834 $ 6,317,582
Unnecessary/unreasonable costs5 $ 1,846,463 $ 1,855,830
We summarize fourteen of the audits below. The audit of the
State contractor evaluated the contractor's indirect cost rates.
The auditors calculated different rates than proposed by the
contractor. The contractor agreed to the rates calculated by the
auditors. We questioned no costs in that report.
ALABAMA DEPARTMENT OF ENVIRONMENTAL MANAGEMENT
Scope and Objectives
We contracted with an independent public accounting (IPA)
firm to perform an interim audit of a cooperative agreement
awarded to the Alabama Department of Environmental Management
(ADEN) to identify and rank hazardous waste sites. The objective
of the audit was to determine whether costs claimed were
reasonable and allowable under the terms of the cooperative
agreement and applicable regulations. The audit covered costs
claimed by ADEN from January 1, 1987 through December 31, 1988.
3 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.
4 Costs questioned because, at the time of the audit, they
were not supported by adequate documentation and/or had not been
approved by responsible program officials.
5 Costs questioned because they were not necessary or not
reasonable.
-------
ERA Office of Inspector General Annual Stmerfund Report to the Con
for Fiscal 1990
11
Findings
1. ADEN Needs To Properly Allocate Program Costs
ADEN did not properly allocate repair and maintenance
charges for the computer to all assistance agreements. As a
result, ADEM claimed $6,021 of excess repair and maintenance
charges under the cooperative agreement.
2. Indirect Costs Mav Need To Be Adjusted
ADEM based its indirect costs for October, November and
December 1988 on an indirect cost rate not approved by EPA. When
EPA establishes the final rate, adjustments may be needed.
Financial Results of Audit
Federal Share
Total Costs
$477,110
$471,089
$ 6,021
$ 0
$ 0
Amount audited $477,110
Amount accepted $471,089
Ineligible costs6 $ 6,021
Unsupported costs7 $ 0
Unnecessary/unreasonable costs8 $ 0
Recommendations
We recommended that EPA Region 4:
Require ADEM to properly allocate program costs among
assistance agreements.
Require ADEM to make necessary adjustments to reflect
the final approved indirect cost rate for the period
ending September 30, 1989.
Not participate in ineligible costs of $6,021, and
recover funds due EPA.
6 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.
7 Costs questioned because, at the time of the audit, they
were not supported by adequate documentation and/or had not been
approved by responsible program officials.
8 Costs questioned because they were not necessary or not
reasonable.
-------
EPA Office of Inspector General Annual Stinerfund Report to the Conorass for Fiscal 1990 12
Agency Response
In response to the audit report, EPA Region 4 indicated:
ADEM's computer maintenance costs will be part of its
indirect cost pool.
No adjustment to indirect costs was necessary because
EPA approved the rate ADEN used.
ADEM should deduct $6,021 in ineligible costs from its
next reimbursement request.
CALIFORNIA DEPARTMENT OF HEALTH
Scope and Objectives
The California State Controller performed on our behalf an
interim audit of the California Department of Health Services-
Toxic Substances Control Program's (DHS-TSCP) accounting
procedures for controlling costs under the cooperative agreement
for Stringfellow Superfund site work. The audit covered the
period from cooperative agreement award on July 28, 1983, through
September 30, 1988. The audit objectives were to determine the
reasonableness, allowability and allocability of the costs
claimed to date under the Stringfellow cooperative agreement, and
to determine the adequacy of the DHS's financial management
system under the cooperative agreement.
Findings
1. Failure to Use the Official State Accounting System
DHS-TSCP did not use the official California State
Accounting and Reporting System (CALSTARS) in accounting for
Stringfellow project costs. Instead, DHS-TSCP used manually
prepared spreadsheets compiled from a combination of sources,
including interoffice memorandums and piecemeal data extracted
from CALSTARS, to report the source and application of funds for
EPA-supported activities. The use of a manual spreadsheet system
was duplicative, resulted in inaccuracies, and took more time
than using the official State accounting system. As a result, we
questioned more than $2 million of unreconcliable, duplicate and
unsupported costs.
2. Inadequate Labor Distribution System
DHS-TSCP used an inadequate labor distribution system to
accumulate and claim labor costs against the cooperative
agreement. It based most labor costs claimed on allocations of
employee time and not actual time charges. Our prior audit
-------
EPA Office of Inspector General Annual Sunerfund Report to the Congress for Fiscal 1990 13
reports also noted that the DHS-TSCP timekeeping system
predesignated personnel to various programs, and claimed their
labor, fringe, and associated indirect costs on this basis. The
current DHS time reporting system is similar, in that it
allocates the costs of supervisory and clerical positions as
direct charges to projects based upon the direct labor hours
spent by the working level staff. Supervisory and clerical staff
do not fill out timesheets. Neither method permitted
verification of the validity of employee and related costs
allocated to EPA funded projects.
3. Failure to Develop an Indirect Cost Rate
DHS-TSCP did not develop an indirect cost rate proposal for
periods beginning with the 1987-88 fiscal year. This was due to
an inability to identify direct and indirect costs adequately.
DHS-TSCP needed the indirect cost proposal to support indirect
billings to EPA.
4. Costs Claimed Not Reconciled
DHS-TSCP did not establish procedures to reconcile Federal
funds requested to actual disbursement of Federal funds. As a
result, DHS-TSCP had overdrawn $165,736 in Federal funds through
September 30, 1988.
5. Audit Resources Not Adequately Used
DHS-TSCP did not adequately use its audit resources. The
DHS-TSCP has used its audit resources almost exclusively to
perform external contract cost audits, instead of performing
internal audits of its operating procedures. In addition, the
audit group had no audit plan to fulfill its audit
responsibilities.
6. Lack of Centralized Filing System
DHS-TSCP had not established a centralized filing system to
maintain documentation applicable to the Stringfellow Superfund
site. Without site specific files, errors and omissions
involving the accounting and reporting of costs and other
information are more likely.
7. Lack of Written Accounting Procedures
DHS-TSCP had not established written procedures for
preparing and reviewing quarterly Financial Status Reports
(FSRs). Specifically, it had no procedures detailing the process
of identifying and summarizing expenditures from the source
documentation or the official accounting records to the FSR. In
-------
EPA Offlca of Inmactor Canard Annual Simerfund Report to tha Congress for Fiscal 1990 14
addition, there was no provision for DHS management to review the
accuracy of the completed FSRs.
8. Staff Not Trained in Preparation of FSRs
DHS-TSCP did not devote enough resources to the FSR claiming
process. One accountant not thoroughly knowledgeable on how to
accumulate costs shown on the FSRs prepared the FSRs. In
addition, DHS-TSCP had not designated any other employee to
assist this employee if he became ill.
9. Lack of Coordination Between Accounting and Program Section
DHS-TSCP's Accounting and Program sections did not
coordinate to assure that only eligible costs were claimed. They
had no procedures for the two sections to mutually review and
certify that costs were accurate before claiming them against the
EPA cooperative agreement.
Financial Results of Audit
Federal Share Total Costs
Amount audited $15,399,411 $15,399,411
Amount accepted $11,776,463 $11,776,463
Ineligible costs9* $ 1,983,679 $ 1,983,679
Unsupported costs10 $ 0 $ 0
Unnecessary/unreasonable costs11 $ 1,639,269 $ 1,639,269
* In addition to the amount audited, $165,736 was overdrawn
and therefore ineligible, resulting in total ineligible
costs of $2,149,415.
9 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.
10 Costs questioned because, at the time of the audit, they
were not supported by adequate documentation and/or had not been
approved by responsible program officials.
11 Costs questioned because tl .y were not necessary or not
reasonable.
-------
EPA Offics of Inspactor Goneral Annual Suporfund Raport to tho Conarass for Fiscal 1990 15
Recommendations
We recommended that EPA Region 9:
Disallow the ineligible costs questioned for Federal
participation, and recover the Federal share of these
costs.
Assess the eligibility of the unreasonable costs in the
report. In this respect, the Region should assure
that: (1) the proper laboratory testing procedures
were used to analyze samples taken from the
Stringfellow site; and (2) the equipment rental costs
charged to the project were reasonable and necessary.
Suspend all payments to DHS-TSCP for its direct labor,
fringe and indirect costs under the agreement until it
has demonstrated that it distributes labor charges on
the basis of actual and not predesignated charges.
Advise DHS-TSCP of its failure to meet the minimum
regulatory standards necessary to qualify as a
responsible grantee, and establish procedures to
follow-up on DHS-TSCP's actions to meet these
standards.
Assure correction of the financial management
weaknesses noted in the report.
Agency Response
In response to the audit report, EPA Region 9 indicated:
DHS-TSCP had prepared an adequate procedure for FSR
preparation and review.
DHS-TSCP now had two full-time accountants working on
accounting and reporting of Federal funds; its Program
Audits Unit will perform periodic reviews to insure
that FSR preparation and Letter of Credit drawdown
procedures are being followed; and it had formed a work
group to recommend corrective actions on problems
related to financial management and grant
administration.
DHS-TSCP accounting and program staff began meeting
regularly to review the costs being charged against the
cooperative agreement.
DHS-TSCP implemented the CALSTARS accounting system and
made several changes to its labor distribution system.
-------
EPA Office of Inspector General Annual Sunarfund Report to the Congress for Fiscal 1990 16
One change allows direct charging of the tine of
clerical, supervisory and certain administrative staff.
EPA and DBS established a Memorandum of Understanding
which provided a framework for the review of Superfund
procurement actions, and specifically addressed cost
and price analysis requirements.
It required DHS-TSCP to designate a liaison to
expeditiously resolve all audit issues, and submit an
audit plan relating to the risk areas identified in the
EPA audit.
DHS-TSCP will account for costs on a project basis
according to EPA regulations and guidance.
It required DHS-TSCP to establish a centralized filing
system for site-specific files.
It required DHS-TSCP to submit a corrective action plan
to provide supporting documentation on labor
distribution and cost categories for past financial
management records.
DHS-TSCP submitted an indirect cost rate proposal for
the State's 1987-88 fiscal year.
It required DHS-TSCP to develop both a charter and
annual audit plan to review areas of high audit risk.
Found certain costs to be ineligible, deferred some
costs for further review, and required additional
documentation from DHS-TSCP on other costs so that it
could make a determination. It required repayment of
$1,372,356 from DHS.
Would make a determination whether the State meets
requirements of a responsible grantee based upon
corrective action plans it required the State to
submit.
CALIFORNIA STATE WATER RESOURCES CONTROL BOARD
Scope and Objectives
The California State Controller performed on our behalf an
interim audit of a cooperative agreement with the California
State Water Resources Control Board (SWRCB) for response
activities at South Bay area sites. The Regional Water Quality
Control Board (RWQCB) performed much of the work under the
cooperative agreement. The audit objectives were to determine:
-------
EPA Office of Inspector General Annual Suoerfund Report to the Congress for Fiscal 1990 17
a. Eligibility of costs claimed;
b. Adequacy of the program management of the SWRCB and the
RWQCB; and
c. Adequacy of the SWRCB's accounting and financial management
system.
The audit covered costs claimed by SWRCB from September 27,
1985 through September 30, 1989.
Findings
1. RWQCB Needs Written Guidance for Site Inspections
RWQCB inspectors do not have written guidance on the scope
or the methods for conducting site inspections. Adequate site
inspection guidance is essential to ensure thorough and complete
site inspections.
2. RWQCB Needs Improved Enforcement
Evidence of RWQCB's inadequate site inspections included (a)
potentially responsible parties (PRPs) using inadequate
containers with improper labeling for the storage of potentially
hazardous waste; (b) hazardous containers not stored in
designated areas with restricted public access; (c) PRPs1
insufficient notification of the RWQCB about the disposition of
known and potentially hazardous materials; (d) no enforcement of
permit violations; and (e) no field follow-up by RWQCB on
problems identified during site visits.
3. RWQCB Needs Improved Coordination with SWRCB. Local Agencies
and PRPs
RWQCB did not verify that PRPs obtained permits needed for
the discharge of contaminants into the atmosphere, soil
accumulation, soil disposal, and carbon filter handling and
disposal, as the cooperative agreement required.
4. RWQCB Had Inadequate Staffing to Perform Site Inspections
RWQCB does not have enough site inspection staff to monitor
the toxic waste sites. This severely limits RWQCB's ability to
identify potential cleanup compliance violations by PRPs,
consultants and contractors.
5. SWRCB and RWQCB Failed to Define Role and Mission
SWRCB and RWQCB did not clearly define the role and mission
of RWQCB in meeting State and Federal regulations and cooperative
-------
EPA Office of Inspector General Annual Sunarfund Report to the Congress for Fiscal 1990 18
agreement requirements. As a result, both agencies had problems
in planning and managing available staff.
6. SWRCB Did Not Maintain Detailed Accounting Records
SWRCB did not have detailed accounting records supporting
the costs it claimed on Financial Status Reports. Therefore the
auditors could not determine whether the costs claimed were
incurred, reasonable and allocable to the cooperative agreement.
We questioned all $2,903,899 claimed.
7. SWRCB Did Not Maintain a Centralized Filing System
SWRCB did not establish a centralized filing system to
maintain complete file documentation and cost information by
site, as EPA required.
8. SWRCB Did Not Request Approval for Its Indirect Cost Rate
SWRCB did not develop indirect cost rate proposals covering
the effective date of the cooperative agreement through 1988. It
did not determine or identify actual overhead costs annually.
9. SWRCB Needs to Improve Letter of Credit Drawdown Procedures
SWRCB did no submit the required reports or listings of
expenditures by site for EPA approval before requesting funds.
EPA did not adequately monitor the drawdown of funds by SWRCB.
Financial Results of Audit
Federal Share Total Costs
Amount audited $2,903,899 $2,903,899
Amount accepted $ 0 $ 0
Ineligible costs12 $ 0 $ 0
Unsupported costs13 $2,903,899 $2,903,899
Unnecessary/unreasonable costs14 $ 0 $ 0
12 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.
13 Costs questioned because, at the time of the audit, they
were not supported by adequate documentation and/or had not been
approved by responsible program officials.
14 Costs questioned because they were not necessary or not
reasonable.
-------
EPA Office of Inspector General Annual Suoarfund Report to the Congress for Fiscal 1990 19
Recommendations
We recommended that EPA Region 9:
Disallow the questioned costs for Federal
participation, and recover the costs.
Advise the SWRCB of its continuing failure to meet the
minimum regulatory standards to qualify as a
responsible grantee, and establish procedures to follow
up on SWRCB actions to meet these standards.
Assure that SWRCB and RWQCB correct the programmatic
and financial management deficiencies. The corrective
actions needed include definition of agency roles and
responsibilities, training site inspectors, performing
more inspections, compliance with financial
recordkeeping requirements and preparing proper
indirect cost rate proposals for each fiscal year.
Agency Response
Region 9 and the DIG were still resolving certain issues in
this report as we went to press.
GEORGIA DEPARTMENT OF NATURAL RESOURCES
Scope and Objectives
We contracted with an IPA to perform an interim audit of a
cooperative agreement awarded to the Georgia Department of
Natural Resources (GDNR) to identify and rank hazardous waste
sites. The objective of the audit was to determine whether costs
claimed were reasonable and allowable under the terms of the
cooperative agreement and applicable regulations. The audit
covered costs claimed by GDNR from October 1, 1985 through
September 30, 1989.
Findings
1. GDNR Needs to Ensure that Only Approved Travel Costs Are
Charged to the Cooperative Agreement
GDNR charged travel costs for employees not approved under
the cooperative agreement. We questioned $5,813 of claimed costs
for this reason and because of accounting errors.
2. GDNR Needs to Comply with Record Retention Requirements
GDNR had destroyed all records for costs incurred during its
fiscal year ending June 30, 1986. Federal regulations require
-------
EPA Office of Inspector General Annual Suoerlund Report to the Congress for Fiscal 1990 20
recipients to maintain records for three years after submission
of the final Financial Status Report.
3. GDNR Claimed Unsupported Costs
GDNR claimed $8,435 of travel, equipment and other costs not
supported by source documentation.
Financial Results of Audit
Federal Share Total Costs
Amount audited $1,229,216 $1,229,216
Amount accepted $1,214,968 $1,214,968
Ineligible costs15 $ 5,813 $ 5,813
Unsupported costs16 $ 8,435 $ 8,435
Unnecessary/unreasonable costs17 $ 0 $ 0
Recommendations
We recommended that EPA Region 4:
Allow GDNR to charge travel costs only for approved
personnel.
Require GDNR to maintain records for three years after
submission of the final Financial Status Report.
Not participate in questioned costs of $14,248, and
recover funds due EPA.
Agency Response
In response to the report, EPA Region 4 indicated:
GDNR should comply with record retention requirements.
$9,201 of questioned costs were ineligible and GDNR
should deduct them from its next reimbursement request.
13 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.
16 Costs questioned because, at the time of the audit, they
were not supported by adequate documentation and/or had not been
approved by responsible program officials.
17 Costs questioned because they were not necessary or not
reasonable.
-------
EPA Office of Inspector General Annual Simerfund Report to the Congress for Fiscal 1990 21
KENTUCKY NATURAL RESOURCES AND ENVIRONMENTAL PROTECTION CABINET
Scope and Objectives
We contracted with an IPA to perform an interim audit of a
cooperative agreement awarded to the Kentucky Natural Resources
and Environmental Protection Cabinet (KNREP) to identify and rank
hazardous waste sites. The audit objectives were to determine
if:
a. Costs claimed under the cooperative agreement were
reasonable, allowable and allocable to the project; and
b. The State's financial management, accounting, procurement,
contract administration and property management systems
included adequate controls to assure that costs claimed were
reasonable, allowable and allocable to the project.
The audit covered costs claimed by KNREP from March l, 1985
through March 31, 1989.
Findings
1. KNREP Needs to Record Costs By Site
KNREP's timekeeping system did not record hours worked by
site. Therefore the site-specific hours could not be reconciled
with the formal time summaries.
2. KNREP Claimed Costs Prior to Effective Date of Agreement
KNREP claimed payroll costs for the last half of February
1985, even though the agreement was not effective until March
1985.
3. KNREP Needs to Avoid Data Input Errors
A data input error resulted in charging time spent by an
employee on another project to the cooperative agreement.
4. KNREP Did Not Use Proper Purchase Authorization Procedures
KNREP did not submit required cost-effectiveness comparisons
for Federally-funded equipment.
-------
EPA Office of Inspector General Annual Suoerfund Report to the Congress for Fiscal 1990 22
Financial Results of Audit
Amount audited
Amount accepted
Ineligible costs18
Unsupported costs19
Unnecessary/unreasonable costs20
Federal Share
$990,692
$985,988
$ 4,704
$ 0
$ 0
Total Costs
$990,692
$985,988
$ 4,704
$ 0
$ 0
Recommendations
We recommended that EPA Region 4:
Require KNREP to implement a timekeeping system
facilitating the tracking of hours by site as well as
by activity and project.
Require KNREP to reconcile hours reported to EPA with
the formal timekeeping system and ensure that the data
reported is accurate.
Require KNREP to implement procedures to ensure that
costs claimed were incurred within the project and
budget period.
Require KNREP to develop and implement procedures
reducing the potential for undetected data input
errors.
Agency Response
In response to the audit report, EPA Region 4 indicated:
KNREP is implementing an automated time accountability
and cost recovery system.
Costs incurred before award are unallowable.
18 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.
19 Costs questioned because, at the time of the audit, they
were not supported by adequate documentation and/or had not been
approved by responsible program officials.
20 Costs questioned because they were not necessary or not
reasonable.
-------
EPA Offlcft of Inspsctof Gonoral Annual Supflrfund Raport to ttio Conorsss for Fiscal 1990 23
Costs incurred on other projects are ineligible. KNREP
agreed that costs questioned as incurred on another
project were in error and will examine procedures to
reduce the potential for undetected errors.
KNREP will comply with cost-effectiveness comparison
requirements during future procurement actions.
KNREP should reimburse EPA for $4,704 of questioned
costs.
MISSISSIPPI DEPARTMENT OF ENVIRONMENTAL QUALITY
Scope and Objectives
We contracted with an IPA to perform an interim audit of a
cooperative agreement awarded to the Mississippi Department of
Environmental Quality (MDEQ) to identify and rank hazardous waste
sites. The objective of the audit was to determine whether costs
claimed were reasonable and allowable under the terms of the
cooperative agreement and applicable regulations. The audit
covered costs claimed by MDEQ from April 5, 1985 through
April 30, 1989.
Findings
1. MDEQ Claimed Unapproved Travel Costs
MDEQ claimed $1,593 in travel costs for persons not approved
under the cooperative agreement.
2. Indirect Costs May Need To Be Adjusted
MDEQ did not have approved final indirect cost rates for
three periods during which it charged provisional rates. If the
final rates differ from the provisional rates, it will need to
adjust the indirect costs charged.
-------
EPA Office of Inspector General Annual Suoerfund Report to the Congress for Fiscal 1990 24
Financial Results of Audit
Federal Share Total Costs
Amount audited $435,850 $435,850
Amount accepted $434,257 $434,257
Ineligible costs21 $ 1,593 $ 1,593
Unsupported costs22 $ 0 $ 0
Unnecessary/unreasonable costs23 $ 0 $ 0
Recommendations
We recommended that EPA Region 4:
Require MDEQ to charge travel costs only for personnel
approved under the cooperative agreement.
Require MDEQ to make any necessary adjustments to
reflect final approved indirect cost rates.
Not participate in ineligible costs of $1,593, and
recover funds due EPA.
Agency Response
In response to the audit report, EPA Region 4 indicated:
The travel costs questioned were disallowed because
they were not related to the program funded by the
cooperative agreement.
MDEQ should make the necessary adjustments to claimed
costs if indirect cost rates are approved before
project closeout.
21 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.
22 Costs questioned because, at the time of the audit, they
were not supported by adequate documentation and/or had not been
approved by responsible program officials.
23 Costs questioned because they were not necessary or not
reasonable.
-------
EPA Office of Inspector General Annual Sunarfund Report to the Congress for Fiscal 1990 25
NEW YORK STATE DEPARTMENT OF ENVIRONMENTAL CONSERVATION
Scope and Objectives
We contracted with an IPA to perform an interim audit of a
cooperative'agreement awarded to the New York State Department of
Environmental Conservation (NYSDEC) for remedial
investigation/feasibility study activities for three sites in New
York State: Fulton Terminals in Fulton, Clothier in Granby, and
Volney Landfill in Volney. The audit objectives were to
determine:
a. The adequacy, effectiveness and reliability of procurement,
accounting and management controls exercised by NYSDEC in
administering the cooperative agreement;
b. NYSDEC1s compliance with cooperative agreement provisions
and Federal regulatory requirements; and
c. The reasonableness, allocability and allowability of costs
claimed under the cooperative agreement.
The audit covered costs claimed by NYSDEC from December 31,
1984 through March 31, 1989.
Findings
1. Fulton Terminal Site
NYSDEC claimed $60,991 of unsupported costs incurred without
a required subagreement or more than the approved budget.
2. Clothier Site
NYSDEC claimed $158,009 of unsupported costs incurred
without adequate supporting documentation, without a required
subagreement, more than the approved budget, or without a needed
contract revision.
3. Volnev Site
NYSDEC claimed $71,897 of ineligible costs for unacceptable
analytical data, incurred after the cooperative agreement
expired, or outside the scope of the cooperative agreement. We
also questioned $2,135 of claimed costs as unsupported which were
more than the approved budget or not adequately documented.
-------
EPA Offlca of liUDBCtof Ganaral Annual Suoarfund Report to thfl Congress for Fiscal 1990
Financial Results of Audit
Amount audited
Amount accepted
Ineligible costs24
Unsupported costs25
Unnecessary/unreasonable costs26
Recommendations
Federal Share
$1,609,172
$1,316,140
$ 71,897
$ 221,135
$ 0
Total Costs
$1,609,172
$1,316,140
$ 71,897
$ 221,135
$ 0
We recommended that EPA Region 2:
Not fund the ineligible costs.
Evaluate the appropriateness of funding the unsupported
costs.
Agency Response
In response to the audit report, EPA Region 2 disallowed
$73,559 of claimed costs and, based on EPA payments, required
NYSDEC to refund $31,657.
NORTH CAROLINA DEPARTMENT OF HUMAN RESOURCES
Scope and Objectives
We contracted with an IPA to perform an interim audit of a
cooperative agreement awarded to the North Carolina Department of
Human Resources (NCDHR) to identify and rank hazardous waste
sites. The objective of the audit was to determine whether costs
claimed were reasonable and allowable under the terms of the
cooperative agreement and applicable regulations. The audit
covered costs claimed by NCDHR from July 1, 1985 through Hay 31,
1989.
24
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.
25 Costs questioned because, at the time of the audit, they
were not supported by adequate documentation and/or had not been
approved by responsible program officials.
26 Costs questioned because they were not necessary or not
reasonable.
-------
EPA Office of Inspector General Annual Sunerfund Report to the Congress for Fiscal 1990
27
1. NCDHR Needs to Comply with Federal Property Management
Standards
State accounting policies did not comply with Federal
Property Management Standards. They provided for reporting
equipment with a unit price under $500 as supplies. EPA
regulations require that recipients list all real and personal
property purchased under cooperative agreements.
2 Indirect Costs May Need To Be Adjusted
The cognizant Federal agency had not approved NCDHR's final
indirect cost rate for the fiscal year ending June 30, 1989. If
that agency approves a different rate, NCDHR must adjust claimed
costs accordingly.
3. NCDHR Claimed Unallowable Costs
NCDHR could not provide supporting documents for $1,083 of
claimed supply costs.
Financial Results of Audit
Federal Share
$1,873,445
$1,872,362
$ 1,083
$ 0
$ 0
Total Costs
$1,873,445
$1,872,362
$ 1,083
$ 0
$ 0
Amount audited
Amount accepted
Ineligible costs77
Unsupported costs21
Unnecessary/unreasonable costs29
Recommendations
We recommended that EPA Region 4:
Require the State to implement procedures to accumulate
data required by Federal Property Management Standards.
27 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.
28 Costs questioned because, at the time of the audit, they
were not supported by adequate documentation and/or had not been
approved by responsible program officials.
29 Costs questioned because they were not necessary or not
reasonable.
-------
EPA Office of Inspector General Annual Suoerfund Report to the Congress for Fiscal 1990 28
These should include accounting records identifying
items acquired as either expendable or nonexpendable
property.
Require NCDHR to make any necessary adjustments to
reflect approved final indirect cost rates.
Not participate in ineligible costs of $1,083, and
recover funds due EPA.
Agency Response
In response to the audit report, EPA Region 4 indicated:
NCDHR used an approved indirect cost rate and therefore
did not need to adjust claimed costs.
NCDHR provided documentation to support $913 of the
$1,083 questioned. NCDHR should deduct the ineligible
balance of $170 from its next payment request.
OREGON DEPARTMENT OF ENVIRONMENTAL QUALITY
Scope and Objectives
We contracted with an IPA to perform a final audit of the
core program cooperative agreement awarded to the Oregon
Department of Environmental Quality (DEQ). The audit objectives
were to determine:
a. The reasonableness, allocability and allowability of costs
claimed under the cooperative agreement;
b. The adequacy, effectiveness and reliability of procurement,
accounting and management controls exercised by DEQ in
administering the cooperative agreement; and
c. DEQ's compliance with cooperative agreement provisions and
Federal regulatory requirements.
The audit covered costs claimed by DEQ from December 17,
1987 through January 31, 1989.
Findings
1. Internal Controls Need Strengthening
DEQ needs to strengthen its internal financial management
controls to comply with Federal regulations. We found (a) one
instance of an incorrect allocation of a retroactive pay raise
resulting in overcharging the cooperative agreement; (b) an
-------
EPA Office of hiinector General Annual Suoerfund Report to the Congress for Fiscal 1990 29
inequitable allocation of employee leave and benefit costs; (c)
direct charging of secondary level supervision; (d) lack of
verification of accounting system entries; and (e) lack of
reconciliation of the travel costs charged with employee
timecards.
2. Inadequate Inventory Control Systems
DEQ needs to improve its inventory control systems to comply
with Federal regulations. We found (a) five of 22 pieces of
equipment purchased under the cooperative agreement did not have
State property tags, and (b) DEQ's centralized inventory for data
processing equipment did not contain State property of inventory
tag numbers.
3. DEO Claimed Ineligible Costs
We questioned $85,293 as ineligible because (a) a computer
malfunction resulted in personnel costs being overcharged; (b)
DEQ inequitably allocated employee leave and benefit costs; (c)
DEQ miscoded timesheet data into the accounting system; (d) DEQ
directly charged costs for secondary level supervision; and (e)
DEQ used an indirect cost rate not approved by EPA.
Financial Results of Audit
Federal Share Total Costs
Amount audited $223,919 $235,704
Amount accepted $142,890 $150,411
Ineligible costs30 $ 81,028 $ 85,293
Unsupported costs31 $ 0 $ 0
Unnecessary/unreasonable costs32 $ 0 $ 0
30 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.
31 Costs questioned because, at the time of the audit, they
were not supported by adequate documentation and/or had not been
approved by responsible program officials.
32 Costs questioned because they were not necessary or not
reasonable.
-------
EPA Office of Inspector General Annual Simerfund Report to the Congress for Fiscal 1990 30
Recommendations
We recommended that EPA Region 10:
Require DEQ to make the following improvements to their
financial management system:
1. Improve the data processing interface between the
DEQ personnel and payroll systems.
2. Establish procedures to ensure prompt notification
of personnel actions (e.g., retroactive salary
adjustments), verify entries into DEQ's electronic
payroll system, verify costs charged to the
cooperative agreement to the source documents, and
reconcile travel costs to timesheets.
3. Develop a fringe benefit rate for application to
direct labor costs, or allocate employee leave and
fringe benefit costs on an equitable basis as
required by OMB circular A-87.
4. Include the costs of secondary level supervision
in the indirect cost rate.
Require DEQ to make the following improvements to their
property control system:
1. Implement procedures to make sure it tags all
nonexpendable equipment when received.
2. Centralize the property management responsibility
within one functional area.
3. Establish procedures to include property tag
numbers in the central inventory.
Disallow questioned costs for Federal participation.
Recover $81,028 of Federal funds paid exceeding the
amount accepted in the audit report.
Agency Response
This audit was not yet resolved as we went to press.
-------
EPA Offlca of Inspector Ganaral Annual Suoarfund Report to tha Conorass for Fiscal 1990 31
SOUTH ADAMS COUNTY, COLORADO
Scope and Objectives
We contracted with an IPA to perform two interim audits and
one final audit of cooperative agreements awarded to the South
Adams County Water and Sanitation District (SACWSD) for response
to the Rocky Mountain Arsenal Superfund site. The audit
objectives were to determine:
a. The reasonableness, allocability and allowability of costs
claimed under the cooperative agreement;
b. SACWSD's compliance with cooperative agreement provisions
and Federal regulatory requirements; and
c. The adequacy, effectiveness and reliability of procurement,
accounting and management controls exercised by SACWSD in
administering the cooperative agreement.
The audit covered costs claimed by SACWSD from April 7, 1986
through July 25, 1989.
Findings
1. SACWSD*s Contract Procurement System Needed Improvement
SACWSD did not have a formal procurement system complying
with Federal regulations or cooperative agreement special
conditions. It did not have written procurement policies and
procedures, and did not follow consistent procurement practices.
SACWSD did not (a) properly procure all contracts, (b) properly
maintain procurement documentation, and (c) include all required
subcontract provisions in executed contracts. It did not sign an
agreement for one contract. As a result, SACWSD could not be
sure it awarded contracts to the best offerers or that awarded
contracts were fair and reasonable.
2. SACWSD Needed to Improve Chancre Order Approval Procedures
SACWSD approved change orders containing items not needed to
operate the water treatment facility.
3. Accounting System Deficiencies
SACWSD's system to account for cooperative agreement costs
was deficient. It did not adequately support labor costs, base
labor costs claimed on actual costs, reconcile amounts reported
to the reneral ledger, or account for costs by type of expense.
-------
EPA Office of Inspector General Annual Sunerfund Report to the Congress for Fiscal 1990 32
4. SACWSD's Controls Over Contractor Billing Needed Improvement
SACWSD did not pay contractors in accordance with contract
provisions. SACWSD claimed contract costs specifically
identified as unallowable by EPA. Payments to two contractors
exceeded contract limitations.
5. SACWSD's Property Management System Needed Improvement
SACWSD's property management system did not fully comply
with Federal regulations. In addition, SACWSD did not obtain
required EPA approval before purchasing equipment.
6. SACWSD Claimed Unsupported. Ineligible and
Unnecessary/Unreasonable Costs
SACWSD claimed:
(a) Engineering expenses, force account costs and equipment
costs that were (i) unsupported, (ii) not approved
before being incurred, or (iii) not procured in
compliance with Federal regulations;
(b) Change order costs not needed to operate the water
treatment facility; and
(c) Ineligible engineering costs exceeding contract limits
or incurred without a contract.
Financial Results of Audit
Federal Share Total Costs
Amount audited $10,717,257 $11,075,083
Amount accepted $ 7,285,267 $ 7,608,650
Ineligible costs" $ 65,431 $ 65,759
Unsupported costs34 $ 3,159,365 $ 3,184,113
Unnecessary/unreasonable costs35 $ 207,194 $ 216,561
33 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.
34 Costs questioned because, at the time of the audit, they
were not supported by adequate documentation and/or had not been
approved by responsible program officials.
33 Costs questioned because they were not necessary or not
reasonable.
-------
EPA Offlcft of hupBCtOf GOTBTB! Annual Supoffund Roport to the Conor BM for Fiscal 1990 33
Recommendations
We recommended that EPA Region 8:
Require EPA review and approval of all SACWSD
procurement actions until the SACWSD procurement system
fully complies with Federal regulations.
Direct SACWSD to improve its procurement and property
management systems to meet the requirements of Federal
regulations and cooperative agreement special
conditions.
Review all change orders approved by SACWSD to
determine the need, allowability, reasonableness and
allocability of costs claimed.
Recompute payroll costs claimed using actual costs
incurred.
Require SACWSD to (1) maintain timesheets, signed by
the employee and reviewed by the supervisor, to support
payroll costs; (2) periodically reconcile financial
reports with the general ledger; (3) establish controls
to make sure contractors bill according to contract
terms; and (4) document unsupported costs questioned.
Disallow the ineligible costs questioned for Federal
participation, and recover Federal funds paid exceeding
the amounts accepted in the audit report.
Agency Response
As this report went to press, EPA Region 8 had not completed
resolution of the audit findings. An approved deviation to the
procurement requirements will clear $3,129,153 of the questioned
costs.
TEXAS WATER COMMISSION - BIOECOLOGY SITE
Scope and Objectives
We performed an interim audit of a cooperative agreement
awarded to the Texas Department of Water Resources, the
predecessor agency to the Texas Water Commission (TWC). EPA
awarded the agreement for the performance of remedial activities
at the BioEcology Disposal Site in Grand Prairie, Texas. Our
audit objectives were to determine if:
a. Costs claimed under the cooperative agreement were
reasonable, allowable and allocable to the project; and
-------
EPA Office of inspector General Annual Suoerfund Report to the Congress for Fiscal 1990 34
b. The State's financial management, accounting, procurement,
contract administration and property management systems
included adequate controls to assure that costs claimed were
reasonable, allowable and allocable to the project.
The audit covered costs claimed by TWC from March 1, 1986
through June 30, 1989.
Finding
TWC Did Not Maintain Summary Records of Negotiation
A prior audit report recommended that TWC maintain a summary
record of negotiation on all procurements over $10,000. TWC had
not implemented this recommendation.
Financial Results of Audit
Amount audited
Amount accepted
Ineligible costs36
Unsupported costs37
Unnecessary/unreasonable costs38
Recommendation
Federal Share
$3,902,626
$3,902,626
$ 0
$ 0
$ 0
Total Costs
$6,192,409
$6,192,409
$ 0
$ 0
$ 0
We recommended that EPA Region 6 require TWC to prepare a
summary record of negotiations setting forth the principal
elements of negotiations. This record should contain enough
detail to reflect the significant considerations controlling the
establishing of price and other terms of the contract.
Agency Response
In response to the audit report, EPA Region 6 indicated TWC
would include the summary record of negotiations in contract
files.
36 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.
37 Costs questioned because, at the time of the audit, they
were not supported by adequate documentation and/or had not been
approved by responsible program officials.
38 Costs questioned because they were not necessary or not
reasonable.
-------
EPA Office of Inspector General Annual Suparfund Report to the Congress for Fiscal 1990 35
TEXAS WATER COMMISSION - HIGHLANDS SITE
Scope and Objectives
We contracted with an IPA to perform an interim audit of a
cooperative'agreement awarded to the Texas Water Commission
(TWC). EPA awarded the agreement for the performance of remedial
activities at the Highlands Acid Pit site in Harris County,
Texas. The objective of the audit was to determine whether costs
claimed were reasonable and allowable under the terms of the
cooperative agreement and applicable regulations. The audit
covered costs claimed by TWC from September 30, 1982 through
September 30, 1989.
Finding
TWC Claimed Ineligible Indirect Costs
TWC claimed $9,373 of indirect costs exceeding the amount
authorized under approved indirect cost rates.
Financial Results of Audit
Amount audited
Amount accepted
Ineligible costs39
Unsupported costs40
Unnecessary/unreasonable costs41
Recommendation
Federal Share
$5,877,842
$5,868,488
$ 9,354
$ 0
$ 0
Total Costs
$6,472,050
$6,462,677
$ 9,373
$ 0
$ 0
We recommended that EPA Region 6 not participate in the
ineligible costs, and recover funds due EPA.
39
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.
40 Costs questioned because, at the time of the audit, they
were not supported by adequate documentation and/or had not been
approved by responsible program officials.
41 Costs questioned because they were not necessary or not
reasonable.
-------
EPA Office of Inspector General Annual Suoerfund Report to the Congress for Fiscal 1990 36
Agency Response
In response to the audit report, EPA Region 6 obtained a
refund of $2,656 from TWC.
TEXAS WATER COMMISSION - SIKES SITE
Scope and Objectives
We performed an interim audit of a cooperative agreement
awarded to the Texas Department of Water Resources, the
predecessor agency to the Texas Water Commission (TWC). EPA
awarded the agreement for the performance of remedial activities
at the Sikes Disposal Site in Crosby, Texas. Our audit
objectives were to determine if:
a. Costs claimed under the cooperative agreement were
reasonable, allowable and allocable to the project; and
b. The State's financial management, accounting, procurement,
contract administration and property management systems
included adequate controls to assure that costs claimed were
reasonable, allowable and allocable to the project.
The audit covered costs claimed by TWC from March 1, 1986
through June 30, 1989.
Finding
TWC Did Not Maintain Summary Records of Negotiation
Prior audit reports recommended that TWC maintain a summary
record of negotiation on all procurements over $10,000. TWC had
not implemented this recommendation.
-------
EPA Office of Inspector General Annual Stmarfund Report to the Congress for Fiscal 1990
37
Financial Results of Audit
Amount audited
Amount accepted
Ineligible costs42
Unsupported costs43
Unnecessary/unreasonable costs44
Recommendation
Federal Share
$1,162,032
$1,155,349
$ 6,683
$ 0
$ 0
Total Costs
$1,162,032
$1,155,349
$ 6,683
$ 0
$ 0
We recommended that EPA Region 6 require TWC to prepare a
summary record of negotiations setting forth the principal
elements of negotiations. This record should contain enough
detail to reflect the significant considerations controlling the
establishing of price and other terms of the contract.
Agency Response
In response to our audit report, EPA Region 6 indicated TWC
would include the summary record of negotiations in contract
files. TWC also refunded $6,683.00 to EPA.
REGION 8 ADMINISTRATION OF SUPERFUND COOPERATIVE AGREEMENTS - FOLLOW-
UP REVIEW
Scope and Objectives
We conducted a special review of EPA Region 8's corrective
actions taken in response to the audit findings and
recommendations of our prior audit of Region 8's Administration
of Superfund Cooperative Agreements (Audit Report No. E5EH7-08-
0005-71992), dated September 30, 1987. The specific objectives
of our review were to determine whether:
a. Region 8 management took the corrective actions indicated in
its response to the audit recommendations;
42
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.
43 Costs questioned because, at the time of the audit, they
were not supported by adequate documentation and/or had not been
approved by responsible program officials.
44 Costs questioned because they were not necessary or not
reasonable.
-------
EPA Office of Inspector General Annual Suoerfund Report to the Congress fof Fiscal 1990 38
b. Region 8 implemented the corrective actions in accordance
with the Region's action plan and milestone dates; and
c. The actions were effective in correcting the conditions
addressed in the audit report.
Due to its limited scope, the review was not an audit
following the Government Auditing Standards (1988 Revision)
issued by the Comptroller General of the United States.
Findings
1. Pre-Remedial Program Continues to Require Corrective Actions
Finding No. 1 of the audit included recommendations that the
Region improve the (i) timeliness and effectiveness of pre-
remedial functions performed under cooperative agreements; and
(ii) management of National Priorities List (NPL) sites included
in cooperative agreements to assure the timely performance of
actions. The Region agreed with the recommendations. Our
follow-up review showed the Region had begun timely action to
correct the conditions leading to the first recommendation, but
its actions were not fully effective.
The Region issued "Procedures for Managing Superfund
Cooperative Agreements." However, the procedures were not fully
effective because the Region did not disseminate them to all
applicable Regional staff and provide appropriate training on
their application. As a result, two of three Regional Project
Managers (RPMs) we interviewed were not adequately documenting
their evaluations of State pre-remedial work products.
The Region had agreed to meet the SARA requirements for
completion of preliminary assessments and site inspections (Sis).
However, we found that 25 (30 percent) of the 84 sites we
reviewed had not met the SARA goal for completion of an SI. The
Region had also committed to perform several site-specific
activities by certain dates. It did not meet some of these
commitments.
2. Regional Administration of Cooperative Agreements Needs
Strengthening
Finding No. 2 of the audit included recommendations that the
Region: (i) take a more active role in the monitoring of the
recipients' cooperative agreement activities; (ii) develop
written procedures to help the RPMs perform their administrative
responsibilities; (iii) assure that the recipients have the
necessary qualifications to meet the requirements of 40 CFR
30.301 before the award of a cooperative agreement; (iv) require
that recipients prepare site-specific schedules for all NPL
-------
EPA Office of Inspector General Annual Simerfund Report to the Congress for Fiscal 1990 39
sites; (v) place additional emphasis on updating and maintaining
the CERCLIS data base; and (vi) continue to coordinate with the
State of Utah to develop an effective working relationship. The
Region agreed with these recommendations.
Our follow-up review showed that Region 8 implemented
corrective actions on five of the six recommendations which
effectively addressed the conditions identified in the audit
report. However, actions on the first recommendation had not
been fully successful. In response to that recommendation, the
Region emphasized the value of executing Superfund Memorandums of
Agreement (SMOAs) with the States. The Region agreed to have
three SMOAs in place and three others in negotiations by the end
of fiscal 1988. However, as of our review more than a year after
that time, only the State of Utah had an operational SMOA.
3. Oversight of Recipient Financial Management Needs
Improvement
Finding No. 3 of the audit included recommendations that the
Region: (i) prepare written procedures for use in administering
the Letter of Credit method of reimbursement; and (ii) improve
review of recipient accounting systems. The Region agreed with
the recommendations.
Our follow-up review showed that Region 8 timely implemented
its proposed corrective actions. However, their actions were not
fully successful in correcting the deficiencies which led to the
first recommendation. We found that the States continued to
submit the Quarterly Cash Transaction Reports (SF-272S) late. We
found that States submitted 11 (38 percent) of the 29 SF-272s we
reviewed late.
4. Lack of Corrective Action Tracking System
Our follow-up review also showed the Region did not have an
effective system for tracking the implementation of corrective
actions agreed to in response to audit report recommendations.
As a result, Regional management had no assurance of timely,
complete and effective implementation of corrective actions. The
Region had used the Agency's automated follow-up system, which
was terminated in early 1988 because it was inadequate. The
Region stated it would include all outstanding actions from prior
OIG audit reports when EPA fully implemented its new audit
tracking system.
-------
EPA Office of Inspector General Annual Siinarfund Report to the Congress for Fiscal 1990 40
Recommendations
We recommended that EPA Region 8:
Prepare and implement an updated action plan which
addresses each of the incomplete corrective actions in
Audit Report NO. E5EH7-08-0005-71992.
Enter the corrective action plan from our follow-up
review into the Management Audits Tracking System and
monitor progress until all corrective action items are
complete.
Agency Response
In response to our draft report, EPA Region 8 stated it:
Sent its comments and findings in a transmittal letter
with every EPA review of State prepared pre-remedial
deliverables.
Requested each State in the Region to initiate a SMOA
with EPA, and offered funding to each State to develop
and negotiate these agreements.
Implemented the Agency's new Management Audit Tracking
System.
In response to our final report, EPA Region 8 further stated
it:
Developed standard operating procedures for cooperative
agreement oversight responsibilities.
Inserted language in the performance agreements of Site
Assessment Managers establishing objectives for the
management of State site assessment programs.
Instituted a program to provide training to the site
assessment staff twice a year.
Would complete the backlog of pre-SARA site inspections
by the end of October 1991.
-------
EPA Offlca of liMMCtor Gonaral Annual Suporfund Raport to tho Congress for Fiscal 1990 41
REMEDIAL INVESTIGATIONS AND FEASIBILITY STUDIES
In fiscal 1990, we issued four reports on remedial
investigation/feasibility study (RI/FS) reviews. All of the
reports were issued as technical reports by the OIG Technical
Assistance Staff. The reports did not contain recommendations to
EPA management, and required no response from the Agency. The
reviews are summarized below.
BAIRD & McGUIRE COMPANY SITE. HOLBROOK. MASSACHUSETTS
Scope and Objectives
Our review objectives of the RI/FS performed for the Baird &
McGuire Company site in Holbrook, Massachusetts, were to:
a. review the EPA-approved work plan for accuracy and
completeness of the RI/FS;
b. determine if the work plan omitted essential data
requirements which delayed the completion of the remedial
investigation (RI);
c. determine if professional care was used by both EPA and the
contractor in the work plan preparation, review and approval
process; and
d. determine if the costs and hours proposed by the contractor
and its subcontractors were reasonable for the tasks added
after locating the dioxin.
To perform this review, OIG technical staff reviewed site
documents, visited the site and discussed the site with the
site's Remedial Project Manager and On-Scene Coordinator.
Findings and Conclusions
1. The Work Plan Was Not Thorough
The RI, as first conducted, did not meet its own objectives
and did not appear to have a comprehensive review of all
documents related to the site to ensure that a thorough and
complete work plan was developed. Therefore, additional work was
needed for these "unresolved" issues. This caused the entire
project to take longer than would have been necessary had the
work plan been prepared more thoroughly.
The lack of a thorough work plan resulted in the preparation
of an incomplete Health and Risk Assessment for Presence of
Pesticides on Building Walls and Floors. An additional site
reconnaissance and sampling trip by the contractor was required
-------
EPA Office of Inspector General Annual Suoerfund Report to the Congress for Fiscal 1990 42
to prepare an addendum to that assessment. This resulted in both
a time delay and an increase in cost.
2. Wetlands Issue Not Completely Examined In a Timely Manner
Contamination in site wetlands was not completely examined
in the original RI for the site. This data gap was filled in
through a Phase II Addendum RI. The impact of low levels of
contaminants to the environment, especially the wetlands, was not
fully discussed in either the Feasibility Study (FS) or the
Record of Decision (ROD) for the site.
3. Dioxin Contamination Not Investigated in a Timely Manner
Although evidence indicating the presence of dioxin was
available before the RI was performed, no dioxin samples were
taken during the original RI. Later, sampling had to be
postponed and health and safety requirements modified because of
the presence of dioxin.
4. Coordination Between Removal and Remedial Programs Was Good
The site had a transition from removal action to remedial
activities. During this transition, there was good coordination
between the removal and remedial programs.
5. Field Pilot Study Not Done During RI/FS
The Agency's Guidance on Remedial Investigations and
Feasibility Studies Under CERCLA (June 1985) indicates that bench
and pilot studies should be done, if at all possible, during the
RI. The site required a field pilot study of the treatment of
pumped contaminated groundwater. Although the need for the study
was known, it was not done during the RI/FS and had to be done
later.
IRON HORSE PARK SITE. NORTH BILLERICA, MASSACHUSETTS
Scope and Objectives
Our review objectives of the RI/FS performed for the Iron
Horse Park site in North Billerica, Massachusetts, were to:
a. determine if the project cost increases during the RI/FS
were attributable to EPA's decision to expand the work plan
activities for the RI/FS; and
b. determine if the contractor used due professional care in
preparing the final work plan and its amendments which
resulted in an increase in costs from $610,837 to
$1,326,000.
-------
EPA Office of Inspector General Annual Simerfund Report to the Congress for Fiscal 1990 43
To perform this review, OIG technical staff reviewed site
documents and discussed the site with the EPA project officer.
Findings and Conclusions
1. Phased-Operable Unit Approach Used Was Appropriate
The phased operable unit approach used for the site is a
viable alternative sanctioned by statute and regulation. It was
appropriate for use at this site due to the complexity of the
site.
2. Final Work Plan and Amendments Were Appropriate
The final work plan for the RI/FS was based on review of
existing information, consistent with the Agency guidance and
under the direction of the EPA project manager. The five
amendments to this plan were directed toward revising the scope
and objectives of the site remedial activities. Although some of
the additional or revised tasks may have overlapped, this is
sometimes unavoidable at a site this complex.
3. Cost of the RI/FS Was Reasonable
Cost overruns for remedial activities at Superfund sites are
not uncommon given the magnitude of uncertainties involved in RIs
and the lack of available information. Considering the magnitude
of environmental sampling and analysis efforts at the site, the
cost of $1.3 million falls within the normal range.
NYANZA CHEMICAL SITE, ASHLAND. MASSACHUSETTS
Scope and Objectives
Our review objectives of the RI/FS performed for the Nyanza
Chemical site in Ashland, Massachusetts, were to:
a. determine if the RI/FS formed an adequate basis for
selection of a remedial action; and
b. determine if EPA Region 1 took all reasonable and necessary
measures to assure that the contractor carried out the RI/FS
as required.
The scope of our review was limited to Phase I of the RI/FS
for the site.
-------
EPA Office of Inspector General Annual Simerfund Report to the Congress for Fiscal 1990 44
findings and Conclusions
1. The RI Failed to Locate Significant Areas of Contamination
Both a 1980 State report and a 1982 aerial photo
interpretation report indicated a rectangular basin which the
report indicated had been a collection tank which held
wastewater. However, the RI which began in 1983 did not include
any sampling in the basin area. Later sampling found the
presence of organic contaminants in that area at high
concentrations. As a result, an emergency removal action was
conducted.
The RI/FS also failed to locate 250 buried drums in a sludge
disposal area. Six years later, the remedial contractor
uncovered these drums and a removal action was conducted. The
magnetometer used in the RI/FS in 1983 was capable of detecting
buried drums.
2. Inappropriate Sampling Methods Led to Erroneous Conclusions
and Additional Expenditures to Characterize the Site
Several significant errors in sampling strategy greatly
reduced the value of the Phase I RI/FS. These errors included
compositing soil samples inappropriately, use of the wrong type
of monitoring well, failure to filter groundwater samples, and
failure to sample adequately to obtain sludge volume estimates.
The contractor's methodology for 66 soil samples discussed
in the RI was to take them as composites over a depth of 68
inches. The use of this technique is highly questionable where
the depth and thickness of the sludge deposits varies greatly
from sample to sample. The technique failed to give an
indication of the amount of contaminated material which needed to
be removed or of the concentrations of contaminants in the
sludge. As a result, additional sampling was required after the
completion of the RI/FS.
The contractor used a monitoring well with a single 17-foot
screen in an area where the presence of nitrobenzene was
suspected. Because nitrobenzene is a dense non-aqueous phase
liquid, it sinks through the groundwater and moves along any
impervious layer or the bedrock underlying the aquifer.
Therefore, a discrete screen interval for that area would be
needed to properly sample for nitrobenzene. Samples collected
from that well indicated very low levels of nitrobenzene (less
than 0.4 mg/1. More than two years later, EPA's Emergency
Response Team constructed a monitoring well immediately adjacent
to the contractor's well. The new well was equipped with a short
screen length at bedrock level. Samples from this new well
-------
EPA Office of Inspector General Annual Suoerfund Report to tha Congress for Fiscal 1990 45
indicated gross contamination with nitrobenzene (more than 54
mg/1). As a result, a removal action was initiated.
Contractor staff did not filter the first two rounds of
groundwater samples collected during the RI. As a result, the
reported concentrations of heavy metals included the metals
naturally present in the suspended solids in the samples as well
as in the groundwater. Since such particulate matter does not
move with the groundwater, this resulted in sample results
indicating much higher metal concentration than actually existed
in the groundwater. Therefore, the discussion of heavy metal
contamination was seriously flawed and the costs associated with
the collecting and analyzing the two rounds of samples produced
information of questionable value. A third round of samples was
collected which was filtered, but the results from this sampling
were not available for the RI report.
The contractor failed to sample seven of the eight areas
identified as sludge and fill deposits. Instead, it relied on
results from an earlier investigation by a different contractor,
despite the fact that both EPA and the State were critical of the
methodology used in that investigation. EPA later engaged
another contractor to fill data gaps from the RI/FS as pre-design
work. This study found no contamination in some areas where the
RI/FS indicated contamination existed, and significant
contaminations in other areas that the RI/FS had not identified.
The study found that about 21,000 of the 102,000 cubic yards of
material the RI/FS determined to be contaminated did not require
excavation. Furthermore, it found that more than 24,300 cubic
yards of material the RI/FS indicated could be left undisturbed
in fact required excavation.
3. EPA's Contractor Exceeded Its RI/FS Budget Estimate and More
Than Doubled Its Estimated Time of Completion. Yet Was
Unable to Produce a Report Which Would Support the Agency's
Record of Decision fROD)
The contractor's preliminary work plan stated the RI/FS
would take ten months and cost $480,862. The RI/FS eventually
took 23 months and cost more than $612,000. Furthermore, the
Agency spent about $210,000 more in a pre-design study to
compensate for deficiencies in the RI/FS. In addition, a Phase
II RI/FS was also required to address groundwater contamination.
This work was included in the preliminary work plan for what
became the Phase I RI/FS. The contractor's RI/FS did not reveal
any findings differing markedly from several prior studies done
of the site.
-------
EPA Office of Inspector General Annual Sunarfund Report to the Congress for Fiscal 1990 46
4. EPA Region 1. Although Aware of Numerous Deficiencies on the
Part of the RI/FS Contractor. Was Unable to Effect
Significant Improvements Despite Repeated Notices of
Unsatisfactory Contractor Performance
The Remedial Project Manager (RPM) assigned by EPA Region 1
to monitor this project became aware of deficiencies in the
contractor's performance early in the course of the RI/FS. As a
result, he gave the contractor low scores in the performance
ratings done for each four-month period to determine the amount
of the contractor's award fee. In the Work Assignment Completion
Report, he characterized the contractor's performance as
"abysmal" and recommended that no award fee be given for the
project. Despite the Agency's knowledge of the contractor's poor
performance, the deficiencies were not corrected, an inadequate
RI/FS was produced, and the Agency had to fill data gaps through
a pre-design study performed by another contractor.
5. The RI/FS Failed to Provide an Adequate Basis for Selection
of a Remedial Alternative
The deficiencies summarized above resulted in an RI/FS which
did not provide an adequate basis for remedy selection. As a
result, EPA had to conduct a pre-design study to obtain
additional data to support the ROD. The significant
discrepancies between the assessments of sludge deposits in the
RI/FS and in the pre-design study were a major blow to the
credibility of the Agency. Two removal actions were undertaken
in response to hazards which were undetected during the RI.
SELMA PRESSURE TREATING SITE. SELMA, CALIFORNIA
Scope and Objective
The objective of our review of the RI/FS performed for the
Selma Pressure Treating site in Selma, California, was to
determine if there was an adequate technical basis for the
selected remedy as documented in the ROD. To perform this
review, OIG technical staff reviewed site documents, visited the
site and met with Region 9 program staff.
Conclusion
We concluded that there was not an adequate technical basis
for the selected remedy documented in the ROD for the following
reasons:
1. Too few soil samples were taken to confidently
calculate the amount of contaminated soil requiring
remediation.
-------
EPA Offlca of Imnactor General Annual Suoerfund Report to the Congress for Fiscal 1990 47
2. Solidification/stabilization treatability test results
were not available until after the ROD was signed and
the results to date have been inconclusive. The August
1989 Treatability Study Report concluded that the
solidification/stabilization technologies have
limitations in applications to areas containing high
concentrations of metals, pentachlorophenol (PCP) and
other organics.
3. Additional wells in the shallow, intermediate and deep
aquifer north and northwest of the site are needed in
order to determine if there is an off-site source of
groundwater contamination that would require off-site
soil remediation.
Both EPA and the State have acknowledged that additional
work is required at the site, and that it may result in a change
to the chosen remedy included in the ROD.
Agency Response
In response to our audit report, EPA Region 9 planned to
install additional monitoring wells and an extraction well to
develop more complete hydraulic data on the intermediate aquifer.
They also planned a round of sampling of all of the active wells.
-------
EPA Offlea of Inspector General Annual Superffund Report to the Congress for Fiscal 1990 48
PERFORMANCE 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 performance audits and special
reviews completed in fiscal 1990.
COST RECOVERY COLLECTIONS
Scope and Objectives
We reviewed EPA's collection of Superfund cost recovery
amounts. Our audit objectives were to determine if EPA:
a. Recorded cost recovery amounts as accounts receivable in
EPA's financial records;
b. Collected cost recovery amounts in a timely manner; and
c. Assessed interest upon late payment.
We reviewed collections resulting from cost recovery
enforcement actions for Superfund sites in EPA Regions 3, 4 and
5. We issued separate audit reports for each of these regions,
and a consolidated report to the EPA Deputy Administrator.
Findings were similar in the three regions reviewed. We have not
separately summarized them below. However, we do summarize the
responses of the regions as well as that of EPA Headquarters. We
judgmentally selected for review 44 of 152 enforcement actions in
the selected regions for fiscal years 1987 through 1989. We also
reviewed oversight costs for 11 cases. Because our samples were
judgmental and not random, we could not make statistical
projections on the remaining enforcement actions in the universe.
Findings
1. Accounts Receivable Need to Be Recorded
Neither Headquarters nor the regions timely recorded
accounts receivable on the financial records of the Agency. For
fiscal 1989, $5.3 million (90 percent) of $5.9 million of the
payments we reviewed were not timely recorded as accounts
receivable. Because EPA had not recorded receivables, it was not
aware of what payments were due. As a result, a payment might be
diverted, lost or not paid without the Agency being aware of it.
This also results in late payments with a resulting loss of
applicable interest, as discussed in Finding No. 2. We found
that EPA did not record accounts receivable because it: (a) had
not established internal controls for forwarding settlement
documents to the Financial Management Office, (b) did not
promptly obtain judicial orders from the Department of Justice,
-------
EPA Offlca of IntnaetOT General Annual Suparfund Report to the Congress for Fiscal 1990 49
and (c) did not timely record accounts receivable on the
financial records when it received settlement documents before
payment. In addition, the regions did not establish routine
procedures to reconcile Superfund and Office of Regional Counsel
records with the financial records.
2. Prompt Action Needed to Collect Amounts Owed
Neither Headquarters nor the regions were promptly
collecting cost recovery amounts owed to the Superfund Trust
Fund. Of the 55 settlement documents we reviewed, we found 22
cases (40 percent) of delayed collection of amounts owed. Since
the U.S. Treasury Department invests Superfund monies in Treasury
bills, the Superfund Trust Fund lost $103,856 of interest.
'The failure to collect promptly resulted from (a) delays in
sending accounting data to responsible parties, (b) late payment
of amounts due, (c) delays due to responsible party requests for
further documentation and/or dispute of cost billed, and (d)
delays in notifying responsible parties of the effective date.
These conditions existed primarily because the regions did not
(a) have a system for tracking when they needed accounting data
and (b) take consistent action to collect payments promptly.
Recommendations
We recommended that EPA:
Reconcile records to be sure that it collected cost
recovery amounts due in the past. Where it did not
collect cost recovery amounts, EPA must record the
amount due as an account receivable and take
appropriate collection action. Further, the Financial
Management Office should notify the Regional
Administrator for appropriate corrective action when
other offices do not provide settlement documents
timely.
Provide guidance on when to record amounts owed,
particularly when under appeal or in litigation, as
accounts receivable.
Complete planned corrective actions cited in the
response to the draft report.
-------
EPA Office of Inspector General Annual Suoerfund Report to the Congress for Fiscal 1990 50
Agency Consolidated Headquarters Response
In response to the draft report, EPA stated it:
Was working with the Department of Justice to make sure
itdistributed court-approved consent decrees to EPA
systems.
Provided detailed guidance to regional staffs for
timely and accurate establishment of accounts
receivable for cost recovery, penalties and oversight
reimbursement.
Included guidance in two Directives for current and
accurate establishment and management of accounts
receivable.
Would reiterate to all Financial Management Officers
(FMOs) and Comptrollers the importance of recording
receivables into the system when finance offices
receive documents establishing receivables.
Would engage an independent contractor to perform
internal control reviews, including a determination on
the timely recording of Superfund receivables, at four
regional finance offices.
Formed cooperative task forces of regional finance,
counsel and Superfund offices to address cost recovery
issues.
Was developing procedures to reconcile records, and was
reconciling records monthly with the Superfund program
offices and regional counsels.
Was developing periodic reports to help the regions
reconcile accounts receivable data with CERCLIS data on
settlements.
Would review regional financial offices' processes to
determine if they promptly record receivables in the
financial records.
Would issue a Resources Management Directive defining
when to record amounts owed as accounts receivable.
Distributed guidance on Monitoring and Collecting
Oversight Reimbursement.
Would review FMO procedures and controls for oversight
billing.
-------
EPA OfflcB of Inspflctor GanofBl Annual Suparfund Raoort to tha Compass for Fiscal 1990 51
In response to the final report, EPA further stated it:
Would establish a task force of representatives from
applicable Headquarters offices and each region to
coordinate efforts to improve the recording and
collection of Superfund accounts receivable.
Would issue memorandum guidance requesting (1)
reconciliation of all administrative and judicial cost
records, (2) checking of all past settlements to be
sure that accounts receivable are established, and (3)
an accounting of all collections.
Would establish internal controls over documentation
required to establish accounts receivable.
Agency Regional Responses
Each region reviewed also stated in responses to draft and
final audit reports that it was taking regional actions which
would correct the deficiencies cited in the reports. We
summarize these actions below by region.
Region 3
Region 4
Would have the Office of Regional Counsel submit its
records monthly to the Office of the Comptroller for
reconciliation.
Would review and complete written procedures for
billing oversight costs.
Would track oversight billings through CERCLIS.
Had a contractor conduct a Superfund internal control
review.
Would complete a Memorandum of Understanding on
procedures for establishing Superfund accounts
receivable.
Performed a quality assurance review of the billing
process to be sure that procedures in EPA's Financial
Management Manual are followed.
Would monthly reconcile printouts from the CERCLIS and
Docket systems with the Integrated Financial Management
System (IFMS), and IFMS reports to original documents
on file.
-------
EPA Office of Inspector General Annual Suoerfund Report to the Congress for Fiscal 1990 52
Would establish a work group of representatives from
the involved regional units to meet at least quarterly
to discuss accounts receivable procedures.
Would notify the referring official of any missed
payment due dates.
Would perform a review of accounts receivable to test
controls in place to make sure that all receivables are
properly recorded, promptly billed and collected, or
referred to collection agencies or Office of Regional
Counsel.
Was reconciling the records of the Financial Management
Unit with those of the Office of Regional Counsel and
the Waste Management Division.
Implemented a system for prompt issuance of written
notices of the effective date for cost recovery
agreements and followed up on all late payments.
Region 5
Executed a Memorandum of Understanding Concerning
Superfund Cost Recovery Procedures among the Waste
Management Division, the Office of Regional Counsel and
the Planning and Management Division.
Scheduled an internal control review of accounts
receivable.
Implemented Superfund Accounts Receivable - Interim
Operating Procedures.
Began regularly reconciling tracking system reports
from the Office of Regional Counsel and the Waste
Management Division, and will provide the reports to
the Planning and Management Division.
COST RECOVERY ACTIONS FOLLOW-UP REVIEW
Scope and Objectives
We conducted a special review of EPA's corrective actions in
response to our Consolidated Report on EPA's Cost Recovery
Actions Against Potentially Responsible Parties (E5EH4-11-0066-
61534, September 24, 1986). The purpose of our follow-up review
was to determine the timeliness and effectiveness of the Agency's
actions in correcting the reported deficiencies. The specific
objectives of our review were to determine whether EPA had:
-------
EPA Office of huoectof General Annual Suoarfund Report to the Congress for Fiscal 1990 53
a. Implemented our recommendations, and
b. Realized improvements in efficiency and effectiveness.
Due to its limited scope, the review was not an audit
following the Government Auditing Standards (1988 Revision)
issued by the Comptroller General of the United States.
Findings
1. EPA Needs to Actively Pursue sites under $200.000
The Agency was still not aggressively pursuing cost recovery
actions against PRPs where it spent less than $200,000 for
cleanup. Although the Agency had issued guidance on alternative
dispute resolution procedures including arbitration, the Agency
had not used these alternative procedures for cost recovery
purposes. The Agency had not used outside attorneys or outside
collection agents in cost recovery. Four of the ten regions had
set up cost recovery units. However, the General Accounting
Office reported in December 1989 that some regions did not have
full-time cost recovery staff.
2. Bankrupt Potentially Responsible Parties Impact on EPA's
Ability to Recover Costs Under CERCLA
While EPA had developed a system to identify and act on
bankruptcies, the Agency still did not have a centralized way to
track bankruptcy cases and actions, and the money claimed and
collected for the sites involved. EPA had issued guidance on
filing claims against bankrupt PRPs, including actions against
viable and nonviable PRPs. However, the Agency had still not
incorporated language in their demand letters identifying EPA as
an official creditor. The Agency needs to take these actions to
improve management of cost recovery against bankrupt PRPs.
3. EPA Needs to Complete Negotiations with Responsible Parties
in a More Timely Manner
Negotiations conducted since our 1986 report still often
exceeded Agency timeframes. Regions 3 and 4 were not always
completing remedial investigation/feasibility study (RI/FS) and
remedial design/remedial action (RD/RA) negotiations within the
required 90-day and 120-day timeframes, respectively. We found
23 (66%) of 35 RI/FS negotiations late in Region 3 and 38 (66%)
of 58 RI/FS negotiations late in Region 4. For RD/RA
negotiations, we found 18 (39%) of 46 late in Region 3 and 19
(45%) of 42 late in Region 4. While EPA issued guidance since
our last report to set timeframes and specific negotiation steps,
and to notify PRPs of the timeframes, negotiations were still
delayed. In addition, Headquarters and in some cases the regions
-------
EPA Office of Inspector General Annual Sunarfund Report to the Congress for Fiscal 1990 SA
were not monitoring the length and conduct of negotiations even
though CERCLIS contained this information.
4. EPA Needs to Identify and Track Statute of Limitations Dates
Since our previous audit, EPA began using a three-year
statute of limitations (SOL) period, tracking SOL dates, taking
some cost recovery actions in a timely manner, and trying to take
cost recovery actions within a year for removals. However, the
Agency needs to monitor the regions to be sure they take timely
action on all SOL sites. For sites with an SOL date after
October 17, 1989 (three years from SARA's enactment date), 34
open sites out of 226 total sites in Regions 3 and 4 had exceeded
the SOL date without sufficient action taking place. In
addition, these regions had closed 109 of the 226 sites without
taking any cost recovery action. While Headquarters now tracks
SOL dates and sends quarterly reports to the regions,
Headquarters did not monitor to make sure the regions addressed
these sites.
5. EPA Needs to Implement a Comprehensive Management
Information System to Track Enforcement Activities
While the Agency had developed a CERCLA enforcement system
in CERCLIS that includes many enforcement activities and much
data, it still manually generated some critical information such
as bankruptcy claims and dollars. In addition, management was
not always using this information to actively monitor regional
program actions and related results.
Recommendations
We recommended that EPA:
Encourage a consistent approach in all regions for
pursuing cases under $200,000, including issuance of a
demand letter.
Conduct a pilot test using an arbitration board for
sites under $200,000.
Emphasize to the regions the increased use of
alternative dispute resolution techniques to settle
small cost recovery cases as an alternative to filing
judicial actions.
Encourage and support the regions to establish cost
recovery units.
Develop a system to track readily available information
on sites with bankrupt PRPs and associated dollars
-------
EPA Office of Inspector General Annual Sunerfund Report to the Congress for Fiscal 1990 SB
claimed and collected to allow EPA management to
monitor these sites and corresponding actions.
Require that demand letters contain explicit language
identifying EPA as an official creditor.
Request that in fiscal 1991 each region do an internal
control review based on the results of our report and
address this issue in their fiscal 1991 Federal
Managers' Financial Integrity Act assurance letter.
Study negotiation timeframes, analyze the reasons for
not timely completing negotiations and implement
negotiation strategies that permit timely negotiation
results.
Periodically request regional status reports, including
action plans, on initiation of cost recovery for sites
where the SOL is about to expire.
Incorporate all bankruptcy claims and costs recovered
into CERCLIS and make sure that CERCLIS includes all
cost recovery enforcement actions.
Require that management use the enforcement information
for active monitoring of regional program actions and
results.
Agency Response
In response to our draft report, EPA stated it:
Was piloting programs in three regions to test
collection services and alternative dispute resolution
techniques, including arbitration, for recovering
removal costs.
Drafted an update of guidance on written demands for
cost recovery.
Was reconciling cost recovery settlement data in
CERCLIS with collections data in the Integrated
Financial Management System (IFMS), and developing a
Settlements/Collections Report integrating CERCLIS and
IFMS data.
Analyzed regional performance in managing negotiation
timeframes, and identified management improvements it
would make.
-------
EPA Office of Inspector General Annual Sueerfund Report to the Congress for Fiscal 1990 56
In response to our final report, EPA further stated it:
Would assess the variations and relative performance of
regional cost recovery programs, and identify
transferable management and organization strategies for
more consistent and effective cost recovery enforcement
actions.
Planned to develop a specialized bankruptcy report to
help regions to track status of bankruptcy cases in the
cost recovery enforcement program.
Would distribute the audit report to Regional
Administrators, and request that in fiscal 1991 each
region (a) perform an internal control review or
alternate control review based on the results of the
report and (b) address the issue in its Federal
Managers' Financial Integrity Act assurance letter.
Began monitoring regional management of RD/RA
negotiations moratoria.
Was developing a more specialized SOL report to
facilitate management of SOL sites.
OVERSIGHT OF POST-SETTLEMENT ACTIVITIES
Scope and Objectives
We completed reviews of oversight of Superfund post-
settlement activities by Region 2 and Region 3. The Region 3
review produced no findings. The purpose of these reviews was to
determine the timeliness and effectiveness of regional post-
settlement activities. The specific objectives of the Region 2
review were to determine whether EPA is:
a. Adequately monitoring compliance with settlements and taking
effective measures when parties are not in compliance;
b. Assessing and collecting applicable penalties and damages
for noncompliance; and
c. Adequately monitoring enforcement support contractors'
oversight of PRP post-settlement compliance.
Our Region 2 review focused on settlement documents issued
between Fiscal Years 1986 and 1989. We judgmentally selected 13
cases from the 37 Federal lead sites with settlement documents
issued during our review period. Most documents issued by the
Region during our review period were for RI/FS activities and our
sample reflected that fact. In addition, we chose a mix of New
-------
EPA Office of liMMCtor Canard Annual Suoerfund Report to the Congress for Fiscal 1990 £7
York and New Jersey cases. We did not select cases from Puerto
Rico, which had few cases. We also made sure that at least half
had Technical Enforcement Support (TES) contract assignments.
Findings
1. Length of Regional Reviews Delay Superfund Cleanups
Superfund cleanup work was unnecessarily delayed after the
Region had settled with the PRPs. The Region took between 6 and
36 months to approve workplans, project operation plans and other
documents required before beginning field work on RI/FSs, or
other work phases. This occurred because of a lengthy review
process which lacked definitive EPA review and approval timeframe
guidelines. In addition, the Region maintained no automated
post-settlement tracking system to monitor the timeliness of PRP
submissions or the overall status of settlement cases. Another
contributing factor was an understaffed and overworked project
manager corps which could not always devote essential review time
to individual projects. As a result, Superfund cleanup actions
were significantly prolonged (up to several years), increasing
the potential for harm to public health and the environment.
2. Region Needs to Be More Aggressive in Assessing Stipulated
Penalties
Region 2 was not assessing stipulated penalties for
noncompliance with settlement milestone dates. The Region did
not take aggressive enforcement action, limited its actions to
verbal negotiations or warning letters, and only sought penalties
in extreme instances. The Region did not assess PRPs as much as
$1,157,500 in penalties for two of the 13 cases we reviewed. As
a result, there was no inducement for PRPs to follow compliance
order requirements. This lack of enforcement encourages PRPs to
delay implementing important provisions of the settlement
document, thus unnecessarily lengthening the overall cleanup
process. This can harm public health and environment.
3. Oversight of TES Contractors Needs Improvement
The Region needed to improve its oversight of TES
contractors. The Region did not effectively monitor the timely
submission and processing of required contractor reports and
plans; conduct and document field oversight reviews, quality
assurance audits and contractor office reviews; and emphasize
project manager training. These conditions occurred because of
inadequate monitoring, untimely or lengthy Regional reviews and
approvals, lack of written procedures, and low priorities or
insufficient resources for certain tasks. As a result, work
stoppages and unnecessary delays caused a longer cleanup process,
EPA did not know if TES tests or records were reliable or
-------
EPA Office of Inspector General Annual Simerfund Report to the Congress for Fiscal 1990 58
accurate, and EPA was not sure that project managers knew enough
to administer TES contracts adequately.
4. Oversight Costs Were Not Billed in a Timely Manner
The Region had not sought to recover cleanup and oversight
costs from PRPs as stipulated in settlement documents. Regional
management had given only limited attention to enforcing this
settlement requirement. In addition, project managers gave this
a low priority, and cost recovery packages were not adequately or
timely prepared to document costs claimed. As a result, the
Region had not recovered at least $627,761 for the Superfund
Trust Fund, on which the Government could have earned interest.
Recommendations
We recommended that EPA, Region 2:
Develop and implement guidelines on timeframes for
Regional review and approval of PRP submissions.
Develop and implement an automated tracking system to
monitor specific post-settlement milestone dates.
Consider streamlining the review process for PRP draft
submissions.
Review the current project managers' workloads and
determine if it needs to make reassignments to better
equalize workloads.
Develop and implement a systematic approach for
preserving documentation in project files.
Aggressively pursue stipulated penalties when PRPs do
not comply with settlement document requirements. The
Region should justify those instances where it does not
pursue stipulated penalties.
Improve the quality and timely monitoring of TES
contractors' required reports and workplan submittals
and compliance with milestone dates.
Expedite the Regional review and approval system for
TES deliverables.
Develop timetables and minimum requirements for
periodic field oversight reviews, quality assurance
audits, and contractors' office reviews.
-------
EPA Office of Jnanactor General Annual Stmerfund Report to the Congress for Fiscal 1990 59
Require that project managers attend prescribed
training, generally before performing TES oversight
responsibilities.
Set up and implement an effective system for the timely
recovery of oversight costs, requiring the sending of
mandated settlement document itemized cost accountings
to PRPs within 90 days of the end of each fiscal year.
Collect the $627,761 in oversight costs identified in
our report.
Agency Response
In response to our draft audit report, EPA Region 2 stated
it:
Would develop guidelines with New York State setting
timeframes for reviewing PRP submissions.
Was installing and implementing an automated post-
settlement tracking system.
Set up a Superfund Records Center, which would result
in a complete set of organized site files.
Designated a full-time records coordinator to manage
and oversee the records center and contractor
activities.
Would be more aggressive in seeking stipulated
penalties for future violations.
Would use a Regional monitoring system, developed for
the Alternative Remedial Contracts Strategy contracts,
for TES contractor monitoring.
Formalized written procedures for administering TES
work assignments.
Drafted a revised contractor fee plan which would
reward contractors based upon the quality of services
provided rather than the numerical score.
Received additional staff positions to reduce the
workload of project managers and expedite review of TES
assignments and deliverables.
Would schedule in-house training based on the TES
User's Guide, and had set up a computerized tracking
system to improve the monitoring of RPM training.
-------
EPA Office of Inspector General Annual Suoerfund Report to the Congress for Fiscal 1990 60
Would include provisions in future TES assignments
requiring an annual itemized expenditure documentation,
and would include those expenditures in demand letters
to PRPs.
Hired a cost recovery coordinator whose sole
responsibility is the administration of cost recovery
activities in Region 2.
Would incorporate in all Administrative Orders language
providing for interest on all payments not received
within 30 days.
In response to the final audit report, EPA Region 2 further
stated it:
Expected to develop and implement guidelines to improve
the quality and timeliness of approval of PRP
submissions, by developing a Superfund Memorandum of
Agreement with each State and improving the peer review
process.
Would monitor PRPs1 compliance with settlement document
requirements and aggressively pursue stipulated
penalties or justify why it does not pursue penalties.
Requested enhancements to the TES Work Assignment
Tracking System based on the audit findings.
Was documenting each project manager site visit.
Conducts periodic audits to make sure both the PRP's
contractor and the EPA oversight contractor follow the
approved Quality Assurance Plan.
REGION 4 REMOVIAL ACTIVITIES
Scope and Objectives
We reviewed the EPA Region 4's implementation of the
removial cleanup program and related remedies. The removial
cleanup approach used removal cleanup authorities to expedite
remedial actions (RAs) at National Priorities List (NPL) sites.
Our overall audit objective was to evaluate the efficiency and
effectiveness of the Region's removial cleanups at eight
Superfund sites. Our specific audit objectives were to determine
whether Region 4:
a. Effectively managed removial activities to expedite NPL site
cleanups and delisting at lower cost than RAs;
-------
EPA Offica of liMpactor General Annual Superfund Report to the Conoresn for Fiscal 1990 61
b. Obtained State assurances on selected remedies and cost
sharing, under CERCLA section 104(c)(3), before beginning
renovial cleanup actions;
c. Followed CERCLA requirements for State and local community
participation in remedial projects;
d. Followed Federal and EPA procurement regulations and
policies in obtaining removial cleanup services; and
e. Adequately coordinated remedial and removal sections'
removial activities.
We limited the scope of this review to the eight sites on
which Region 4 and Headquarters agreed in March 1988 to use the
removial approach.
Findings
1. Region 4 Did Not Accomplish Removial Program Obiactives
Region 4's removial cleanup approach of using removal
authorities for remedial cleanups did not accomplish its goal of
expediting cleanup and deleting hazardous waste sites from the
NPL. In March 1988, Region 4 and the Office of Emergency and
Remedial Response (OERR) in Headquarters agreed on eight sites
for removial cleanup activities. Of these eight sites, Region 4
had only partially cleaned up three sites after more than two
years and obligating more than $15 million. Lack of defined
policies and procedures to carry out the removial cleanup
program, inadequate coordination and oversight of removial
actions, noncompliance of selected sites with Office of Solid
Waste and Emergency Response (OSWER) criteria, and remedy
changes, along with State opposition to selected remedies,
resulted in significant delays in removial cleanups and about
$3.86 million in potentially excessive cleanup costs ($3.26
million) and questionable obligations ($600,000).
2. Statutory Requirements for Superfund State Contracts fSSCsl
and State/Public Participation Disregarded
Region 4 did not provide States "substantial and meaningful"
roles in removial activities. When initiating quick cleanup
starts at selected removial sites, Region 4 frequently did not
seek or disregarded input or participation from States and
affected communities. At two of the eight removial sites, Region
4 did not execute the required SSCs before cleanup actions began.
Although EPA had signed SSCs at two other sites, the Region did
not follow contract provisions on remedy changes, cleanup starts,
and cost overruns. EPA frequently changed ROD remedies and
cleanup goals without State or citizen input. Minimizing
-------
EPA Office of Inspector General Annual Superfund Report to the Congress for Fiscal 1990 62
participation from States and the public delayed cleanups and
increased cleanup costs.
The Region bypassed the input of States and other affected
parties in trying to obtain RA starts and expedite NPL site
cleanups under the removial approach. This situation resulted
from the use of removal authority for cleanup actions although
the sites were remedial projects. Unlike remedial procedures,
removal actions address more immediate hazards and do not require
as much State and public participation as do remedial cleanup
actions. The removial approach of using both removal and
remedial procedures created conflicts over which would dominate
as well as which program's staff would be responsible for
implementation. In addition, Superfund program managers were
often uninformed about individual site actions of On-Scene
Coordinators (OSCs) and Remedial Project Managers (RPMs). These
managers had no adequate system for monitoring site activities
for compliance with applicable laws and regulations.
3. Region 4's Removial Program Omitted or Rushed Key Procedures
in the Remedial Cleanup Process
Region 4 omitted or inadequately completed key remedial
requirements to obtain RA starts and speed cleanup actions at
removial sites. The Region inappropriately changed ROD remedies
and cleanup levels and rushed ROD signatures before adequately
characterizing sites. Due to remedial investigation/feasibility
study (RI/FS) data gaps, the Region needed to collect additional
information to correct discrepancies in remedies and cleanup
levels. In some instances, the Region had to do additional site
testing and get more information to address State concerns. The
Region also replaced Remedial Designs (RDs) with conceptual
designs. It used Emergency Response Cleanup Services (ERCS)
contractors or their subcontractors for sampling, testing and RD
work contrary to OSWER directives. Furthermore, Region 4 did not
always involve States in removial cleanup decisions and obtain
SSCs from applicable States (see Finding 2). Certain State
officials stated that the Region omitted these key steps to
achieve RA starts (program goals), or "bean counts." In
addition, some site files showed changes in RODs and cleanup
levels to qualify sites under the removial program criteria.
4. Questionable Response Actions at Removial Sites
Proposed removial response actions appeared excessive or
inappropriate at seven of the eight sites. The Region proposed
or began removial activities at four sites based on claimed
immediate or substantial threats despite minimal levels of
contamination. According to State officials and site
documentation, the Region undertook many of the removial actions
to meet Regional performance goals rather than critical
-------
EPA Office of Inspector General Annual Suoarfund Report to the Congress for Fiscal 1990 63
environmental needs. None of the removal actions were time
sensitive. The Region drafted Action Memoranda for seven of the
eight removial sites warning of immediate and serious hazards to
public health or the environment which site documentation did not
support. The actual site conditions were not always as serious
as described in the memoranda. These sites had been on the NPL
for many years and progressed to the ROD stage, and the Region
had not documented changes in site conditions. For five of these
sites, the Region had completed removal actions in the early
1980s. These early removals generally mitigated the immediate
threats. In addition, later removial actions taken at Geiger,
Independent Nail and Palmetto Wood did not support the immediate
threat assertions made in the Action Memoranda. The actions
appeared excessive or unnecessary. In addition, the Region's
selection of three sites for removial actions was inconsistent
with removial guidance. As a result, the Region spent large sums
on inappropriate sites with only minimal threats to human health
and the environment.
5. Questionable Use of ERGS Contractors/Subcontractors for
Remedial Activities
Region 4 created potential conflict of interest situations
by using ERGS contractors or their subcontractors to perform
remedial design, sampling and site characterization activities.
EPA OERR approved the Region's use of ERGS contractors to perform
removial cleanups. Contrary to OSWER Directive 9360.0-03B,
Region 4 tasked ERGS contractors or their subcontractors to
identify and define, through sampling and/or analysis, what was
to be cleaned up; design the cleanup system; and perform the
actual remedial construction. The Region took these actions to
speed the cleanup process, assuming that ERGS contractors and
subcontractors had the skill to characterize the sites and take
appropriate cleanup actions. Permitting a single contractor or
its subcontractor to perform every step in the cleanup process
creates potential for data manipulation for the contractor's
financial benefit.
Recommendations
We recommended that EPA Region 4:
Make sure all future removial actions follow program
requirements.
Issue formal guidance and procedures for the removial
program to facilitate cooperation and coordination
between the Region's remedial and removal staffs, end
duplication of effort among staff personnel, and
specify the duties, responsibilities, and individual
roles of the Region's remedial and removal staffs.
-------
EPA Offlca of IniPBCtof Gonafal Annual Supsifund Raoort to ths Conoress for Fiscal 1990 6A
Establish controls to make program managers strictly
accountable for following established procedures to
ensure the integrity of EPA programs and maintenance of
the public trust.
Adequately determine the type and extent of
contamination before selecting future sites for
removial cleanups.
Develop controls keeping managers informed of removial
and remedial actions and making sure staff follows
CERCLA and Agency policies for State and public
involvement and for SSCs in NPL cleanup activities.
Instruct removal and remedial staffs to comply strictly
with SSC provisions.
Require documented justifications for any changes in
ROD remedies and cleanup goals and omission of any key
remedial requirements such as RDs.
Establish controls to be sure that the Region conducts
complete RI/FSs, does not rush RODs to execution, does
not begin removial cleanup actions before adequately
characterizing sites, and selects only the most cost
effective remedies adequately protecting human health
and the environment at removial sites. These controls
should include an in-depth independent, second party
review of any RODs signed or RAs begun in the fourth
quarter of each fiscal year to be sure they are
justified and adequate.
Instruct Regional staff not to arbitrarily change RODs,
remedies and cleanup goals to reduce RA time and costs
to qualify sites for the removial program.
Establish procedures to be sure statements in removal
Action Memoranda clearly reflect documented site
conditions.
Establish adequate controls over removal and remedial
activities to be sure cleanup actions among removial
sites are consistent, eliminate duplicate contractor
services, and follow OSWER program criteria in
selecting removial sites.
Remind Regional staff the OSWER Directive 9360.0-03B
restricts the use of ERCS contractors in cleanup
actions, and establish controls to be sure they follow
it to prevent actual, apparent or potential conflicts
of interest.
-------
EPA Offlca of huDBCtor Ganaral Annual Suoerfund Rflnort to tho ConoraM for Fiscal 1990 65
Agency Response
In response to our draft report, EPA Region 4 stated it:
Would follow Headquarters removial guidance.
Would develop formal standard operating procedures to
detail removial administrative procedures and define
specific roles of remedial and removal personnel, if
the Region continues to use removials.
Would develop a system of controls to be sure it
follows SSC regulations.
Would follow OSWER Directive 9355.3-02, Interim Final
Guidance on Preparing Superfund Decision Documents,
when making changes in RODs, remedies or cleanup goals.
Would follow OSWER Directive 9360.0-03B.
In response to our final report, EPA Region 4 further stated
it:
Would make sure that all RI/FSs are peer reviewed and
the reviewers concur before proceeding with ROD
signature. The Regional Branch Chief and Division
Director will independently review the proposed plan
before releasing it to the public and asking the
Regional Administrator to sign the ROD. Region 4 will
make sure that it uses the nine remedy evaluation
criteria set forth in the National Contingency Plan
appropriately when selecting a remedy. The Region will
document the site file appropriately to reflect these
reviews.
Would have the Regional Branch Chief and the Division
Director review and approve all significant changes to
RODs or remedies, and appropriately document the review
and approval process in the site file.
Would issue the latest OSWER guidance on preparation of
removal Action Memoranda to Emergency Response and
Removal Branch personnel, and hold a seminar on the
preparation of Action Memoranda.
Would develop controls to make sure staff follows OSWER
Directive 9360.0-03B on actual, apparent or potential
conflicts of interest involving ERCS contractors or
their subcontractors, and present seminars on this
topic.
-------
EPA Office of Inspector General Annual Suoerfund Report to the Congress for Fiscal 1990 66
SUPERFUND INNOVATIVE TECHNOLOGY EVALUATION DEMONSTRATION PROGRAM
Scope and Objectives
The purpose of the audit was to determine the success of the
Superfund Innovative Technology Evaluation (SITE) Demonstration
Program in encouraging the development and use of innovative
technologies to achieve more permanent protection of human
health, welfare, and the environment. Our audit objectives were
to determine if:
a. EPA planned technology demonstrations in accordance with
SARA;
b. EPA conducted and evaluated technology demonstrations in a
timely manner;
c. Completed demonstrations were leading to a more widespread
use of the technologies and more effective site cleanups;
and
d. EPA had adequate internal controls in place to guard against
fraud, waste and abuse.
Findings
1. Improvements Needed in Matching Technologies with Hazardous
Waste Sites for Demonstration Purposes
Problems in locating sites for technology demonstrations
delayed the Demonstration Program. Matching technologies to
specific sites had been a difficult and time-consuming task,
frequently taking a year or longer. SITE officials repeatedly
asked the regions to volunteer prospective sites since they
didn't have a universe of hazardous waste sites with known
characteristics. This delayed site matching. Relying on the
regions to suggest sites was a major cause of the site matching
problem. When we finished our audit work, program officials had
developed a data base to help match sites, but still relied on
the regions to provide timely and accurate detailed site
information.
Some regional Superfund officials were reluctant to
recommend sites and participate in the program because of the
limited time they have to clean up sites. In addition, some
Remedial Project Managers (RPMs) and On-Scene Coordinators (OSCs)
we contacted were unwilling to recommend sites. There was little
or no incentive for them to do so, since they had little
documented information on successful technology demonstrations.
These individuals were not tracked or held accountable for
-------
EPA Office of Inspector General Annual Sunerfund Report to the Congress for Fiscal 1990 67
participation in the SITE Program but instead were primarily
accountable for cleanup of sites.
Developers turning down sites, developers exiting from the
program, and proposed technologies having a limited scope of
treatment also affected the Agency's site matching process. The
SITE Program needed to address all these factors to increase the
number of demonstrations and thus provide reliable, documented
information to RPMs and OSCs to aid in cleanup decision-making at
Superfund sites.
2. Improvements Needed in Reporting Results for Completed
Demonstrations
The SITE Program needed to address lengthy reporting periods
and delays in issuing final technology demonstration reports.
The program had taken as long as 22 months to publish these
reports. The reports were critical because they were the
principal means of informing RPMs, OSCs and Superfund cleanup
contractors about the in-depth demonstration results. Extensive
rewrites and a long review process by EPA, the demonstration
contractor, the technology developer, and other report reviewers
had delayed the reporting process. In addition, the Office of
Research and Development (ART) needed to shift from their normal
long range focus of 3-5 years to the shorter period of under two
years for the SITE process. SITE management set a new timeframe
of 18 months for the entire demonstration process. SITE
officials needed to explore possible alternatives to identify and
eliminate bottlenecks in the reporting process.
The lack of reported information and documented results
handicapped the success of the program. In fact, 30 percent of
the individuals we contacted in the regions told us they had not
heard of the SITE Program or were not familiar enough with it to
answer our questions. These OSCs and RPMs are the ultimate EPA
users of the demonstrated technologies. While those familiar
with the program thought it was a very good idea, they had not
received enough information about specific demonstration results
to encourage them to use innovative technologies. As a result,
the use of these innovative technologies to more permanently
clean up Superfund sites was hindered.
3. Improvements Needed in Ensuring Adequate Contractors'
Performance and Cost Control
RPMs, OSCs, developers and SITE officials repeatedly
expressed concerns about contractors' performance in such areas
as experience, writing reports, and time delays. In addition,
program officials and SITE management did not appear to be
adequately controlling contractor costs and overall project
costs. The nine projects we reviewed frequently had significant
-------
EPA Office of Inspector General Annual Suoerfund Report to the Congress for Fiscal 1990 68
cost increases and tine extensions. We found increases to
original cost estimates that were as high as 137 percent with an
overall average of over 98 percent. This cost growth is
especially important because the contractors received significant
portions of Demonstration Program funds during fiscal 1987
through 1989.
We found that award fees were not always consistent with the
project time delays and increased costs. SITE management needed
to adequately use the award fee determinations to communicate
performance results and the need for high quality work to the
contractors. Further, the SITE Program needed improvements to
make sure contractors performed adequately and controlled costs.
4. The SITE Demonstration Program Discouraged Distribution of
Federal Funds to Developers
The Demonstration Program discouraged distribution of
Federal assistance to technology developers. No developer had
received funding assistance as of October 1, 1989. SITE
officials told us they took a conservative approach to providing
funding because they were unclear what Congress intended. In
addition, they told us they feared providing funds to developers
would limit available funds remaining to conduct the program.
Four of five developers we talked with believed funding impeded
the program, and two stated they would not participate again in
the program because of a lack of funding. Further, while no
technology developers received funding, EPA paid its SITE
contractors about 80 percent of the program's $34.6 million
budget during fiscal 1987 through 1989. Finally, 11 developers
have exited the program without demonstrating their technologies.
The Agency gained little from these developers, despite a cost of
about $2.6 million. Because EPA did not fund developers, the
Demonstration Program may have discouraged developers of other
promising technologies from applying for admission to the
program.
Recommendations
We recommended that EPA:
Review and analyze why developers exit the
Demonstration Program so it can use this information in
selecting future technologies.
Begin SITE technology demonstrations using more than
one technology.
Formalize the number of site locations at which a
developer can refuse to conduct a demonstration.
-------
EPA Offlca of Inspector General Annual Suporfund Report to tha Conorasg for Fiscal 1990 69
Add SITE demonstrations to the performance indicators
or elements of management tracking systems.
Explore and develop other incentives for regional RPMs
and OSCs to offer their sites for SITE technology
demonstrations.
Make SITE management formally accountable for meeting
reporting milestones.
Consider alternatives for performing a detailed review
of the process for preparing and issuing SITE reports,
such as a Management Systems Review.
Evaluate publication alternatives to speed up the
actual distribution process.
Prepare a videotape or presentation of the
Demonstration Program's goals and objectives and
present it to all Superfund personnel.
Require adequate justification for individual funding
increases.
If it cannot improve contractor performance in key
areas, such as report writing, keep those functions in-
house on future projects.
Reinforce to contractors and project managers the use
and importance of the award fee process.
Consider for the next contract period a different
contract type to more fairly balance risk between EPA
and the contractors.
Seek further clarification from Congress on legislative
intent on funding for technology developers.
Reduce the amount of financial information required
from prospective developers.
Formalize the amount of time expected to award funds to
developers, and convey this information to developers
applying under new solicitations.
Request additional funds for developer funding.
Agency Response
In response to our draft report, EPA stated it:
-------
EPA Office of Inspector General Annual Sunerfund Report to the Congress for Fiscal 1990 70
Demonstrated the first combination of technologies in
the SITE Program.
Would screen technologies accepted under the SITE-005
solicitation to identify possible technology matches
and investigate possible combinations.
Would change the SITE-006 solicitation to require
developers to assess their function in a combination
approach.
Would encourage applicants to propose potential sites
in their applications.
Is tracking demonstration program progress quarterly
through the SITE Milestone Checklist report.
Would review the publication process and consider
whether to do this as a management system review.
Prepared one videotape on the SITE Program and showed
it to the Superfund '89 conference, and plans to
prepare a videotape on the Alternative Treatment
Technologies Information Center.
Will reinforce and emphasize the award fee process to
SITE contractors and Project Managers.
Met with the EPA Contracts Management Division on the
possible use of different contract types.
Will develop a statement for future solicitations on
the time expected for award of competitive cooperative
agreements.
In response to the final audit report, EPA further stated
it:
Completed a review of the reasons developers exit the
demonstration program.
Added to the selection process a screening of all
developers' proposals for their potential capabilities
to use "treatment train" technologies.
Would include regional site nominations for SITE
demonstrations as a reporting measure in the Strategic
Targeted Activities for Results System (STARS).
Would perform a SITE Management Review.
-------
EPA OfflcB of Inspector GanBral Annual Supcrfund Report to the Conoross lot Fiscal 1990 71
Implemented interim improvements in the publication
distribution process.
Prepared several video tapes on SITE for use in the
Basic Training Academy for RPMs and OSCs.
Directed project managers to pay closer attention to
contractor performance and requests for work assignment
resource increases and justifications.
Reviewed the contract type used, and decided that Cost-
Plus-Award-Fee was still the most appropriate
mechanism.
Would state in future solicitations that it would take
eight months to award funds to developers.
Would review resource levels for the SITE program at
the time of Superfund reauthorization.
COST-PLUS-AWARD-FEE CONTRACTS
Scope and Objectives
We audited the award fee process for Superfund cost-plus-
award-fee (CPAF) contracts. Our audit objectives were to
determine if:
a. Award fees effectively motivated contractors to excellence;
b. Award fee plans and procedures were consistent among
Superfund programs;
c. The award fee process adhered to Federal Acquisition
Regulations (FAR), award fee plans developed by the Agency,
and Superfund program user manuals; and
d. EPA completed the award fee process in a timely manner.
We conducted audit field work at EPA Headquarters and Region
3. We reviewed award fee records compiled by Headquarters
officials and personnel in all ten EPA regions. We reviewed 21
of the 98 active Superfund contracts as of June 2, 1989. We
reviewed all active Superfund contracts except remedial program
contracts addressed in a July 1988 General Accounting Office
report, contracts that did not provide award fees, region-
specific contracts other than Region 3 ARCS awards, and contracts
with a potential value of less than $30 million. The 21
contracts reviewed covered five Superfund programs and were
potentially worth over $2.2 billion.
-------
EPA Office of Inspector General Annual Sunarfund Report to the Congress for Ftecal 1990 72
Findings
1. Award Fees Often Failed to Achieve Excellence
The Agency rewarded performance that was less than
satisfactory. We believe paying award fees for less than
satisfactory work does not meet the intent of the award fee
concept in the FAR, to motivate the contractor to excellence.
Under three of the eight contracts in place for more than a year,
EPA rewarded contractors for work rated satisfactory and
sometimes less than satisfactory. For example, EPA rated 85
percent of the work of one contractor no better than
satisfactory, and 60 percent of the work of a second contractor
as marginal or deficient, yet both received award fees.
Moreover, a third contractor collected award fees despite
charging the government for unreasonable costs. In addition to
the award fees, all 21 contracts reviewed provided contractors
with base fees even when contractor efforts were seriously
deficient. However, the FAR allows EPA to reduce the payment of
any fee, base or award, for performance not meeting contract
requirements.
2. EPA's Performance Evaluation Procedures Varied By Contract
EPA needs to revise evaluation procedures for Superfund
contractors. Because the evaluation procedures differed, the
Agency did not provide award fees in a uniform manner. Moreover,
the administrative effort used for evaluation was not always
justified by the size of the award fees. EPA evaluators spent
more effort rating the performance on the smaller Environmental
Services Assistance Team contracts than on the much larger
Alternative Remedial Contracting Strategy contracts. The rating
categories the Agency used to evaluate contractors were not
consistent. Of the 21 contracts reviewed, 14 had five rating
categories while seven had only four. Also, the amounts of award
fees available for each category varied among contracts. As a
result, one contractor providing unsatisfactory work could
receive 20 percent of the available award fees, while another
contractor could receive 35 percent for similarly unsatisfactory
work.
3. Late Appraisals Hinder the Award Fee Process
The Agency did not always use award fee evaluations to
provide contractors with timely feedback on their performance.
The FAR and most of the contract award fee plans required such
notice. One contractor lacked such feedback for more than a
year. Other contractors provided marginal or unsatisfactory work
for months without formal notification from EPA. As a result,
contractors continued to perform less than adequately, and were
not informed where they needed to improve.
-------
EPA Office of Jnipactor Ganaral Annual Suoarfund Report to tha Conorass for Fiscal 1990 73
Recommendations
We recommended that EPA:
Monitor future Environmental Services Assistance Team
Zone I award fee evaluations, and terminate the
contract if future evaluations show any widespread
return to the deficient performance in the first three
performance periods.
Restrict the payment of base fees as permitted by the
FAR if services performed under any Agency CPAF
contract do not meet contract requirements.
Restructure all Agency CPAF contracts to provide no
award fees for less than satisfactory work, and allow
only reduced amounts for work no better than
satisfactory.
Determine and recoup the actual costs and base fees
inappropriately charged against contracts, as detailed
in the audit report.
Establish consistent procedures for CPAF contracts to
provide award fees in a uniform manner. Each contract
should have the same number of rating categories and
the percentage of award fee available for each category
should be consistent.
Modify future contracts to eliminate the award fee
aspect when the contract value is small or when EPA
does not spend what it planned.
Emphasize to all involved personnel, and include in
their performance agreements, the importance of
completing evaluations.
Not process any work assignments for managers who are
late in completing their award fee evaluations.
Agency Response
In response to the draft audit report, the EPA stated it:
Informed the Environmental Services Assistance Team
Zone I contractor that EPA was seriously considering
not exercising the first option period but instead
recompeting the requirement. Due to performance
improvements, EPA continued the contractor, but the
first option period was split into a four-month period
and an eight-month period.
-------
EPA Offica of Inspflctof General Annual Supsffund Report to tha Conoress for Fiscal 1990 74
Formed a task force to evaluate the scale used for
award fee determinations in all remedial contracts.
Would develop a work plan to ensure implementation of
the OSWER Directives requiring timely evaluation in all
CPAF contract Work Assignment Managers' job performance
standards.
In response to the final audit report, EPA further stated
it:
Established a no award fee policy for unsatisfactory
performance.
Set up a work group to review and revise Agency award
fee procurement regulations.
Would issue a memorandum emphasizing the provisions of
the Inspection of Services clause (FAR 52.246-5) and
the need to review closely instances of reperformance
within contractors' control and attributable to poor
technical workmanship or management oversight.
Reviewed the charges the audit stated should be
recouped, and found some of them were appropriate. On
one contract, EPA instructed the firm to stop charging
non-dedicated corporate management level of effort to
the contract, and developed an action plan to further
research and resolve the issue.
Would issue a new or revised OSWER Directive
emphasizing to all personnel involved in the award fee
process that completing contractor performance
evaluations in a timely manner is essential, and amend
an OSWER Directive to include such a requirement in
performance standards for Work Assignment Managers.
Would set up an OSWER work group to study award fee
contracting issues, including evaluation timeliness.
ARCS CONTRACTS BIDDING AND AWARD
Scope and Objectives
We reviewed the Agency's bidding and award process for the
Alternative Remedial Contracting Strategy (ARCS) contracts, which
have a potential value of $6.6 billion. Our intent was to
identify control weaknesses or make observations for change early
in the ARCS process. Our review objectives were to determine if:
-------
EPA Offlca of Innpflctof Ganaral Annual Suparfund Raoort to tha Conorass for Fiscal 1990 "75
a. EPA awarded ARCS contracts in accordance with Federal and
EPA acquisition regulations;
b. EPA awarded ARCS contracts timely; and
c. The ARCS program resulted in more firms participating in the
remedial program.
We judgmentally selected two ARCS contracts from the second
cycle of the ARCS procurement process for review, assuming that
the Agency would have identified areas in the first cycle to
improve the procurement process in later cycles. We limited the
scope of our work primarily to the procurement process leading to
award of an ARCS contract. We did not review the implementation
of ARCS contracts. Our review work was performed in Headquarters
and Region 3.
Findings
1. ARCS Contracts Were Awarded Consistent with Acquisition
Regulations
The ARCS procurement process complied with applicable
Federal and EPA Acquisition Regulations (EPAAR). Except for
preparing an independent cost estimate, EPA complied with or
obtained an appropriate deviation from the FAR. In addition, the
two contract files reviewed contained the required documentation
such as the summary of negotiations, approved deviations from
prescribed regulations, and determinations and findings
statements. The contracts also contained the clauses required by
the FAR for CPAF contracts. EPA also required all Architect and
Engineer Evaluation Board members to complete separate financial
interest statements. EPA held several symposia to brief industry
about the new contracting strategy.
2. ARCS Contracts Were Generally Awarded Timely
EPA met its overall time goal for awarding all ARCS
contracts despite the complexities of a new contract mechanism
and the great effort to conduct cost and price analyses of over
100 firms associated with the prime ARCS contractors. The awards
exceeded the program requirement to have a new contract mechanism
in place before the existing Remedial Planning Contracts expired
in September 1990. EPA awarded 45 contracts beginning January 1,
1988 and ending June 28, 1989, an elapsed time of 18 months. EPA
took longer than its goal of nine elapsed months from receiving
acceptable procurement rationale documents to the first contract
award for all three ARCS procurement cycles. However, we
identified no adverse effects to the remedial program from the
failure to meet this goal.
-------
EPA Office of Inspector General Annual Suoerfund Report to the Congress for Fiscal 1990 76
3. ARCS Increased Competition
EPA net an overall goal of increased competition by awarding
45 ARCS contracts to 23 firms. Of the 23 prime contractors, 11
were new to Superfund. Also, 52 team subcontractors new to
Superfund were associated with ARCS prime contractors. The
structure of the ARCS program ensured many more contracts than
under the previous three large Remedial Planning Contracts. The
ARCS structure also maintained competitive pressure after award
because EPA would base the annual assignment of work on the
quality of past performance.
4. Independent Cost Estimate for Future ARCS Contracts Needed
EPA did not independently prepare cost estimates for ARCS
contracts, as required by the FAR. Doing so would have provided
additional assurance EPA had negotiated a fair and reasonable
price. EPA prepared a one-page analysis of the major cost
categories for various sizes of ARCS contracts before
negotiations, but it did not include enough detail to be
considered an independent Government estimate. EPA contract
negotiators relied on other means to negotiate what they
considered to be a fair and reasonable price. EPA technically
reviewed each cost proposal and compared it with other offerers'
cost proposals submitted for a region or zone.
5. Better Documentation of Estimated ARCS Zone Requirements Is
Needed
Documentation supporting EPA's estimates of annual technical
hours needed and contract costs for each ARCS zone was not
available. Additionally, individual acquisition plans (lAPs)
prepared for each of the three ARCS procurement cycles did not
consistently identify estimated resource requirements. Thus EPA
managers lacked basic data for justifying contract needs or
comparing estimated program requirements with contract award
results and analyzing the variances. lAPs developed for Cycles
II and III did not contain the estimated contract value and/or
the estimate of technical hours needed by the regions. In
addition, EPA did not sufficiently document the reasons for large
variances in planned versus actual procurement awards.
6. Guidance Needed for Use of Small and Disadvantaged
Businesses
EPA required each ARCS bidder to submit a subcontracting
plan addressing the use of small or disadvantaged businesses.
However, EPA did not establish criteria and procedures to define
and evaluate a contractor's "good faith" efforts and to make sure
EPA would act consistently when determining actual performance.
The 45 ARCS contracts resulted in 113 team subcontractors,
-------
EPA Office of IniMctor General Annual Suoerfund Report to the Congress foe Fiscal 1990 77
including 49 (43 percent) small or disadvantaged businesses.
While this number is encouraging, there are no guarantees that
the prime contractors will actually assign work to these firms.
The Performance Evaluation Board's report did not contain a
mandatory section requiring specific comments on the
subcontracting plan goals.
Other Comments
1. Cost Competition Not Used as a Selection Factor in Awarding
ARCS Contracts
EPA, consistent with the SARA requirements to follow the
Brooks Act requirements under the FAR, did not use cost
competition as a selection factor in evaluating offerers with
which to negotiate ARCS contracts. Agency officials believed
they negotiated and obtained fair and reasonable prices for each
ARCS contract consistent with FAR requirements. Without cost
competition as a selection factor, wecannot be sure the
contracts were awarded at the lowest possible cost consistent
with receiving high quality technical services.
2. Inspection Clause Could Be Strengthened
EPA might pay contractors unnecessary costs for poor quality
work that must be redone. A standard FAR inspection clause
included in all ARCS contracts states that if a contractor's work
is not acceptable and must be redone, the Government must pay the
contractor in order for the Government to obtain acceptable
quality work. As a result, the Government absorbs the cost no
matter how many times it takes the contractor to provide an
acceptable product or service.
Recommendations
We recommended that EPA:
For future architect-engineer contract awards, comply
with, or request a deviation from, the FAR requirement
for preparing independent Government cost estimates.
Provide support for planning estimates of level of
effort hours needed and cost estimates before accepting
the procurement planning request.
Document and keep for historical reference the reasons
for variances between overall hour/cost estimates and
the actual potential hours/costs in ARCS contract
awards.
-------
EPA Office of Inspector General Annual Superfund Report to the Congress for Fiscal 1990 78
Document and retain the current analysis and decisions
on ARCS contract workload to assist future management
analysis and decisions.
Establish written evaluation criteria for defining
"good faith" efforts towards meeting subcontracting
goals.
Provide written guidelines to help contracting officers
evaluate contractor compliance with a subcontracting
plan.
Require all Performance Evaluation Boards to include a
mandatory section on the contractor's compliance with
the contract's subcontracting plan in each award fee
evaluation.
Determine the desirability and feasibility of providing
current and future ARCS contractors with additional
incentives encouraging them to exceed subcontracting
plan goals.
Suggestions
In connection with our "Other Comments," we suggested that
EPA:
assess the need to amend SARA to allow EPA to use cost
competition in future Superfund Architect-Engineer
contracts.
request from the Civilian Agency Acquisition Council a
deviation from the FAR inspection clause requiring the
Government to reimburse a contractor's cost to repeat
unacceptable work, if that is found to be warranted.
Agency Response
In response to the draft audit report, EPA stated it would
comply in the future with the FAR requirement for an independent
Government cost estimate.
In response to the final audit report, EPA further stated
it:
Would be able to prepare realistic cost estimates to
support planned level of effort hours needed before
beginning future remedial architect/engineer
procurements.
-------
EPA Office of Inipectof General Annual Suoerfund Report to the Congress for Fiscal 1990 79
Would involve the Office of Small and Disadvantaged
Business Utilization in reviewing and evaluating "good
faith" efforts of ARCS contractors to meet and exceed
the goals for using small and disadvantaged businesses.
EPA will also allow representatives of that Office to
meet with Performance Evaluation Boards.
Would send a letter to all ARCS contractors
highlighting the importance of good faith efforts to
achieve and exceed small and disadvantaged business
utilization goals.
Requested regional contracting officers to issue with
each remedial design work assignment a bilateral
modification containing FAR 52.236-23, Responsibility
of the Architect-Engineer Contractor. This clause
states "the contractor shall, without additional
compensation, correct or revise any errors or
deficiencies in its designs, drawings, specifications,
and other services."
CERCLIS REPORTING
Scope and Objectives
We audited the accuracy, reliability and consistency of
standard Comprehensive Environmental Response, Compensation, and
Liability Information System (CERCLIS) reports. Our objective
was to determine whether reporting was accurate and reliable.
The audit reviewed CERCLIS reporting and related controls as
they existed from June through September 1989. We conducted the
audit primarily at Headquarters. We also visited Regions 2 and 3
to obtain background information and users' views on working with
CERCLIS.
findings
1. CERCLIS Report Program Documentation Needs Significant
Improvement
Documenting a program's specific steps and the reasons for
these steps is vital so future programmers can modify programs
correctly, with only one exception, all the program source
code45 we examined contained no documentation comments and did
not agree with descriptions of report logic prepared by
45 A computer program written in a high level (English-like)
language. It must be changed to a machine language format (load
module) before it can be processed by a computer.
-------
EPA Office of Inspector General Annual Suoerfund Report to the Congress for Fiscal 1990 80
contractors. It will be very difficult for future programmers to
change these reports. They may even need to rewrite programs
completely rather than simply change them because they won't know
how the programs work. In addition, without a good understanding
of how these programs select and process records, it may become
impossible to resolve questions about the meaning of reports and
their relation to other reports. In fact, it may become
impossible to rely on them at all.
2. Improvements in CERCLIS Report Library and Change Controls
Are Needed
Control over report programs was not adequate. Programmers
could change reports without approval. Control over programming
was so weak that the correct source code for one production
report could not be found. Therefore users cannot rely upon
reports produced by these programs because they cannot be certain
that the correct and error-free version of a program is being
executed. If users cannot rely on these reports, they will
either not use them or use them with considerable risk. Except
for Superfund Comprehensive Accomplishments Plan reports, EPA was
not using CERCLIS reports for day-to-day management decision
making. Information in related reports was inconsistent because
of the same lack of control. A comparison of reports which would
appear to users to list identical items showed significant
differences.
3. Formal Testing Procedures for CERCLIS Reports Are Needed
EPA did not have formal testing and acceptance procedures
for programming new reports or changing old reports. If CERCLIS
officials did not receive negative comments on a report from
field users, they assumed all was well. The number of coding
errors found in the five reports reviewed shows the serious flaws
in this methodology. In fact, one report understated prior year
obligations for one region by $500 million.
Recommendations
We made no recommendations in the final audit report because
the Agency had taken adequate action to correct the deficiencies
found.
Agency Response
In response to our position papers and draft report, EPA
stated it would:
Insert comments into the code when it examines reports
for inclusion in the national library, and modify the
CERCLIS Reports Library to reflect the changes.
-------
EPA Office of Inspector General Annual Suoerfund Report to the Congress for Fiscal 1990 81
Require sign-offs from the EPA program office (report
owner) for all report specifications, reports library
documentation, test/sample reports, and report
modifications before reinstatement to the production
reports menu.
Comprehensively review all future report documentation
for adherence to selection criteria standards and
Federal documentation standards.
Place all source programs and load modules in a
centralized library.
Require that the program offices and the reports
librarian approve all changes to the production program
library, and that the librarian make sure the library
contains the latest approved copy of each program.
Record any changes to source code within the program in
the form of comments, and update a report change log
for each report modification.
Consult the reports librarian when changing one program
report to see if related or affected programs need to
be changed.
Let users know by electronic mail of changes to a
report.
Review reports usage analysis and ask for user comments
to identify all reports critical to end of the year
reporting and fiscal 1990 planning, and give those
reports highest priority for review and correction.
Place each critical report on a fast track for systems
analysis, program confirmation and sign-off,
reprogramming, verification of code against select
logic, testing, approval by program office and
submission to the National Library.
Remove all reports not identified as critical from the
CERCLIS National Reports Menu. Make these reports
available only through a special menu on the production
system until verification, testing and release of each
report.
Allow changed or new reports only through a report
change or new report request form.
-------
EPA Office of Inspector General Annual Simarfund Report to the Congress for Flteal 1990 82
Use report documentation, specifically specification
forms and report layouts, to validate the successful
development of new reports.
Have program offices or report owners evaluate a report
to verify validity while independent report developers
are testing the report.
Not allow users access to reports before testing is
complete.
CERCLIS POST-IMPLEMENTATION STUDY SPECIAL REVIEW
Scope and Objectives
We reviewed the Comprehensive Environmental Response,
Compensation, and Liability Information System (CERCLIS) post-
implementation evaluation. Our objective was to evaluate the
adequacy of the work performed and the response of management to
its conclusions and recommendations.
We conducted the review at EPA headquarters. We examined
the study's work plan and final report, and interviewed
appropriate staff. Due to its limited scope, the review was not
an audit following the Government Auditing Standards (1988
Revision) issued by the Comptroller General of the United States.
Findings
1. Certain Post-Implementation Evaluation Findings Are Suspect
Four tasks did not receive enough independent testing and
verification. These tasks involved data management, change
controls, data base integrity and security. The contract team
performing the study relied solely on interviews, surveys and
available documentation in their evaluation of the system.
Without independent verification and testing of procedures, there
can be no assurance that controls are actually in place and
effective. As a result, the study's conclusions for these tasks
are suspect and EPA must attempt evaluations again at additional
cost to the Government. Weaknesses overlooked in any of these
four critical areas could adversely affect the life of the system
because users would not be able to rely on it for their
information needs.
2. A Software Assessment Should Be Performed
The contract team did not perform the planned assessment of
software quality. The evaluation was to have included the
adequacy of edits, the ability of data elements to support
reporting requirements, and ease of maintenance. Responsible
-------
EPA Offlca of ifUDflctof Gammy Annual Suoorfund Rapoit to th9 Conoross for Fiscal 1990 83
officials stated that the assessment will not be done in the
future because of the OIG's work on CERCLIS Reporting. However,
the OIG limited its review to report programming. Without a
thorough review of software quality, EPA cannot be sure that the
system meets information needs, information is accurate, and
future maintainers of the system can be effective and efficient.
Recommendations
We recommended that EPA:
Include independent testing and verification procedures
in OSWER system evaluations.
Make evaluations of the data management, change
controls, data base integrity and security.
Agency Response
In response to our final report, EPA stated it:
Would make sure OSWER project managers understand the
need for independent testing and verification
throughout the system life cycle and include this in
their plans.
Created a task force charged with ensuring ongoing data
management. The task force identified critical data
quality issues and developed CERCLIS monthly audit
reports in response to these issues.
Instituted and documented a formal change process
addressing emergency and routine change requests,
analysis and review, decision making, and
implementation.
Reviewed and revised all major standard reports for
consistent formats, field headers and select logic; and
were working to improve select logic maintenance and
access.
Assigns accounts and passwords only to Headquarters,
regional and contractor staff requiring direct access
for data base maintenance, report retrieval or software
development. Monthly access reviews by the National
Computer Center and regional local area network
security will provide the level of security required by
EPA's Information Security Manual.
-------
EPA Office of Inspector General Annual Superfund Report to the Congress for Fiscal 1990 84
REGION 5 CONFIDENTIAL DISCLOSURE STATEMENTS
Scope ami Objectives
We audited Region 5's compliance with the Ethics in
Government Act of 1978, Executive Order No. 11222, and 40 CFR
Part 3, Employee Responsibilities and Conduct. We reviewed the
responsibilities of both Region 5 Deputy Ethics Officials, the
Regional Administrator and the Regional Counsel. Our overall
audit objective was to determine whether the Deputy Ethics
Officials made sure employees followed Government rules on
financial interests and investments, outside employment, and
other outside activities. Our specific objectives were to
determine whether the Deputy Ethics Officials were:
a. Properly identifying and notifying employees to file
Confidential Statements of Employment and Financial Interest
(confidential statements) as required under 40 CFR 3.302(b)
and (c);
b. Making sure applicable employees properly and promptly file;
and
c. Properly reviewing the financial interests and outside
employment of employees for potential conflicts, and
promptly resolving any conflicts.
Our review did not include Region 5 employees in the Senior
Executive Service. EPA requires them to submit Executive
Personnel Financial Disclosure Reports to EPA's Deputy General
Counsel in Headquarters. Our audit period was October 1, 1988
through December 31, 1989.
Findings
1. Problems Persist in Collecting Confidential Statements
Region 5 did not effectively collect confidential statements
because it did not have formal written procedures nor had it
implemented a proposed automated system to make sure it timely
received all confidential statements. The Regional Administrator
inaccurately certified to the EPA Ethics Official that
confidential statements were required from 97 employees below the
GS/GM 13 level and that they all complied with this requirement.
Our review showed that 99 employees below the GS/GM 13 level were
required to file and that only 59 (60%) of these employees
submitted a confidential statement. Consequently, for those
employees who did not submit confidential statements, the
Regional Administrator was unlikely to be aware of conflicts of
interest between the employees' EPA duties and responsibilities
and their personal financial interests and activities. Besides
-------
EPA Office of Inspector General Annual Suoerfund Report to the Congress for Fiscal 1990 85
not having formal written procedures, the employee designated to
administer the program had no formal training in reviewing
statements for possible conflicts of interest.
2. Confidential Statements Need to Include Spouse. Child and
Blood Relative Data
Few employees who submitted confidential statements included
information about the employment and financial interests of
spouses, minor children or blood relatives residing with the
employee (relatives). Only 60 of 307 confidential statements
submitted to the two Deputy Ethics Officials showed this type of
information. We determined that 25 married Superfund employees
did not include spousal information on their confidential
statements. We contacted five of these employees, all of whom
said their spouses were employed. One employee told us her
spouse worked in an environmental related industry, without
complete disclosure of required information, a Deputy Ethics
Official can not completely assess conflicts of interest. This
condition usually occurred because employees did not understand
they had to provide this information, although instructions were
on the back of the form.
Recommendations
We recommended that EPA Region 5 ensure completion of the
corrective actions planned in response to our draft report, and
provide us a written action plan with specific milestone dates to
implement their planned actions.
Agency Response
In response to the draft audit report, EPA Region 5 stated
it:
Would issue a detailed memorandum with a sample
confidential statement attached to all employees
required to file a confidential statement.
Would put their procedures in writing.
Established a checklist as a tickler system to remind
new employees to submit confidential statements.
Would provide ethics training to employees responsible
for reviewing the confidential statements.
Would further clarify and emphasize the requirements
covering employment and other financial interests of
spouses, children and other relatives.
-------
EPA Office of Inipector General Annual Suoerfund Report to the Congress for Fiscal 1990 86
Sent follow-up memoranda to all affected employees
requesting submission of spousal, minor children and
relative information, where applicable.
In response to our final report, EPA Region 5 provided
Action Plans for implementing the above planned actions.
INVESTIGATIVE-DERIVED WASTES SPECIAL REVIEW
Scope and Objectives
We conducted a special review of EPA's policy for disposing
of wastes stemming from pre-remedial site investigations. We
became aware of this issue while conducting a survey of the pre-
remedial program's management of Field Investigation Teams
(FITs). It was not an audit. We reviewed existing and proposed
EPA regulations and policies, and current waste disposal
practices. Field work was done in EPA Regions 5, 6 and 9, and in
EPA Headquarters.
Findings
OSWER had no specific formal guidance for disposing of
wastes stemming from pre-remedial site investigations. OSWER
recognized that this issue needed attention and planned to issue
formal guidance. However, OSWER delayed formal guidance while
OSWER and EPA regions tried to resolve concerns about disposal
costs and waste quantities for off-site disposal. Because there
was no formal guidance, situations occurred that unnecessarily
alarmed the public. In one instance, the Agency's FIT contractor
employees discarded personal protective gear and other materials
in a public park garbage container. This alarmed the park
district employees who found the material and thought they had
touched contaminated material. It also resulted in the fire and
police departments treating the incident as a hazardous material
release. In another instance, the lack of an EPA signature on a
hazardous waste manifest resulted in a FIT subcontractor leaving
two drums marked "hazardous" on a roadside for a short time.
Recommendations
Because the Agency agreed to implement the recommendations
in our draft report, we made no further recommendations in our
final report.
Agency Response
In response to our draft audit report, EPA agreed to issue a
directive and guidance on investigative-derived waste. OSWER
issued Directive Number 9345.3-02 on Hay 24, 1991, which included
-------
EPA Office of Inspector General Annual Superfund Report to the Congress for Fiscal 1990 87
final guidance on Management of Investigation-Derived Wastes
During Site Inspections.
ENVIRONMENTAL RESPONSE BRANCH SITE-SPECIFIC TIMEKEEPING SPECIAL REVIEW
Scope and Objectives
We audited overtime claims and payments to determine if EPA
had adequate and functioning controls to prevent and identify
waste and abuse. We issued the final audit report on August I,
1990 (E1MMF9-11-0039-0100419). During the audit, we determined
that some Superfund timesheets of Environmental Response Branch
(ERB) staff showed account numbers different from those listed on
printouts from the Agency's accounting system. As part of the
special review, we tried to reconcile these differences by
reviewing available documentation and discussing the matter with
appropriate officials.
Findings
We found that EPA did not charge all appropriate costs
accurately to site-specific accounts. Of the 159 fiscal 1988 and
1989 ERB timesheets in our sample, 79 (49 percent) listed site-
specific accounts to be charged. However, the corresponding
hours recorded in the accounting system were charged to the
employees' regular Fixed Account Numbers instead. Further, the
Superfund Accounting Branch could not locate 11 (18 percent) of
the 60 timesheets we requested from their files. Unless EPA
corrects these situations, it may lose monies from future cost
recovery. There were no written procedures on the processing or
input of site-specific redistribution corrections.
Suggestions
We suggested that EPA:
Resolve the cases we identified in our review and
determine whether other similar cases exist and need
resolution.
Require that procedures on site-specific redistribution
corrections be written.
Consider submitting timesheets to the Headquarters
Accounting Operations Branch instead of the Region 2
Financial Management Office for current pay period
timesheets processing.
-------
EPA Office of Inspector General Annual Suoerfund Report to the Congress fof Fiscal 1990 88
Agency Response
In response to the special report, EPA:
Reviewed all site-specific charges for fiscal 1990.
Agreed to resolve the cases identified in our review.
Agreed to review all site-specific charges for fiscal
1989.
Agreed to update Office of Emergency and Remedial
Response (OERR) procedures for timekeeping and site-
specific charging, and provide training in them for all
OERR managers and timekeepers.
BETTER BRITE ZINC SHOP SITE, Wl, UNANNOUNCED SITE REVIEW
Scope and Objectives
We performed an unannounced site review at the Better Brite
Zinc Shop Superfund removal site in DePere, Wisconsin.
Unannounced site reviews include a site visit while a removal is
in progress. While at the site, auditors observe conditions,
review documentation and interview personnel. There is follow-up
work at the EPA regional office to review documentation that is
not at the site and to interview appropriate personnel.
Our review objectives are to determine the adequacy of:
osc compliance with removal directives and guidance;
The OSC's controls in monitoring the cleanup work and
on-site spending; and
The technical assistance provided by the Technical
Assistance Team (TAT) contractor.
Findings
The site was inactive at the time of our visit. During our
site visit, we saw a former shop employee entering the site. EPA
officials told us that EPA did not control the site at the time.
Therefore, the potentially responsible party had access to the
site and apparently could let others onto the site at its
discretion. We also saw children playing at the site. Part of
the removal action included removing contaminated soil. There
were no fences or ropes controlling access to the contaminated
soil.
-------
EPA Office of Inspector General Annual Suoerfund Report to the Congress for Fiscal 1990 89
Recommendation
We recommended that EPA Region 5 consider posting warning
signs at the site to alert the public of the potential for health
risk.
Agency Response
In response to our audit report, EPA Region 5 posted warning
signs at the site within three days of receiving the report.
BUNKER HILL SITE, ID, SPECIAL REVIEW
Scope and Objectives
We performed a special review in response to a confidential
complaint against the Regional Administrator (RA), Region 10.
The complainant alleged that the RA blocked or delayed the
normally routine actions of the Hazardous Waste Division (HWD) to
enforce Superfund requirements against the Bunker Limited
Partnership (BLP), owners of the Bunker Hill Superfund site in
Kellogg, Idaho. The specific allegations against the RA were:
a. The RA would not allow the HWD staff to order BLP to respond
to various concerns of EPA about the company's salvage
activities, site maintenance, site security and the
containment of hazardous materials.
b. The RA refused to allow HWD to notify BLP that they were a
Potentially Responsible Party (PRP) for financing the
cleanup of the site. He refused to notify the company even
after mounting evidence that its action, or lack of action,
was contributing to the further pollution of the site.
c. The RA discussed the negative impact of EPA enforcement
action on the value of the company's stock offering at a
meeting in Region 10 in January 1988. Both HWD staff and
BLP officials were present.
This was a special review, and not an audit following the
Government Auditing Standards (1988 Revision) issued by the
Comptroller General of the United States. We did not conduct a
review of the Bunker Hill site. We made no recommendations.
Conclusions
The RA took extraordinary measures to prevent the HWD staff
from performing the normal and proper activities required to
enforce the Superfund regulations. From August 1986 through
October 1989, the RA blocked or delayed any formal enforcement
actions against BLP despite the recommendations of the HWD staff.
-------
EPA Office of Inspector General Annual Suoerfund Report to the Congress for Fiscal 1990 90
As a result, EPA did not take timely enforcement action against
BLP. This failure had serious consequences:
The smelter complex within the Superfund site
deteriorated to the point that, in October 1989, the
Agency for Toxic Substances and Disease Registry
(ATSDR) declared it a public health hazard.
The partners have transferred all of BLP's assets to
newly formed corporations through various stock and
property transfers. As a result, collections for the
Superfund cleanup activities will be much harder.
The company's uncontrolled salvage activities may have
resulted in the sale of highly contaminated equipment
and material to, in some cases, uninformed buyers. For
example, an unknown quantity of lead-contaminated
railroad ties have disappeared from the site.
We summarize our specific conclusions below.
1. RA Delayed Issuance of Administrative Orders
HWD staff noted several indications of environmental threats
due to conditions at the site over the years. These included an
October 1986 fire, removal of railroad ties with extremely high
levels of lead, and salvage operations disturbing large
quantities of asbestos-containing material. HWD staff discussed
the issues with BLP on many occasions. Although BLP officials
continually stated that they wanted to cooperate, little progress
was made on the issues.
HWD staff drafted an administrative order against BLP in
November 1986, but did not issue it because of the RA's stated
desire to resolve conflicts informally. On November 12, 1987,
the HWD Director sent a letter to BLP stating that an
administrative order would govern any future salvage activities.
BLP could negotiate the terms of the order with EPA. However,
EPA would issue a unilateral administrative order if it could not
reach an acceptable agreement with BLP. The HWD Director took
this action without telling the RA because he did not believe the
RA would approve.
The HWD Director's letter was discussed at a meeting called
by the RA in January 1988. The RA stated there would be no need
to issue an administrative order. HWD staff spent 1988 trying to
negotiate with BLP officials. However, BLP officials continued
to deny they were doing anything wrong, and to deny access to
their facilities. Although the RA was repeatedly informed about
the hazardous conditions at the site, he would not change his
decision.
-------
EPA Office of Inspector General Annual Superfund Report to the Congress for Fiscal 1990 91
In the middle of 1989, EPA staff secretly discussed with the
resident ATSDR staff the possibility of performing a public
health review at the site. ATSDR agreed, and determined that
chemical and physical hazards at the smelter complex presented a
significant risk to public health. On October 5, 1989, ATSDR
issued a Public Health Advisory for the Bunker Hill smelter
complex. ATSDR issues Public Health Advisories only under
extraordinary conditions, and ATSDR had issued fewer than a half
dozen nationwide since the Superfund program began.
In October 1989, Region 10 officials conducted an inspection
and assessment of the smelter complex. They confirmed the ATSDR
findings and observed additional threats requiring immediate
actions. On October 24, 1989, EPA finally issued a unilateral
administrative order to BLP and other PRPs for the site requiring
the performance of needed response actions. This was almost
three years after HWD staff first sought enforcement action
against BLP.
2. RA Delayed Notification that BLP Is a PRP
In 1984, the previous RA and the HWD staff decided to name
Gulf as the site's sole PRP. They believed Gulf was the primary
cause of the pollution. They planned to name additional PRPs as
conditions changed and they identified other companies.
In December 1987, Gulf presented a fairly detailed argument
for EPA to name more PRPs. On January 11, 1988, the HWD Director
signed a background paper and an options paper addressed to the
RA. The Director stated that BLP had contributed to many of the
problems at the site, and recommended the immediate naming of BLP
as a PRP. However, the RA adamantly opposed sending BLP a PRP
notice letter.
Having failed with Region 10, Gulf presented its evidence to
EPA Headquarters officials. The Assistant Administrator for
OSWER agreed that EPA should name more PRPs. He asked the CERCLA
Enforcement Division Director to resolve the conflict between the
RA and the HWD staff. The Director's primary goal was to modify
the standard PRP notice letter language into a form that the RA
would accept. His attempt to discuss this with the RA by
telephone turned confrontational and they reached no conclusion.
On October 18, 1988, the HWD Director sent the revised PRP
notice letter and an attached request for information to BLP.
HWD informed Gulf and the local community that EPA had notified
BLP it was a PRP. However, the RA continued to insist that the
letter was not a notice letter, and BLP was not a PRP. For the
next year, BLP refused to provide the information EPA requested
unless EPA granted it a specific confidentiality agreement.
-------
EPA Office of inspector General Annual Suoerfund Report to the Congress for Fiscal 1990 92
When ATSDR issued its report, the RA reversed his position.
Region 10 sent a second notice letter and information request to
BLP on October 4, 1989.
3. Discussion of Value of Stock Issue
Within the limited scope of our review, we found no evidence
that the RA discussed the impact of EPA's enforcement action on
the value of the company's stock offering, although BLP officials
raised the issue at the meeting.
Agency Response
The EPA Deputy Administrator replied to the report
expressing his deep concern about the findings. He also reported
that the RA whose actions had been reviewed had resigned and an
Acting RA had been appointed. He stated he had:
Directed the Acting RA to give priority attention to
the Bunker Hill site and any risk concerns associated
with it.
Directed the Assistant Administrator for Enforcement to
visit the Region and review with the Acting RA all
significant pending enforcement actions with special
attention to the Bunker Hill site.
Asked the Assistant Administrator for OSWER to work
with the Region to address any immediate risks.
OLIN CORPORATION. OH, SPECIAL REVIEW
Scope and Objectives
We performed a special review of EPA Region 5, State of
Ohio, and EPA's Office of Criminal Investigations (OCI) actions
concerning Olin Chemical Corporation's (Olin) closed waste
management facility in Ashtabula, Ohio. We performed this review
because of an allegation a citizen sent to the White House. This
citizen alleged that EPA Region 5 willingly and knowingly
neglected to sample and test Toluene Diisocyanate (TDI) during a
1984 investigation of Olin. OCI and the Federal Bureau of
Investigation (FBI) had jointly conducted an investigation in
1984 to determine if Olin properly closed its hazardous waste
facility. The Region 5 Waste Management Division provided
technical support to the investigation. The citizen also later
alleged that EPA limited the scope of their investigation to a
proper closure of the Olin facility under the Resource
Conservation and Recovery Act (RCRA) and did not consider other
contaminated areas.
-------
EPA Offlca of Inspector General Annual Suoarfund Report to the Conorasa for Fiscal 1990 93
Findings
Contamination
Neither OCI nor Region 5's Waste Management Division
employees knowingly or willingly neglected to test for TDI during
the 1984 investigation of Olin. EPA took soil samples at the
Olin site and analyzed them. The analysis showed concentration
of contaminants in three areas of the facility higher than the
levels specified by Olin's closure plan. However, only one of
these areas was subject to the closure plan. The other two areas
showed elevated concentrations of two other hazardous wastes.
OCI and the FBI concluded that the closure met applicable
RCRA requirements. They also did not find that Olin reported
false information or knowingly concealed any conflicting data.
Region 5's Associate Regional Counsel stated that, because
there was soil contamination in a non-RCRA regulated area of the
Olin facility, the soil data collected by EPA would be evaluated
to determine whether the soil should be remediated under CERCLA.
The Region 5 RA stated in an October 18, 1985, letter that an
inspection was to begin of Field Brook Stream, a Superfund site
adjoining the Olin site. This inspection was to include sampling
at the Olin site.
2. A Site Inspection of Olin Will Show Extent of Contamination
The site inspection of Field Brook Stream did not include
sampling at the Olin site in those locations of concern. It
addressed ground water contamination from the Olin site, but not
possible TDI contamination. In addition, the Waste Management
Division did not use the OCI sampling data to help determine the
level of contamination at the Olin site. Unless Region 5 (1)
determines that the site does not contain TDI or other hazardous
substances and (2) reviews OCI sampling data, decisions about the
proper cleanup action may not be adequate to protect the public
health and the environment.
Recommendation
We recommended that EPA Region 5 complete the corrective
actions planned during our review.
Agency Response
During our review, EPA Region 5 stated it:
Directed an EPA contractor to perform a site inspection
at the site.
-------
EPA Offlcfl of Impactof GonBfsl Annual Suporfund Rooort to tho Conorass for Fiscal 1990 94
Would draft letters to 23 companies, including 01in,
that closed facilities before the 1987 RCRA Amendments.
The letters would request the companies to show that
their closed facilities follow current closure
requirements. If a facility is not in compliance, EPA
would require the company to develop a plan to close
and manage the site properly over the next 30 years.
In response to the final report, EPA Region 5 further stated
it sent a letter to Olin requiring Olin to clean up the facility
to background levels as stipulated in the 1987 RCRA Amendments.
-------
EPA Offico of bi8D6CtOf Gonofsi Annunl SuDBrfund Rsoort to ttis Conorsss for Fiscul 1990 95
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.
The EPA OIG also issues these audit reports to EPA with a cover
letter for any action EPA may need to take. In fiscal 1990, we
issued eight of these reports to EPA management. We summarize
the eight audits below by agency audited. 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.
U.S. ARMY CORPS OF ENGINEERS
The U.S. Army Audit Agency audited the fiscal 1988 Superfund
financial transactions of the U.S. Army Corps of Engineers (COE).
In general, fiscal 1988 COE Superfund obligations and
disbursements were properly supported and accurately recorded and
reported. However, no supporting documentation could be found
for one obligation for $187,292. The Audit Agency also found one
disbursement transaction for an incorrect amount, which the COE
corrected during the audit.
Recommendation to EPA
We recommended that EPA obtain a written response from the
COE on resolution of the $187,292 obligation.
Agency Response
In response to our audit report, EPA reported it had
received a written response from the COE documenting the
obligation.
DEPARTMENT OF ENERGY
The Department of Energy (DOE) OIG audited the fiscal 1988
Superfund costs incurred by the DOE on lAGs with EPA. The audit
showed no questioned, unsupported or unresolved costs. However,
the DOE had not claimed $449,234 as an added factor cost for
administration and depreciation as required in DOE Order 2110.1A.
The EPA OIG made no recommendations to EPA management as a result
of this audit.
FEDERAL EMERGENCY MANAGEMENT AGENCY
The Federal Emergency Management Agency (FEMA) OIG audited
FEMA's administration of the temporary and permanent relocation
program under Superfund. The audit covered fiscal 1988 program
activities and spending. The FEMA OIG found that FEMA had
-------
EPA Office of Inspector General Annual Superfund Report to the Congress for Fiscal 1990 96
effectively administered the temporary and permanent relocation
program and generally spent funds for eligible purposes.
However, the FEMA OIG found a continuing need for FEMA to improve
its cost reconciliation and reporting for the relocation program.
Specifically, financial reports used unreconciled data resulting
in at least $83,200 in improper charges to Superfund sites and
accounts. Also, the FEMA OIG found overpayments under the
permanent relocation program resulting in questioned costs of
$6,300. The FEMA OIG made appropriate recommendations and FEMA
officials generally concurred and proposed corrective actions.
Recommendation to EPA
We recommended that EPA not reimburse FEMA for the $6,300
overpayment, or adjust future billings for that amount.
Agency Response
In response to our audit report, EPA stated it could not
withhold the funds from FEMA because they were in an allocation
transfer agreement. The agreement transferred appropriated funds
to FEMA, and delegated obligational and spending authority to
FEMA. FEMA assured EPA it would collect the overpayment from the
contractor which received it, and credit the Superfund site.
DEPARTMENT OF THE INTERIOR
The Department of Interior (DOI) OIG conducted several
audits of DOI Superfund activities. The EPA OIG issued these
audit reports, sending the audit results to EPA management.
These reports included results of audits of fiscal 1987
reimbursement expenditures by the U.S. Geological Survey and the
U.S. Fish and Wildlife Service; and fiscal 1988 reimbursement
expenditures by the Office of Environmental Project Review, the
U.S. Fish and Wildlife Service, the Bureau of Reclamation and the
U.S. Geological Survey.
Fiscal 1987 Interagency Agreements
The fiscal 1987 audits of the U.S. Fish and Wildlife Service
and the U.S. Geological Survey found that these bureaus sometimes
conducted valid Superfund work activities before they had
accepted lAGs and charged some costs incorrectly to Superfund
lAGs. The DOI OIG resolved these findings with DOI management.
The EPA OIG recommended that EPA emphasize to Headquarters
and regional offices the need to issue lAGs before starting work
or, if they can't, timely document EPA's request for services
through a memorandum to the other agency. When work begins
before executing an IAG, the agreement should reflect when work
actually began.
-------
EPA Office of Inspector General Annual Suoerfund Report to the Congress for Fiscal 1990 97
In response to our audit report, EPA sent out a memorandum
emphasizing that work should not begin under an IAG until both
parties execute a formal agreement. EPA also emphasized that
valid reasons may exist for exceptions to this policy, including
emergency responses or unplanned delays in funding availability.
The Action Official may approve an IA6 project period beginning
before execution of the IAG, if the program Decision Official
justifies costs incurred within the appropriation period in
current legislation. Failure to provide such justification could
jeopardize reimbursement for costs incurred before execution of
the IAG.
Office of Environmental Project Review fiscal 1988
The DOI OIG found that the Office of Environmental Project
Review did not maintain accurate and complete cost records of
reimbursable expenses charged to Superfund activities. The
Office could not substantiate that about $1.1 million charged to
the IAG was for Superfund-related work. Without accurate and
complete accounting, EPA may not be able to recover the costs
from responsible parties.
The Office also did not let EPA know that it did not
obligate "no year" funds of $805,000 from prior Superfund lAGs by
the expiration date of the lAGs. Thus EPA was unable to
reauthorize the funds to other critical Superfund program needs.
The Office agreed with the audit findings and specified
actions underway to implement the corrective actions recommended
by the DOI OIG. The EPA OIG made no recommendations to EPA
management as a result of this audit.
Fiscal 1988 - Three DOI Bureaus
The DOI OIG questioned the indirect cost rates used by the
U.S. Fish and Wildlife Service, the Bureau of Reclamation and the
U.S. Geological Survey. The bureaus did not develop indirect
cost rates in accordance with EPA Comptroller Policy Announcement
87-10. That Announcement requires other Federal agencies to
certify "(1) that any indirect costs incurred in billings to the
Environmental Protection Agency represent, in accordance with
U.S. Comptroller General principles, indirect costs that would
not have been otherwise incurred by the performing agency or (2)
that statutory authority exists for charging other than the
incremental costs of performance."
All three DOI bureaus disagreed with the questioning of the
indirect cost rates. A memorandum from the DOI Office of
Solicitor asserted that the EPA Announcement is inconsistent with
the U.S. Comptroller General's principles. EPA informed the EPA
-------
EPA Office of Inspector General Annual Suoarfund Ranort to the Conora«« for Fiacal 1990 98
OIG that it was revising the Announcement considering DOI's
position.
The EPA OIG recommended that EPA continue to work on the
indirect cost criteria issue and revise Comptroller Policy
Announcement 87-10. EPA issued Comptroller Policy Announcement
91-04 on January 9, 1991, superseding Comptroller Policy
Announcement 87-10.
INTERNAL REVENUE SERVICE
The Internal Revenue Service (IRS) Inspection Service
reviewed the IRS fiscal 1988 IAG with EPA for statistical
tabulations on environmental taxes categorized by chemical type.
The IRS had generally followed the terms of the IAG and costs
billed to EPA were reasonable. However, the Inspection Service
found that:
IRS1 actual fiscal 1988 costs ($120,266) were
significantly more than the IAG amount ($32,000).
The IAG did not clearly state what work IRS was to
perform.
IRS did not report earnings as actual costs were
incurred and did not bill EPA quarterly, as required.
IRS service centers did not effectively perform
their responsibilities in support of the Superfund
project.
IRS management agreed with the findings and proposed
corrective actions. The EPA OIG made no recommendations to EPA
management as a result of this audit.
DEPARTMENT OF JUSTICE
The Department of Justice OIG audited the Department's Land
and Natural Resources Division's (LNRD) implementation of a
fiscal 1988 IAG with EPA. The audit showed no material
discrepancies in the fiscal 1988 Superfund costs reported by the
LNRD to EPA. However, it found internal control weaknesses
related to time reports and travel documents. In addition, the
LNRD needed to change its system of accounting for Superfund
costs to more accurately account for costs of travel for multiple
cases.
In general, the LNRD agreed with the audit findings and
identified corrective actions it was taking. The EPA OIG made no
recommendations to EPA management as a result of this audit.
-------
EPA Office of Inspector General Annual Suoarfund Report to the Congress for Fiscal 1990 99
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 of the
Public Laws 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.
During fiscal 1990, we issued 20 Superfund contract audit
reports. The combined financial results of these audits were as
follows:
Total Costs Audited $346,844,221
Total Costs Accepted $345,406,173
Total Costs Ineligible46 $ 1,314,354
Total Costs Unsupported47 $ 123,694
Total Costs Unnecessary/Unreasonable48 $ 0
The OIG can choose to have the audits performed by in-house
staff, independent public accounting firms, or another Federal,
State or local audit agency. During fiscal 1990, our Superfund
46 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.
47 Costs questioned because, at the time of the audit, they
were not supported by adequate documentation and/or had not been
approved by responsible program officials.
48 Costs questioned because they were not necessary or not
reasonable.
-------
EPA Offlca of huoactof Ganaral Annual Sunarfund Report to the Conoraaa for Fiscal 1990 100
financial and compliance audits of contracts were performed as
follows:
Audits Performed by OIG Staff 2
Audits Performed by Independent Public Accountants 11
Audits Performed by Defense Contract Audit Agency 7
Exhibit III contains a listing of all Superfund audit
reports issued by the 016 during fiscal 1990.
We summarize three particularly significant contract audit
reports below.
CHEM-TLE'S TERMINATION SETTLEMENT PROPOSAL
Scope and Objectives
The Defense Contract Audit Agency audited a Chem-Tle
Environmental Services, Inc. termination settlement proposal.
EPA terminated the contract for the convenience of the government
and the contractor submitted the proposal for $666,601 on a total
cost basis. The objective of the audit was to determine whether
the settlement proposal was free of material misstatement.
Findings
1. Chem-tle Did Not Establish an Acceptable Accounting System
The contractor's accounting system was not acceptable for
government contracting under section H.30 of the contract.
However, the auditors performed the review to the extent possible
in the circumstances.
2. Chem-Tle Proposed $622.577 of Costs That Were Questioned
The auditors questioned $622,577 of proposed costs involving
(1) unsupported General and Administrative expense costs, (2) a
difference between the fixed labor rates and the actual salary
claimed, (3) unsupported travel, lodging and per diem costs, (4)
direct charges to the contract for insurance costs, (5) quality
assurance costs lacking supporting documentation, (6) costs never
paid by the contractor, (7) directly charged start-up costs that
the contractor should have included in the overhead pool, and (8)
ineligible overhead costs.
-------
EPA Offlea nf Immaetor Ganaral Annual Sunarfund Raoort to tha Connrass for Fiscal 1990
101
Financial Results of Audit
Amount audited
Amount accepted
Ineligible costs49
Unsupported costs30
Unnecessary/unreasonable costs31
Recommendation
Federal Share
$666,601
$ 44,024
$622,577
$ 0
$ 0
Total Costs
$666,601
$ 44,024
$622,577
$ 0
$ 0
We recommended that the Contracting Officer make a final
determination on the costs questioned.
Agency Response
In response to our audit report, the EPA Contracting Officer
sustained the $622,577 of ineligible costs we questioned.
KAAREN JOHNSON ASSOCIATES TRAINING SUPPORT SERVICES CONTRACT
Scope and Objectives
An independent public accounting firm audited the costs
claimed by Kaaren Johnson Associates, Inc. under a level-of-
effort cost-reimbursement type contract. The contract was for
the design, development and delivery of training services to
EPA's Office of Solid Waste and Emergency Response. The
objective was'to determine the allowability, allocability and
reasonableness of the $2,298,272 claimed. We summarize here two
audit reports issued on these costs.
Findings
1. Kaaren Johnson Associates Claimed Ineligible Costs
The contractor claimed $691,777 of costs ineligible under
the terms of the contract and the Federal Acquisition
49
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.
50 Costs questioned because, at the time of the audit, they
were not supported by adequate documentation and/or had not been
approved by responsible program officials.
51 Costs questioned because they were not necessary or not
reasonable.
-------
EPA Office of Inspector General Annual
1990
102
Regulations. The ineligible costs included (1) lease termination
costs, (2) equipment and building lease payments after the
contract period, (3) overhead, fringe benefits and fees applied
to the ineligible direct costs, and (4) the difference between
the overhead and fringe benefit rates used and the rates
recommended by the auditors.
2. Kaaren Johnson Associates Claimed Unsupported Costs
The contractor claimed $120,958 of unsupported costs
including (1) award fees not yet determined, (2) legal and
accounting fees for which the contractor was unable to provide
adequate documentation for services provided, (3) other direct
costs not supported by vendor invoices, and (4) fees applied to
the unsupported costs.
Financial Results of Audits
Amount audited
Amount accepted
Ineligible costs52
Unsupported costs13
Unnecessary/unreasonable costs54
Recommendations
Federal Share
$2,298,272
$1,485,537
$ 691,777
$ 120,958
$ 0
Total Costs
$2,298,272
$1,485,537
$ 691,777
$ 120,958
$ 0
We recommended that EPA not reimburse questioned costs and
evaluate the appropriateness of participating in set-aside costs.
Agency Response
In response to our audit reports, the EPA Contracting
Officer sustained questioned costs of $715,984.32. However,
n rjotiation of the contractual claim has been delayed due to the
contractor's bankruptcy proceedings.
52 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.
53 Costs questioned because, at the time of the audit, they
were not supported by adequate documentation and/or had not been
approved by responsible program officials.
14 Costs questioned because they were not necessary or not
reasonable.
-------
ASSISTANCE TO EPA MANAGEMENT
In addition to performing audits and investigations, the
Office of Inspector General (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. In some instances, an OIG staff person attends meetings
of an EPA work group to provide input. Fiscal 1990 was an active
year for OIG preventive assistance to EPA management in the
Superfund area.
Technical Assistance Grants
The EPA Administrator requested in fiscal 1987 that the OIG
work closely with the Superfund office to develop and administer
the technical assistance grants program. This program assists
groups of persons affected by Superfund sites. Because these
grants are awarded to small groups without grants experience or
much administrative structure, the Administrator recognized that
this program presented special management challenges. In
response to this request, in fiscal 1990 the OIG continued to
participate in work group meetings and review draft program
documents.
Cooperative Agreements
We have been conducting Superfund cooperative agreement
audits for several years and have frequently found significant
deficiencies. These audits are now statutorily required. EPA
published a regulation on cooperative agreements and Superfund
State Contracts for Superfund Response Actions as an interim
final rule in fiscal 1989. The Agency cited the development of
this regulation the Agency as a response to our "capping" report
on cooperative agreement audits issued in fiscal 1987. The OIG
helped to develop this regulation by actively participating in
workgroup meetings and review of drafts. In fiscal 1990, the OIG
also participated in development of the final rule, issued on
June 5, 1990.
Coordination with Other Agencies
Since EPA manages the Hazardous Substance Superfund (Trust
Fund), EPA's OIG took on the task of informing the Federal OIG
community (as well as 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
-------
EPA Office of Inspector General Annual Suoerfund Report to the Congress for Fltcal 1990 104
SARA to conduct an annual audit of uses of the Superfund. In
July 1987, we formed a work group of 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.
To accomplish these objectives, we held two work group
meetings this year and made individual contacts as needed.
We continue to work with other OIGs and audit officials to
resolve Superfund accounting and control problems. The work
group identified the allowability of indirect cost charges by
other Federal agencies for Superfund work as an issue. As a
result, EPA officials began revising Agency policy on the
allowability of indirect costs. In addition, individual meetings
were instrumental in resolving misunderstandings between EPA and
another Federal agency on the allowability of costs and
recordkeeping practices.
Superfund Orientation Course
As Superfund spending has increased and the 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 have 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.
-------
EPA Office of Inspector General Annual Simerfund Report to the Congress for Fiscal 1990 105
All OIG employees and OIG audit services contractor
employees performing Superfund audits will take this course. We
will also offer the course to other Federal OIGs and audit
organizations who perform audits in their own agencies. We
presented a pilot session of this course to a cross-section of
OIG personnel in July 1990. Following this session, we made
additional changes to the instructional materials. We listed the
course in the OIG Training and Development Sources course
catalog. The OIG will offer the course in fiscal 1991.
-------
EPA Office of Inspector General Annual Suoerfund Report to the Congress for Fiscal 1990 106
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 third Annual Report was due to Congress on January 1,
1990, covering fiscal 1989 activities. The report was not
submitted to Congress until November 19, 1990. Our review of the
report was submitted on October 18, 1990, to the Administrator
(Audit Report No. E1SFFO-11-0018-1100026). Most of our audit
work for this review was conducted during fiscal 1990.
Key information in some topics in the Annual Report was
reasonable and accurate. However, we had concerns about the
reasonableness and accuracy of selected information from the
Comprehensive Environmental Response, Compensation, and Liability
Information System (CERCLIS).
In our reviews of the fiscal 1987 and 1988 Annual Reports,
we identified problems with the accuracy of CERCLIS data on the
pre-remedial, removal and remedial programs. Significant
portions of the accomplishments claimed in those reports were not
supported by valid source documents in the regions, and some
accomplishments were not recorded in the correct fiscal year. In
a few cases, accomplishments were double counted in different
years, or did not meet the Agency's definition of an
accomplishment at all. In contrast, we found enforcement data in
CERCLIS to be much more accurate.
Throughout the course of these two reviews, we brought our
concerns to the attention of Office of Emergency and Remedial
Response (OERR) management. After the fiscal 1988 audit, OERR
officials advised us of two corrective actions they were taking:
establishing a CERCLIS Data Quality Work Group to review input
controls; and performing monthly data quality audits. However,
these actions did not occur in time to impact the fiscal 1989
data.
We commend OERR for taking some actions to improve the
quality and reliability of the CERCLIS data. However, at the
time of our audit, the actions actually taken did not fully
address our concerns. The Work Group had not done any source
document data accuracy audits. The Work Group actions had helped
to ensure that CERCLIS entries meet the official Agency
-------
Office of Inspector General Annual Suoerfund Report to the Congress for Fiscal 1990 107
definitions of accomplishments and are complete. However, we
remained concerned about the validity of the support for data
entries in CERCLIS. OERR had not performed a detailed review of
input controls.
As we found in our reviews of the last two Annual Reports,
the process used to prepare the fiscal 1989 Annual Report was not
fully effective. Although the Annual Report was due to Congress
January 1, 1990, it was not submitted to the Office of Management
and Budget until March 1990. One reason for this was the
lateness in issuing prior years' reports. In fact, while the
Report Coordinator was preparing the fiscal 1989 report, he was
still devoting much of his time to the fiscal 1988 report (which
did not go to Congress until April 1990, 15 months after it was
due). Similar delays in preparing the fiscal 1987 report slowed
the fiscal 1988 process.
However, this year's process was much more efficient and
effective than in the past. For example, the delivery of the
draft to the Office of Management and Budget occurred six months
earlier than in the prior year. According to the Report
Coordinator, centering the fiscal 1989 report around a definite
theme (the Superfund pipeline, i.e., the cleanup process from
site identification to actual remediation), having increased
resources to work on it, and simplifying its format all
contributed to a more timely and readable report.
-------
EPA Office of Ininactof General Annual Suoerfund Report to the Congress for Fiscal 1990 108
INVESTIGATIVE ACTIVITY
During fiscal 1990, the number of Superfund investigations
conducted by the OIG increased by 26 percent over fiscal 1989.
At the end of fiscal 1990, there were 53 active Superfund
investigations, 25 percent of all active OIG investigations at
EPA.
Contract Laboratory Program
During fiscal 1990, the Office of Investigations initiated a
major investigative effort within the Superfund program to detect
fraud in the Contract Laboratory Program (CLP). This effort is
directed at a number of CLP contractors. Laboratory analyses
under the CLP are the empirical basis for the entire Superfund
program. Based on analysis of samples by these laboratories for
the presence of hazardous substances, the Superfund program makes
cleanup decisions. 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 responsible parties. Although the CLP
investigation is very complex and time consuming, significant
results have already been achieved during fiscal 1990.
Roy F. Weston, Inc., of Lionville, Pennsylvania, has paid
the government $750,000 as part of a consent judgment arising
from charges that the company submitted false claims for payment.
These charges were part of a civil action filed by the Department
of Justice under the False Claims Act. Weston Analytics, a
division of Roy F. Weston, Inc., obtained a contract under the
CLP in June 1987 to perform certain laboratory tests on soil and
water samples at its laboratory in Lionville. A test for
volatile organic compounds had to be performed on each sample
within ten days of receipt to ensure accurate results. Weston
Analytics failed to complete certain of these tests on time,
concealed this failure by backdating its testing equipment, and
then fraudulently billed EPA for the tests. This practice
continued over the course of a year. As a result, some of the
results submitted to EPA were unreliable, and EPA's responses to
environmental hazards could have been affected. In addition to
the payment of $750,000, Weston agreed to voluntarily withdraw
from certain kinds of laboratory work at the Lionville facility
for a period from four months to a year, subject to EPA's
satisfaction with the compliance program Weston initiated in
response to the Federal investigation.
This investigative effort continued into fiscal 1991. A
number of indictments and several guilty pleas resulted from this
effort in fiscal 1991, which we will discuss in next year's
report.
-------
EPA Office of Inspector General Annual Superfund Report to the Congress for Fiscal 1990 109
EXHIBIT I
UNITED STATES
ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D.C.
HAZARDOUS SUBSTANCE SUPERFUND
SCHEDULE OF OBLIGATIONS
FISCAL YEAR ENDED SEPTEMBER 30, 1990
Description Total Accepted Ineligible Unsupported
Personnel Compensation &
Benefits $ 156,428,448 $ 156,428,448 $ - $
Travel and Transportation
of Persons 11,451,577 11,451,577
Transportation of Things 726,135 726,135
Rent, Communications and
Utilities 25,659,392 25,659,392
Printing and Reproduction 1,307,914 1,307,914
Other Contractual Services 1,121,549,372 1,108,464,764 - 13,084,608
Supplies and Materials 5,593,985 5,593,985
Equipment 22,503,193 22,501,342 - 1,851
Land and Structures 270,414 270,414
Grants, Subsidies and
Contributions 205,133,645 204,590,562 - 543,083
Insurance Claims and
Indemnities 5,143 5,143
Interest - -
Unidentified (41.325) (224.442) - 183.117
GRAND TOTALS Sl.55Q.5B7.flQ.3 $1.536.775.234 $ $13.812.659
The accompanying note is an integral part of this schedule.
-------
EPA Office of Inspector General Annual Superfund Report to the Congress for Fiscal 1990 110
EXHIBIT I
(continued)
UNITED STATES
ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D.C.
HAZARDOUS SUBSTANCE SUPERFUND
NOTE TO SCHEDULE OF OBLIGATIONS
FISCAL YEAR ENDED SEPTEMBER 30, 1990
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The Schedule of Obligations was prepared from information
provided by the EPA Financial Management Division based on
financial information contained in the Integrated Financial
Management System (IFMS) for the fiscal year ended September 30,
1990. EPA's policy is to prepare this schedule in conformity
with accounting policies and procedures that are prescribed by
the Office of Management and Budget (OMB), which is a
comprehensive basis of accounting other than generally accepted
accounting principles. This schedule is not intended to present
either the financial position or the financial results of
operations in conformity with generally accepted accounting
principles.
Obligations, as presented in this Exhibit, were reported by
the Financial Management Division from the Year to Date
Obligation and Expended Totals Report, prepared from information
contained in the IFMS General Journal File for the current fiscal
year appropriation. Total obligations from this report amounted
to $1,550,587,893. The total reported obligations above were
compared to total obligations of $1,536,678,529, as shown on the
Report on Budget Execution (SF-133), submitted to the OMB on
November 29, 1990. The difference between the obligations
reported to us and the obligations reported to OMB amounted to
$13,909,364. The was reconciled by adding to, or subtracting
from the Money Available by Appropriation (a monthly report),
certain general ledger account balances as of September 30, 1990,
to determine the obligations incurred and reported to OMB. The
reconciling items consist of miscellaneous receipts, uncollected
debt allowances, discounts lost, and reimbursements, which should
not be included in obligations reported to OMB, and have been
consistent reconciling items in prior years.
Included in the Schedule of Obligations is ($41,325), for
which there was no object class assigned to the transactions in
the General Journal File of IFMS. We were informed by EPA
officials that no object class was required for certain
-------
EPA Office of hupector General Annual Suoarfund Report to the Congress for Flsrffl 1990
EXHIBIT I
(continued)
transactions such as year-end accruals and cash receipts. The
unidentified object class amount on the schedule was immaterial
in relation to total obligations.
Recording Transactions - Obligations - Nonpayroll
Obligations are amounts of orders placed, contracts awarded,
services received, travel performed and similar transactions
during a given period that will require payments during the same
or future periods. Such amounts reflect adjustments for
differences between obligations previously recorded and actual
disbursements to liquidate those obligations. The term
"obligation" includes both obligations that have matured (legal
liabilities) and those that are contingent upon some future
performance, such as providing services or furnishing materials.
Obligations represent funds obligated in the current fiscal year
against the current fiscal year's appropriation, which may
include carry-over authority for appropriations from prior years.
Obligations are recorded for budgetary purposes by appropriation
at the time they are incurred.
Recording Transactions Obligations - Payroll
Payroll obligations are based upon actual personnel
compensation and benefits recorded biweekly in the payroll
subsystem (EPAYS) plus accruals at month-end and year-end.
Personnel compensation obligations amounted to $130,273,893,
which, based on EPA policy, were recorded as obligations for
budgetary accounting purposes.
Legal Limitations - Administrative Expense Ceiling
Funding for the Superfund program is achieved through a
separate annual, no-year appropriation. The legal limitation set
by Congress on the Superfund appropriation requires the Agency to
stay within an administrative expense ceiling. Congressional
intent was to limit intramural expenses to ensure that the
primary function of the Superfund of cleaning up hazardous waste
sites was protected. Agency policy is that the legally binding
administrative expense ceiling placed on the Superfund
appropriation be managed by the Office of the Comptroller through
a distribution of specific ceilings to the individual Responsible
Planning and Implementation Officers.
Public Law 101-144, dated November 9, 1989, provided funding
to carry out the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, with $1,575,000,000 for
fiscal 1990, to be derived from the Hazardous Substance
-------
EPA Office of Inspector General Annual Suparfund Report to the Congress for Fiscal 1990 112
EXHIBIT I
(continued)
Superfund, plus sums recovered on behalf of the Hazardous
Substance Superfund in excess of $82,000,000 during fiscal 1990,
with all such funds to remain available until expended. The law
also provides that no more than $220,000,000 be available for
administrative expenses. Added to this amount was $48,094,299 of
carryover authority available for Superfund administrative
expenses.
Our analysis of the administrative expenses for the year
indicated that the Superfund program obligated $223,675,787, or
14.4% of total obligations, for these administrative expenses, as
defined by Agency policy. The Agency defined administrative
expenses to include all object classes in the Schedule of
Obligations except Other Contractual Services, Land and
Structures, and Grants, Subsidies and Contributions. These
amounts are within the dollar limitation set by Congress,
adjusted by the carryover authority amount.
-------
EPA Office of Inspector General Annual Stmerfund Report to the Congress tor Fiscal 1990 113
EXHIBIT II
UNITED STATES
ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D.C.
HAZARDOUS SUBSTANCE SUPERFUND
SCHEDULE OF DISBURSEMENTS
FISCAL YEAR ENDED SEPTEMBER 30, 1990
Description Total Accepted
Personnel Compensation &
Benefits $141,524,181 $141,621,547
Travel and Transportation
of Persons 10,746,635 10,746,394
Transportation of Things 588,266 588,266
Rent, Communications and
Utilities 25,078,845 25,078,845
Printing and Reproduction 1,247,837 1,247,837
Other Contractual Services 749,045,638 748,973,024
Supplies and Materials 4,652,735 4,652,472
Equipment 21,859,048 21,858,843
Land and Structures 15,352 15,352
Ineligible Unsupported
Grants, Subsidies and
Contributions
147,363,164 146,766,597
Insurance Claims and
Indemnities 5,143 5,143
Interest (17) (17)
Unidentified f 8.786.870) fl6.139.521)
GRAND TOTALS
$ (110,817) $
(30,362)
50
13,451
241
72,611
263
205
626,929
7.352.601
SI.093.339.957 Si.085.414.782 $ (141.1261 $8,066,301
^^^^^^^^^^^^^^^^^s ^^^^ss^^^^ssssssssss «_^_L_SSX^^^_ *
The accompanying note is an integral part of this schedule.
-------
EPA OffiM of lo»POCtOf General Annual Suoerfund Report to the Conoraas for Fiscal 1990 114
EXHIBIT II
(Continued)
UNITED STATES
ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D.C.
HAZARDOUS SUBSTANCE SUPERFUND
NOTE TO SCHEDULE OF DISBURSEMENTS
FISCAL YEAR ENDED SEPTEMBER 30, 1990
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The Schedule of Disbursements was prepared from information
provided by the EPA Financial Management Division based on
financial information contained in the Integrated Financial
Management System (IFMS) for the fiscal year ended September 30,
1990. EPA's policy is to prepare this schedule in conformity
with accounting policies and procedures that are prescribed by
the Office of Management and Budget (OMB), which is a
comprehensive basis of accounting other than generally accepted
accounting principles. This schedule is not intended to present
either the financial position or the financial results of
operations in conformity with generally accepted accounting
principles.
Disbursements, as presented in this Exhibit, were reported
by the Financial Management Division from a combination of
disbursement data for appropriations 68-20X8145 and 68-20M8145
taken from the year To Date Disbursement Totals Report, prepared
from information contained in the IFMS General Journal File.
Total disbursements from this report amounted to $1,093,339,957.
The total reported disbursements agreed to total outlays of
$1,093,339,957 from the Report on Budget Execution (SF-133),
submitted to the OMB on November 29, 1990.
The Schedule of Disbursements includes ($8,786,870) for
which no object class was assigned to the transactions. We were
informed by Agency officials that no object class was required
for input of certain transactions. The majority of transactions
with no object class were processed as automatic disbursements
and travel vouchers which were offsetting transactions affecting
Accounts Payable, Non-Federal in the general ledger. Also, a
small number of transactions with high dollar amounts were
processed as cash receipts for a balance sheet transfer. The
transaction code for cash receipts was used to debit general
disbursements and credit various general ledger accounts for
-------
EPA Office of Inspector General Annual Simerfund Report to the Congress for Fiscal 1990 115
EXHIBIT II
(Continued)
advances previously recorded as disbursements. The cash receipt
transactions were used to reverse the original transaction when
funds were received for reimbursements, such as travel advances,
collection of Superfund State Contracts, and Interagency
Agreements.
Recording Transactions - Disbursements Nonpayroll
Disbursements represent the amount of cash outlays made to
liquidate obligations. These cash outlays represent funds
disbursed during the current fiscal year against either prior
years' or current year's appropriations. Nonpayroll
disbursements are recorded on the cash basis of accounting.
Recording Transactions - Disbursements Payroll
Personnel compensation disbursements are recorded biweekly
in the payroll subsystem (EPAYS). Disbursements from the
Schedule of Disbursements amounted to $117,942,517, which
represented personnel compensation costs paid during fiscal 1990
on a cash basis. However, our review indicated that the
personnel compensation costs reported on a cash basis should have
been $129,208,675. See Finding No. 4 for additional details.
Recording Transactions - Property and Equipment
EPA's policy is to capitalize property and equipment with a
cost greater than $5,000 and a useful life of two years or
greater. Disbursements for equipment recorded in this Exhibit
are presented on a cash basis, including capitalized and non-
capitalized items.
-------
EPA Office of Inspector General Annual Superfund Report to the Congress for Fiscal 1990 116
EXHIBIT III
1 OF 3
SUPERFUND AUDIT REPORTS
ISSUED DURING FISCAL 1990
INTERNAL AND MANAGEMENT AUDITS AND SPECIAL REVIEWS
Final
Report
Number Description
Reviews Required By CERCLA
0100227 EPA PROGRESS REPORT REVIEW, FISCAL 1988
0400040 RI/FS REVIEW, BAIRD & McGUIRE, MA
0400039 RI/FS REVIEW, IRON HORSE PARK, MA
0400038 RI/FS REVIEW, NYANZA, MA
0400041 RI/FS REVIEW, SELMA TREATING CO., CA
0100492 TRUST FUND AUDIT, FISCAL 1989
Performance Audits
0100274 ARCS CONTRACTS BIDDING AND AWARD
0100187 CERCLIS REPORTING
0100415 CONFIDENTIAL DISCLOSURE STATEMENTS-REG 5
0100222 COST-PLUS-AWARD-FEE CONTRACTS
0100207 COST RECOVERY COLLECTIONS-HQ REPORT
0100172 COST RECOVERY COLLECTIONS-REGION 3
0100152 COST RECOVERY COLLECTIONS-REGION 4
0100126 COST RECOVERY COLLECTIONS-REGION 5
0100230 OVERSIGHT OF POST-SETTLEMENTS-REGION 2
0100485 OVERSIGHT OF POST-SETTLEMENTS-REGION 3
0100519 REMOVIAL ACTIVITIES-REGION 4
0100228 SF INNOVATIVE TECH. EVAL. (SITE) PROGRAM
Follow-Up Reviews
0400013 COOPERATIVE AGREEMENT ADMIN.-REGION 8
0400036 COST RECOVERY ACTIONS AGAINST PRPS
Special Reviews
0400006 BUNKER HILL SITE, ID
0400019 CERCLIS POST-IMPLEMENTATION STUDY
0400044 DISPOSAL OF WASTES FROM SITE INSPECTIONS
0400007 OLIN CORPORATION, OH
0400027 SITE-SPECIFIC TIMEKEEPING-ENV. RESP. BR.
0400023 UNANNOUNCED SITE REVIEW-BETTER BRITE, WI
Audit
Control Number
E1SFF9-11-0015
E1SGG7-14-0003
E1SGG8- 14-0002
E1SGGB-14-0004
E1SGG9- 14-001 3
P1SFF9-1 1-0032
E1SGB9-11-0021
E1SFF9-15-0023
E1SFFO-05-0111
E1SFF9-03-0144
E1SJF9-05-0274
E1SJF9-05-0274
E1SJF9-05-0274
E1SJF9-05-0274
E1SJC9-02-0055
E1SJDO-03-0185
E1SGB9-04-0016
E1SKF9-11-0031
E1SGG9-08-5000
E1SJGO-11-0022
E6FGGO- 13-2005
E1SFGO-15-0020
E1SGG9-05-0275
E6FGG9-05-0480
E1SHF9-11-0039
E1SHGO-05-0192
Date
Report
Issued
3/28/90
9/27/90
9/27/90
9/27/90
9/27/90
9/24/90
4/20/90
3/12/90
7/25/90
3/28/90
3/28/90
3/ 6/90
2/14/90
1/25/90
3/29/90
9/19/90
9/27/90
3/28/90
3/30/90
9/24/90
1/30/90
6/14/90
9/28/90
21 5/90
8/ 7/90
6/29/90
-------
EPA Office of Inspector General Annual Superfund Report to the Congress for Fiscal 1990 117
EXHIBIT III
2 OF 3
SUPERFUND AUDIT REPORTS
ISSUED DURING FISCAL
Final
Report
Number Audi tee
COOPERATIVE AGREEMENTS
0300035 ALABAMA DEPT. OF ENV. MANAGEMENT-PA/ SI
0300037 CALIFORNIA DEPT. OF HEALTH-STRINGFELLOW
1990
Audit
Control Number
P5BGN9-04-0189
S5BG*8-09-0202
0300098 CALIFORNIA ST. WATER RES. CONTR. BD.-S. BAY S5BKN9-09-0267
0300048 GEORGIA DEPT. OF NATURAL RESOURCES-PA/SI
0300010 KENTUCKY NAT. RES. & ENV. PROT. CAB. -PA/SI
0300045 MISSISSIPPI DEPT. OF ENV. QUALITY-PA/SI
0100245 NEW YORK ST. DEPT. ENV. CONS. -MULTI -SITE
0300049 NORTH CAROLINA DEPT. OF HUMAN RES. -PA/SI
0300095 OREGON DEPT. OF ENV. QUALITY-CORE PROGRAM
0300096 S. ADAMS CTY., CO-ROCKY MT. ARS./COM. CITY
0100078 TEXAS WATER COMMISSION-BIOECOLOGY SITE
0300033 TEXAS WATER COMMISSION-HIGHLANDS SITE
0100079 TEXAS WATER COMMISSION-SIKES SITE
0100043 LOCKWOOD ANDREWS NEWMAN-TEXAS CONTRACTOR
INTERAGENCY AGREEMENTS
0100029 ARMY CORPS OF ENGINEERS-FISCAL 1988
0100027 ENERGY DEPARTMENT-FISCAL 1988
0100213 FED. EMERGENCY MGMT AGENCY-FISCAL 1988
0100058 INTERIOR DEPT-FWS & USGS-FISCAL 1987
0100428 INTERIOR DEPT-ENV PROJ REV-FISCAL 1988
0100475 INTERIOR DEPT-FWS, RECLAM. & USGS-FY88
0100200 INTERNAL REVENUE SERVICE-FISCAL 1988
0100080 JUSTICE DEPARTMENT-FISCAL 1988
P5BGN9-04-0213
P5CGN8-04-0091
P5BFN9-04-0190
P5BGL9-02-0366
P5BGN9-04-0129
P5CHN9-10-0151
P5BHN9-08-0092
E5BGL9-06-0133
P5BGN9-06-0188
E5BGL9-06-0134
E5DGLO-06-0041
M5BFLO-11-0017
M5BFLO-11-0016
M5BFLO-1 1-0023
M5BFL9-1 1-0046
M5BFLO-1 1-0034
M5BFLO-1 1-0035
M5BFLO-1 1-0024
M5CFLO-11-0019
Date
Report
Issued
3/27/90
3/30/90
9/28/90
5/ 1/90
11/17/89
4/20/90
3/30/90
5/ 3/90
9/27/90
9/27/90
12/13/89
3/20/90
12/13/89
10/25/89
10/16/89
10/16/89
3/26/90
ll/ 9/89
8/13/90
8/24/90
3/19/90
12/15/89
-------
EPA Office of Inspector General Annual Superfund Report to the Congress tor Fiscal 1990 118
EXHIBIT III
3 OF 3
SUPERFUND AUDIT REPORTS
ISSUED DURING FISCAL 1990
CONTRACT AUDITS
Final
Report
Number Auditee
Preaward Proposals
0100427 ECOLOGY AND ENVIRONMENT, NY
0300093 FOUR SEASONS INDUSTRIAL, INC., SC
0100362 JACOBS ENGINEERING GROUP, INC., CA
0300007 O.H. MATERIALS COMPANY, OH-ZONE 4A
0300036 O.H. MATERIALS COMPANY, OH-EQUIP. RATES
0300047 O.H. MATERIALS COMPANY, OH-EQUIP. RATES
0300084 OHM REMEDIATION, OH
0100354 RADIAN CORPORATION, TX
0100426 RADIAN CORPORATION, TX
0300023 REIDEL ENVIRONMENTAL SERVICES, OR
0300001 WESTINGHOUSE HAZTECH, GA
Interim Audits
0100047 CDM FEDERAL PROGRAMS CORPORATION, MA
0200004 O.H. MATERIALS CORPORATION, GA-PALMETTO
Final Audits
0100182 CHEM-TLE ENVIRONMENTAL SERVICES, CA
0100224 KAAREN JOHNSON ASSOCIATES, MD
0100225 KAAREN JOHNSON ASSOCIATES, MD
0100226 KAAREN JOHNSON ASSOCIATES, MD
0100026 SRI INTERNATIONAL, CA
Indirect Costs
0300029 O.H. MATERIALS COMPANY, OH-FISCAL 1988
System Survey
0300027 NUS CORPORATION, MA-FISCAL 1986
Audit
Control Number
D9AKLO-02-0306
P9AHNO-04-0326
D9AKLO-09-0223
P9AHN9-05-0460
P9AHN9-05-0347
P9AHNO-05-0260
P9AHNO-05-0365
D9AKLO-06-0207
D9AKLO-06-0222
P9AHN9-10-0167
E9AHN9-04-0344
D9BFLO-01-0022
E9BHM9-04-0233
D9CHLO-09-0127
P9CFL9-11-0043
P9CFL9-11-0043
P9CFL9-11-0043
D9CKLO-09-0023
P9DHN9-05-0439
P9EGN9-01-0230
Date
Report
Issued
8/ 9/90
9/20/90
6/27/90
10/31/89
3/27/90
4/27/90
8/16/90
6/22/90
8/ 7/90
21 1/90
10/17/89
10/27/89
12/ 1/89
3/ 7/90
3/28/90
3/28/90
3/28/90
10/13/89
2/22/90
2/15/90
-------
EPA Offlca of bisnactor Ganaral Annual Suoarfund Raoort to the Conorass for Fiscal 1990
119
APPENDIX: ACRONYMS AND ABBREVIATIONS
AOEM
ARCS
ATSDR
BLP
CA
CALSTARS
CERCLA
CERCLIS
CFR
COE
Confidential
statements
CPAF
DEQ
DHS
DHS-TSCP
DOE
DOI
EPA
Alabama Department of Environmental
Management
Alternative Remedial Contracting Strategy
Agency for Toxic Substances and Disease
Registry
Bunker Limited Partnership
California
California State Accounting and Reporting
System
Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as
amended
Comprehensive Environmental Response,
Compensation, and Liability Information
System, the Superfund management information
system
Code of Federal Regulations
Corps of Engineers
Confidential Statements of Employment and
and Financial Interest
Cost-plus-award-fee (contract type)
Department of Environmental Quality, State of
Oregon
Department of Health Services, State of
California
Department of Health Services-Toxic
Substances Control Program, State of
California
Department of Energy
Department of Interior
Environmental Protection Agency
-------
EPA Office of Inspector General Annual Sunarfund Report to the Congress for Fiscal 1990 120
EPAAR Environmental Protection Agency Acquisition
Regulations
ERB Environmental Response Branch (EPA)
ERCS Emergency Response Cleanup Services
FAR Federal Acquisition Regulations
FBI Federal Bureau of Investigation
FEMA Federal Emergency Management Agency
FMO Financial Management Officer
FS Feasibility Study
FSR Financial status Report
FWS Fish and Wildlife Service, U.S. Department of
the Interior
FY Fiscal year
GA Georgia
GDNR Georgia Department of Natural Resources
HQ Headquarters
HWD Hazardous Waste Division (EPA Region 10)
IAG Interagency agreement
IAP Individual acquisition plan
ID Idaho
IFMS Integrated Financial Management System (EPA)
IPA Independent public accounting firm
IRS Internal Revenue Service
KNREP Kentucky Natural Resources and Environmental
Protection Cabinet
LNRD Land and Natural Resources Division
(Department of Justice)
MA Massachusetts
-------
EPA Office of Inspector General Annual Sunaffund Report to the Conor«s« for Fiscal 1990
121
MD
MDEQ
mg/1
NCDHR
NCP or National
Contingency Plan
NPL
NY
NYSDEC
OCI
OERR
OH
OIG
OMB
OR
ORD
OSC
OSWER
PA
PA/SI
PPAS
PRP
RA
Maryland
Mississippi Department of Environmental
Quality
milligrams per liter
North Carolina Department of Human Resources
National Oil and Hazardous Substances
Contingency Plan, 40 CFR Part 300
National Priorities List
New York
New York State Department of Environmental
Conservation
Office of Criminal Investigations (OCI)
Office of Emergency and Remedial Response
(EPA)
Ohio
Office of Inspector General
Office of Management and Budget
Oregon
Office of Research and Development (EPA)
On-Scene Coordinator
Office of Solid Waste and Emergency Response
(EPA)
Preliminary Assessment
Preliminary Assessment/Site Inspection
Personal Property Accounting System (EPA)
Potentially Responsible Party
Remedial Action or Regional Administrator
(EPA)
RCRA
Resource Conservation and Recovery Act
-------
EPA Office of Inspector General Annual Sunerfund Report to the Congress for Fiscal 1990
122
RD
RD/RA
RI
RI/FS
ROD
RPM
RWQCB
SACWSD
SARA
SC
SF
SI
SITE
SMOA
SOL
SSC
SWRCB
TAT
TDI
TES
Trust Fund
TWC
TX
Remedial Design
Remedial Design/Remedial Action
Remedial Investigation
Remedial Investigation/Feasibility Study
Record of Decision
Remedial Project Manager
Regional Water Quality Control Board,
California
South Adams County (Colorado) Water and
Sanitation District
Superfund Amendments and Reauthorization Act
of 1986
South Carolina
Superfund
Site Inspection
Superfund Innovative Technology Evaluation
program
Superfund Memorandum of Agreement
Statute of limitations
Superfund State Contract
State Water Resources Control Board,
California
Technical Assistance Team
Toluene diisocyanate
Technical Enforcement Support (EPA contracts)
Hazardous Substance Superfund
Texas Water Commission
Texas
-------
EPA Office of Inspector General Annual Suparfund Report to the Congress for Fiscal 1990 123
USGS United States Geological Survey, Department
of the Interior
WI Wisconsin
------- |