ff\ Environmental Protection 401 M Street, S.W. (A-109)
United States Office of the Inspector General September 1903
Environmental Protection 401 M Street, S.W. (A-10
Agency Washington, D.C. 2O460
EPA's Office of the
Inspector General
Annual
Superfund Report
to the Congress
for Fiscal 1992
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ANNUAL
SUPERFUND REPORT
TO THE CONGRESS
FOR FISCAL 1992
September 1993
Required by
Section 111 (k) of the
Comprehensive Environmental Response, Compensation,
and Liability Act of 1980 (CERCLA),
as amended by the Superfund Amendments and
Reauthorization Act of 1986 (SARA)
OFFICE OF THE INSPECTOR GENERAL
U.S. ENVIRONMENTAL PROTECTION AGENCY
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EPA Offirce of the Inspector General Annual Suoerfund Report to the Congress for Fiscal 1992
FOREWORD
This report covers fiscal 1992 activities, and is our sixth Annual Superfund
Report to the Congress. The Superfund Amendments and Reauthorization Act
of 1986 (SARA) requires the Office of the Inspector General (OIG) to audit the
Superfund program annually and to report to Congress annually on these 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 site-specific accounting and
documentation of Superfund costs. In our first review of the Hazardous
Substance Superfund under the new Chief Financial Officers (CFO) Act
requirements, we disclaimed an opinion on the financial statements because of
material weaknesses in EPA's financial management system and accounting
controls. The Agency reported to the President in its annual Federal Managers'
Financial Integrity Act (FMFIA) letter "Accounting System-Related Financial
Management Problems" and "Accounts Receivable" material weaknesses. Our
report identified material weaknesses concerning financial reporting, recording
of accounts receivable, property and equipment records, recognition of State
cost share revenue, recording of accounts payable/accrued liabilities, and
accounting for grant drawdowns.
Our reviews of the Agency's performance in managing the Superfund
program also found significant deficiencies. We reviewed EPA's
implementation of its Alternative Remedial Contracting Strategy (ARCS)
program. We found that it did not achieve its objective of accelerating the
remediation process by expediting site studies. Most of the ARCS assignments
we reviewed were well beyond schedule. Also, none of the regions we
reviewed prepared required independent Government cost estimates. The
Administrator appointed a task force to review the problems in the ARCS
program. The task force proposed a number of actions to improve the ARCS
program. By the end of fiscal 1992, EPA had implemented most of the
recommendations and was working on the rest, except for one which was
cancelled. However, we will only know if the actions were effective in
correcting the deficiencies after they have been in place for a period.
We also reviewed EPA's Emergency Response Cleanup Services (ERCS)
program as a follow-up to our 1986 ERCS audit. We found the Agency was
still not obtaining cost data from contractors to support their proposed rates for
equipment. As a result, EPA negotiated unreasonably high rates. We also
found EPA's weak management allowed the ERCS contractors not to comply
with the contract terms and conditions. In addition, we performed a special
review of Region 2's management of Mini-ERCS contracts. The Region's
inadequate monitoring of the contracts resulted in contractors claiming
significant ineligible and unsupported costs, and also caused delays.
We reviewed several aspects of the Agency's enforcement program.
Region 1 did not identify all costs that could be recovered from potentially
responsible parties (PRPs), and did not adequately maintain cost documentation
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EPA Offirce of the Inspector General Annual Superfund Report to the Congress for Fiscal 1992
packages. Region 2 was not recovering all possible costs from PRPs and did
not adequately document its negotiations with PRPs. Neither Region 2 nor
Region 7 completed PRP searches timely. The PRP search process had
significant deficiencies in both regions.
We continued a major investigative effort into the Contract Laboratory
Program (CLP). This complex investigation found fraud committed by a number
of EPA contractors. In fiscal 1992, our Superfund investigative efforts
produced 11 indictments and 22 convictions. Fines and recoveries amounted
to more than $1.4 million, and one settlement agreement resulted in a cost
avoidance of $353,723. Our auditors continued to review aspects of the CLP.
We found that EPA's Sample Management Office (SMO) did not make sure the
best available laboratory analyzed samples. The same contractor has operated
the SMO for more than a decade due to procurements not designed to
encourage competition. We also found a number of weaknesses in the CLP
Quality Assurance/Quality Control program. As a result, EPA often did not take
needed actions against laboratories not meeting contractual requirements, or
took them only after considerable delay.
In addition to reviewing Agency performance, we also took a proactive role
to help EPA management prevent future problems. This included review of
draft documents and participation in EPA work group meetings. During fiscal
1992, we actively participated in an Agency work group on implementation of
the CFO Act. We also participated in the Agency's ARCS Council established
to identify and implement improvements in ARCS contract management. In
addition, we participated in an Agency task force that developed guidance for
EPA staff on preparing independent Government cost estimates.
We C9mpleted a new long range strategic plan for Superfund audits and
investigations during fiscal 1992. We will use this plan in developing our
annual audit and investigative plans for fiscal years 1993-96.
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
\Jlnspec
lnspector General
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EPA Offirce of the Inspector General Annual Suoerfund Report to the Congress for Rscal 1992 Hi
TABLE OF CONTENTS
PURPOSE 1
BACKGROUND 2
HAZARDOUS SUBSTANCE SUPERFUND 4
COOPERATIVE AGREEMENTS AND GRANTS 9
Arizona Department of Environmental Quality 9
California State Water Resources Control Board 14
Idaho Department of Health and Welfare 15
Los Angeles Department of Water and Power 18
New Jersey Department of Environmental Protection - Burnt Fly Bog . . 22
New Jersey Department of Environmental Protection - Combe Fill North 23
New Jersey Department of Environmental Protection - Combe Fill South 25
New Jersey Department of Environmental Protection - Florence Land
Recontouring, Inc. Landfill 27
New Jersey Department of Environmental Protection - GEMS Landfijl . . 28
New Jersey Department of Environmental Protection - Price's Landfill . 30
New Jersey Department of Environmental Protection - Syncon Resins . 31
North Carolina Department of Environment, Health and Natural
Resources 33
North Carolina State University 35
Puerto Rico Environmental Quality Board - Core Program 37
Puerto Rico Environmental Quality Board - Follow-up 39
Puerto Rico Environmental Quality Board - Frontera Creek 41
Puerto Rico Environmental Quality Board - Site Assessment Program . . 43
Washington Department of Ecology 44
Comite Pro-rescate de la Salud y el Ambiente de Vega Alta, Inc 46
Management of Region 7 Cooperative Agreements 47
Management of Region 8 Cooperative Agreements 48
REMEDIAL INVESTIGATION AND FEASIBILITY STUDY 51
Koppers Texarkana Site, Texarkana, Texas 51
PERFORMANCE AUDITS AND SPECIAL REVIEWS 53
Alternative Remedial Contract Strategy (ARCS) Contracts in Regions 1,
3 and 5 1 53
Follow-up of EPA's Negotiation, Award and Management of Contractor-
owned Equipment for Emergency Response Cleanup Services
Contracts 56
Region 2's Management of Mini-ERCS Contractors 59
Cost Recovery Efforts Against Potentially Responsible Parties (PRPs) . . 61
Cost Recovery Negotiations 63
Region 2's Potentially Responsible Party Search Program 65
Region 7's Potentially Responsible Party Search Program 68
Sample Management Office 71
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EPA Offirce of the Inspector General Annual Suoerfund Report to the Congress for Fiscal 1992 |y
Environmental Monitoring Systems Laboratory (EMSL)-Las Vegas
Contract Laboratory Program (CLP) Quality Assurance/Quality
Control (QA/QC) Program 75
Region 9's Administration of the Stringfellow Cooperative Agreement . 79
CERCLIS Reporting and Post-Implementation Follow-up 82
Environmental Technology and Engineering Facility (E-TEC), Edison,
New Jersey, Special Review 85
Unannounced Site Review of Sobel Brothers Removal 86
Unannounced Site Review of International Depository Removal 87
INTERAGENCY AGREEMENTS 89
Agency for Toxic Substances and Disease Registry 89
U.S. Army Corps of Engineers 90
Department of Energy 90
Federal Energy Management Agency 90
Department of the Interior Bureau of Mines 90
Department of the Interior Bureau of Reclamation 91
Department of the Interior U.S. Fish and Wildlife Service 91
Department of the Interior Office of Environmental Affairs 92
Department of Justice 92
CONTRACTS 93
CH2M Hill, Inc 94
NUS Corporation 97
S&D Environmental Services, Inc 99
Vesta Technology, Ltd 102
ASSISTANCE TO EPA MANAGEMENT 105
INVESTIGATIVE ACTIVITY 108
EXHIBIT I: SUPERFUND AUDIT REPORTS ISSUED DURING FISCAL 1992 . 112
APPENDIX: ACRONYMS AND ABBREVIATIONS 119
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EPA Offirce of the Inspector General Annual Simerfund Report to the Conaress for Fiscal 1992
PURPOSE
We provide this report pursuant to section 111 (k) of the Comprehensive
Environmental Response, Compensation, and Liability Act (CERCLA) of 1980,
as amended. The Superfund Amendments and Reauthorization Act (SARA) of
1986 amended that section of CERCLA to add several annual requirements for
the Inspector General of each Federal agency carrying out CERCLA authorities.
These requirements include four audit areas and an annual report to Congress
about the required audit work. This report covers fiscal 1992 audits of
Superfund activities. We discuss the required four audit areas below.
This report contains chapters on the mandated audit areas, except claims.
We also summarize other Superfund audit work, assistance to EPA
management and Superfund investigative work performed during fiscal 1992.
We exceed the statutory requirements by providing Congress with the
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
now meet this requirement through the financial statement audit required by
the Chief Financial Officers Act of 1990.
Claims
CERCLA requires an annual audit to assure "... that claims are being
appropriately and 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. EPA did not pay any
claims in fiscal 1992.
Cooperative Agreements
CERCLA requires audits "... of a sample of agreements with States (in
accordance with the provisions of the Single Audit Act) carrying out response
actions under this title ..." We perform financial and compliance audits of
cooperative agreements with States and political subdivisions. Some of our
audits also review program performance. In addition, we sometimes review
EPA regional management of the cooperative agreement program.
Remedial Investigations/Feasibility Studies (RI/FS)
CERCLA requires our n ... examination of remedial investigations and
feasibility studies prepared for remedial actions ..." Our RI/FS examinations
review the adequacy of the studies to provide a sound technical basis for
remedial action decisions. These examinations may be done as part of audits of
EPA management or as special reviews by our technical staff.
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EPA Offirce of the Inspector General Annual Superfund Report to the Congress for Fiscal 1992
BACKGROUND
The Comprehensive Environmental Response, Compensation, and Liability
Act of 1980 (CERCLA), Public Law 96-510, enacted on December 11, 1980,
established the "Superfund" program. The purpose of the Superfund program
is to protect public health and the environment from the release, or threat of
release, of hazardous substances from abandoned hazardous waste sites and
other sources where other Federal laws do not require response. CERCLA
established a Hazardous Substance Response Trust Fund to provide funding for
responses ranging from control of emergencies to permanent remedies at
uncontrolled sites. CERCLA authorized a $1.6 billion program financed by a
five-year environmental tax on industry and some general revenues. CERCLA
requires EPA to seek response, or payment for response, from those responsible
for the problem, including property owners, generators, and transporters.
The Superfund Amendments and Reauthorization Act of 1986 (SARA),
Public Law 99-499, enacted October 17, 1986, revised and expanded CERCLA.
SARA reinstituted the environmental tax and expanded the taxing mechanism
available for a five-year period. It authorized an $8.5 billion program for the
1987-1991 period. It renamed the Trust Fund the Hazardous Substance
Superfund. The Budget Reconciliation Act of 1990 reauthorized the program
for three additional years and extended the taxing mechanism for four additional
years.
The basic regulatory blueprint for the Superfund program is the National Oil
and Hazardous Substances Contingency Plan (NCP), 40 CFR Part 3pO. The
NCP was first published in 1968 as part of the Federal Water Pollution Control
Plan, and EPA has substantially revised it three times to meet CERCLA
requirements. The NCP lays out two broad categories of response: removals
and remedial response. Removals are relatively short-term responses and
modify an earlier program under the Clean Water Act. Remedial response is
long-term planning and action to provide permanent remedies for serious
abandoned or uncontrolled hazardous waste sites.
CERCLA recognized that the Federal Government can only assume
responsibility for remedial response at a limited number of sites representing the
greatest public threat. Therefore, EPA must maintain a National Priorities List
(NPL), and must update it at least annually. The NPL consists primarily of sites
ranked based on a standard scoring system, which evaluates their threat to
public health and the environment. In addition, CERCLA allowed each State to
designate its highest priority site, without regard to the ranking system.
CERCLA section 104(c)(3) does not allow EPA to fund remedial actions
unless the State in which the release occurs enters into a contract or
cooperative agreement with EPA to provide certain assurances, including cost
sharing. At most sites, the State must pay 10 percent of the costs of remedial
action. EPA may fund 100 percent of site assessment activities (preliminary
assessments, site inspections), remedial planning (remedial investigations,
feasibility studies, remedial designs), and removals. For facilities operated by a
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EPA Offirce of the Inspector General Annual Suoerfund Report to the Congress for Fiscal 1992 3
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 - site assessment, remedial, removal and enforcement.
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EPA Offirce of the Inspector General Annual Suoerfund Report to the Congress for Fiscal 1992
HAZARDOUS SUBSTANCE SUPERFUND
The Chief Financial Officers (CFO) Act of 1990 requires Federal agencies to
prepare annual financial statements covering their trust funds, revolving funds
and commercial activities. For EPA, the largest activity requiring an annual
financial statement is the Hazardous Substance Superfund. The CFO Act also
requires audits of the financial statements by the OIG or an independent public
accounting (IPA) firm selected by the OIG. The EPA OIG's requirement to audit
EPA's financial statements also meets our CERCLA requirement to audit
annually the Superfund, which we previously called our Trust Fund audit.
Fiscal 1992 was the first year EPA was required to prepare audited financial
statements. The financial statements are prepared in a format similar to that
used by large corporations, and do not include the Schedules of Obligations and
Disbursements we included in our past Trust Fund audits.
Scope and Objectives
We contracted with an IPA firm to perform an audit of EPA's Annual
Statements for Fiscal Year 1992, which included financial statements for the
Hazardous Substance Superfund. The audit objectives were to determine if
EPA management:
a. Fairly presented the financial statements;
b. Had established an internal control structure that provided reasonable
assurance that it (1) properly recorded and accounted for transactions to
permit the preparation of reliable financial statements and to maintain
accountability over assets, (2) safeguarded funds, property and other
assets against loss from unauthorized use or disposition, and (3) executed
transactions in compliance with relevant laws and regulations; and
c. Had complied with applicable laws and regulations that, if not followed,
could have a material effect on the financial statements.
The IPA firm also reviewed the status of findings and recommendations
included in prior Trust Fund audit reports. The IPA firm examined, on a test
basis, EPA financial management records, excluding six regional offices
accounting for only seven percent of fiscal 1992 expenditures. The IPA firm
conducted its field work from October 19, 1992 through April 7, 1993.
Findings
1. Disclaimer of Opinion
The IPA firm disclaimed an opinion on the Superfund financial statements
because of a number of exclusions and limitations in the audit. Many of these
are reflected in the findings we summarize below.
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EPA Offirce of the Inspector General Annual Suoerfund Report to the Congress for Fiscal 1992 5
2. Financial Reporting
EPA reported as a material weakness in its 1992 Federal Managers'
Financial Integrity Act (FMFIA) report to the President its inability to provide
complete, timely and reliable data for EPA decision making and control of
assets. EPA also reported as material nonconformances the inadequacy of
reconciliations to external U.S. Treasury reports, the need to adjust the general
ledger because of Integrated Financial Management System (IFMS)
implementation, and the need for more automation of the links between IFMS
and other administrative systems.
EPA personnel spent significant time preparing spreadsheets to summarize
account balances because IFMS did not accumulate information at the level
required for external reporting purposes. Also, financial system reports were
often not received timely and often required significant reconciliation effort to
ensure accuracy. EPA prepared OMB and U.S. Treasury standard forms before
closing its year-end accounting records. Further, because of IFMS weaknesses
and a lack of effective controls to identify and correct inaccurate financial
information, the IPA firm identified needed adjustments of $57,508,000 to
decrease assets, $499,289,000 to decrease liabilities and $441,781,000 to
increase equity. The IPA firm also noted unexplained credit balances of
$26,044,000 in the Superfund Trust Fund trial balances due to incomplete data
conversion during the 1989 IFMS installation.
3. Improvements Needed in Recording Accounts Receivable
EPA did not record Superfund receivables and collections timely. It had not
recorded timely 9 receivables totaling $5,804,437 out of a nonstatistical
sample of 38 receivables totaling $13,821,052. For the 9 receivables, it took
an average of 77 days from the creation of the debt to the recording of the
receivable in IFMS. Also, EPA did not record two accounts receivable totaling
$1,302,000 in the IFMS until it received the collections.
EPA did not record timely in IFMS 17 collections totaling $10,406,812 out
of a nonstatistical sample of 34 collections totaling $17,169,401. EPA took an
average of 10 days from receipt of these collections to record them in IFMS.
EPA had reported accounts receivable as a material weakness in its FMFIA
reports and taken steps to resolve the problems. EPA committed itself to
resolve quickly all issues relating to managing accounts receivable.
4. Property and Equipment Records Needed to Be Integrated with the General
Ledger
EPA did not have an integrated property system supporting the property
and equipment balance reported in the financial statements. EPA used two
systems to account for and control property, the Personal Property
Accountability System (PPAS) and spreadsheets. However, neither system
contained complete historical cost data and information to support all
capitalized property. EPA reported in its 1992 FMFIA report that reconciliation
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EPA Offirce of the Inspector General Annual Superfund Report to the Congress for Fiscal 1992
between PPAS and IFMS was not adequate. It formed a Quality Action Team
to take corrective action.
5. State Cost Share Revenue Was Not Properly Recognized
EPA recorded receivables and corresponding deferred revenue when it
signed agreements with States to share in the cost of Superfund site cleanups.
However, it did not reduce deferred revenue when it incurred site cleanup
disbursements. The auditors could not audit deferred revenue for cost share
agreements because the needed data was not available. EPA did not have an
adequate method for determining costs incurred on those agreements to
properly liquidate the deferral and recognize revenue.
6. Accounts Payable and Accrued Liabilities Were Not Properly Recorded
The auditors identified significant audit adjustments to accounts payable
and accrued liabilities resulting from a lack of effective controls to identify and
correct inaccurate financial information. EPA improperly calculated accrued
liabilities for interagency agreements using a methodology not reflecting actual
services performed. This methodology resulted in a $486 million
overstatement, which EPA subsequently corrected. EPA also did not record
accounts payable for contractor retainages. Further, EPA understated accrued
liabilities by $12,816,251 by suppressing an account number in the detailed
report used to compute the accrual. EPA corrected this understatement at the
auditors' request. In addition, EPA could not discjose all expenses by object
class because year-end accruals were recorded without object class.
7. Accountjng for Grant Drawdowns Did Not Provide Required Account
Information
One finance center applied requests for multi-funded grant drawdowns to
funding sources (appropriations) using the first-in first-put method, based on a
review of available unliquidated obligations. Grant recipients did not identify to
which funding source the grant disbursements should be applied if the payment
requests were not specifically related to a Superfund site cleanup. This could
cause misstatements of activity among the various appropriations that provided
funding under the same grant.
8. Certain Costs Were Not Properly Allocated
EPA did not charge Superfund administrative costs of $17.5 million against
the Superfund. Instead, EPA charged these expenses to the Salaries and
Expenses appropriation although Superfund monies were available to cover the
costs. In addition, EPA charged $390,792 of building repairs and alterations to
Superfund although the Agency had advised that such costs should not be
charged to appropriations not specifically allowing such charges. EPA had not
obtained a legal opinion to determine if it had authority to use the Superfund for
these purposes.
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of the Inspector General Annual Suoerfund Report to the Congress for Fiscal 1992 7
Recommendations
The IPA firm recommended that EPA:
• Develop a report providing trial balances at the highest level of
aggregation required for financial reporting.
• Implement budgetary accounts and transaction codes to account for
reimbursable authority properly.
• Review and correct its automated closing procedures.
• Evaluate the timely closing of its year-end accounting records before
the U.S. Treasury implements the automated Standard General Ledger
trial balance transmission in 1995.
• Determine the appropriate final disposition of unreconciled data
conversion errors and remove them from IFMS general ledger trial
balances.
• Dedicate adequate resources to meeting EPA's financial reporting
requirements timely.
• Develop procedures for calculating State cost shares to recognize
earned revenue properly as cleanup services are performed.
• Determine if a material amount of contractor retainages is being
withheld; if so, develop and implement procedures to present the
amount fairly in the financial statements.
• Make sure regional offices consistently follow the year-end closing
procedures for recording accounts payable and accrued liabilities for
obligations to grantees.
• Record accruals with object class and revise the year-end closing
procedures.
• Determine if additional procedures need to be developed to account for
grant drawdowns.
• Obtain a legal opinion on whether EPA had authority to use Superfund
monies for repairs and alterations.
Agency Response
In response to the draft audit report, EPA indicated it:
• Would develop a report to aggregate the general ledger account
balances.
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EPA Offirce of the Insoector General Annual Suoerfund Report to the Congress for Fiscal 1992 8
• Would issue revised procedures and instructions as needed to account
for reimbursable authority properly.
• Would review the automated closing procedures with the contractor
who developed the software package upon which IFMS is based, and
refer the matter to the Federal Financial System User Group for action.
• Would evaluate its year-end closing process and statement preparation
procedures.
• Was working to reconcile the data conversion errors and to remove
them from the IFMS general ledger trial balances.
• Had sustained funding for IFMS.
• Would develop policies and procedures for State cost shares and
reconcile deferred revenue cited in the audit report.
• Would revise year-end closing instructions.
• Would establish a Quality Action Team to explore the grant drawdown
issues and develop options.
• Had established eight critical information resources management policy
documents as formal binding Agency Directives.
• Had requested a legal opinion on authority to use the Superfund for
repairs and alterations.
We issued the final audit report (P1SFL2-20-8001 -3100264) on June 30,
1993. EPA has 90 days to respond to the report.
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EPA Offirce of the Inspector General Annual Suoerfund Report to the Congress for Fiscal 1992 9
COOPERATIVE AGREEMENTS AND GRANTS
In fiscal 1992, we issued 16 audit reports on Superfund cooperative
agreements, 1 audit report on a contract awarded by a State under a Superfund
cooperative agreement, 1 follow-up report on a State's management of
Superfund cooperative agreements, 2 audit reports on Superfund grants and 2
audit reports on regional surveys of Superfund cooperative agreements. The
combined financial results of the financial audits of Superfund cooperative
agreements and grants were as follows:
FINANCIAL RESULTS OF FISCAL 1992 SUPERFUND
COOPERATIVE AGREEMENT AND GRANT AUDIT REPORTS
Amount audited
Amount accepted
Ineligible costs1
Unsupported costs2
Unnecessary/unreasonable costs3
Federal Share I Total Costs
$54,170,066
35,878,010
3,501,736
10,435,630
4,354,690
$58,480,137
39,197,096
3.852,533
11,075,818
4,354,690
1. Costs questioned because of an alleged violation of a provision of a law, regulation,
contract, grant, cooperative agreement or other agreement or document governing the
expenditure of funds.
2. Costs questioned because, at the time of the audit, they were not supported by ade-
quate documentation and/or had not been approved by responsible program officials.
3. Costs questioned because they were not necessary or not reasonable.
We summarize all but one audit related to Superfund cooperative
agreements and grants below. We did not question any costs or make any
recommendations in that audit of a State contractor.
ARIZONA DEPARTMENT OF ENVIRONMENTAL QUALITY
Scope and Objectives
We contracted with an IPA firm to perform an interim audit of the costs
claimed under three cooperative agreements awarded to the Arizona
Department of Environmental Quality (ADEQ). EPA awarded the cooperative
agreements to ADEQ for activities at multiple sites, identification and ranking of
hazardous waste sites, and core program activities. The audit objectives were
to determine:
a. The reasonableness, allocability and allowability of the costs claimed under
the cooperative agreements;
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EPA Offirce of the Inspector General Annual Superfund Report to the Congress for Fiscal 1992 10
b. ADEQ's compliance with special conditions of the cooperative agreements,
and applicable EPA regulations and instructions; and
c. The adequacy, effectiveness and reliability of procurement, accounting and
management controls exercised by ADEQ in administering the cooperative
agreements.
The audit covered costs claimed by ADEQ from July 9, 1987 through
September 30, 1990.
Findings
1. ADEQ Needed to Allocate Leave Equitably
ADEQ did not have written policies or procedures for allocating leave costs,
but allocated leave costs based on projects worked on during the previous pay
period. As a result, there was no assurance that ADEQ had equitably allocated
holiday and leave costs.
2. ADEQ Needed to Reconcile Payroll Costs to State Payroll System
ADEQ's Labor Activity Reporting System (LARS) did not reconcile to the
State payroll system as required by Region 9. Due to the incomplete
reconciliation, ADEQ could not determine the amount of personnel and fringe
benefits costs charged to the multi-site cooperative agreement.
3. ADEQ's Timekeeping Procedures Needed Improvement
ADEQ's timekeeping system needed to reflect employee time charges
accurately as required by Federal regulations. When an employee did not
submit a time sheet timely, the State payroll system distributed the employee's
time based on the prior pay period's allocation. ADEQ's payroll unit prepared a
transfer quarterly or annually to adjust the employee's salary to reflect the
actual hours worked. However, these transfers were not always accurate. As
a result, time charged to the cooperative agreements did not accurately reflect
the percentages recorded on the time sheets.
4. ADEQ Needed to Monitor Its Intergovernmental Agreement
ADEQ did not adequately monitor its intergovernmental agreement with the
Attorney General's office. That office did not submit adequate documentation
of its costs to ADEQ until we performed our audit. Without these documents,
ADEQ was unable to determine actual costs to charge to the cooperative
agreements or to monitor whether expenses were within the amount
authorized.
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EPA Offirce of the Inspector General Annual Suoerfund Report to the Congress for Fiscal 1992 11
5. ADEQ Needed to Allocate Travel. Operating and Capital Expenditures
Correctly
ADEQ did not allocate travel, operating and capital expenditures according
to Federal regulations. ADEQ allocated non-site specific travel, operating and
capital expenditures to all sites equally. Federal regulations require that costs
be allocated only to sites and activities where the expenses are attributable.
Also, capital expenditure costs must be allocated by applying a usage rate.
ADEQ did not establish a usage rate or maintain records of actual usage for its
capital expenditures.
6. Letter of Credit Drawdown Procedures Needed Improvement
ADEQ's letter-of-credit (LOG) drawdown procedures did not comply with
Federal regulations. ADEQ made LOG drawdowns for unallowable costs
resulting in excess cash drawdowns of $167,253 that it had not returned to
EPA at the time of the audit.
7. Controls Over Capital Equipment Needed Improvement
ADEQ's controls over capital equipment did not comply with Federal
regulations. It did not record several assets purchased with Federal funds on its
inventory list. ADEQ had no written policies and procedures for the recording
of capital acquisitions. Its capital equipment inventory list was incomplete.
ADEQ also was not using an adequate disposition method or tracking disposed
assets.
8. Non-Core Position Charged to Core Program
ADEQ charged the core program cooperative agreement for an employee
not performing core program tasks. When EPA requested ADEQ remove these
payroll costs, ADEQ substituted charges for another employee who also did not
perform core program tasks.
9. ADEQ Needed Improvement in Segregation of Duties
ADEQ did not properly segregate duties in its purchasing and receiving
function. Individuals who completed the original purchase order also received
the merchandise when delivered. In addition,.the same individual signed both
the receiving copy and program copy of the purchase order.
10. ADEQ Did Not Implement Corrective Actions from Prior Audits
ADEQ had not implemented promised corrective actions in response to
three prior audits containing similar findings to those in this audit. Region 9
continued to accept unfulfilled promises by ADEQ to take corrective actions,
and had not acted on all audit recommendations. Region 9 restricted funding
under two of the cooperative agreements to the reimbursement method. Of
three reimbursement requests submitted, Region 9 rejected one, paid 90.5
percent of one and paid one in full.
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EPA Offirce of the Inspector General Annual Suoerfund Report to the Congress for Fiscal 1992 12
FINANCIAL RESULTS OF AUDIT
Amount audited
Amount accepted
Ineligible costs1
Unsupported costs2
Unnecessary/unreasonable costs3
Federal Share
$2,169,265
549,118
66,137
1,554,010
0
Total Costs
$2,181,647
553,382
66,158
1,562,107
0
1. Costs questioned because of an alleged violation of a provision of a law, regulation.
contract, grant, cooperative agreement or other agreement or document governing the
expenditure of funds.
2. Costs questioned because, at the time of the audit, they were not supported by ade-
quate documentation and/or had not been approved by responsible program officials.
3. Costs questioned because they were not necessary or not reasonable.
Recommendations
We recommended that EPA Region 9 require ADEQ to:
• Establish procedures to allocate all employee holiday and leave costs in
accordance with Federal regulations.
• Reconcile total payroll costs per LARS to total payroll costs per the
State payroll system.
• Develop, implement and monitor timekeeping procedures to make sure
that payroll costs charged to the cooperative agreements are consistent
with the employee time sheets, and employees submit time sheets on
time.
• Develop procedures to monitor its intergovernmental agreement with
the Arizona Attorney General's office, and to review and analyze the
monthly activity reports.
• Establish and receive approval of a valid usage rate to allocate capital
expenditure costs to the eleven sites, 'and maintain appropriate records
of usage for equipment and services.
• Revise its LOG drawdown procedures to limit requests to three days'
needs, incjude supporting documentation for each drawdown request,
and to review drawdown requests for correct and justified amounts
according to the EPA Letter-of-Credit Users Manual.
Refund the excess cash balance of $167,252.
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EPA Offirce of the Inspector General Annual Suoerfund Report to the Congress for Fiscal 1992 13
• Develop and implement procedures for recording the receipt of capital
assets according to Federal regulations.
• Develop and implement effective procedures to segregate the
purchasing and receiving of goods.
We also recommended that EPA Region 9 withhold all Superfund
cooperative agreement payments for the State of Arizona if ADEQ did not
implement the above recommendations within 90 days after issuance of our
audit report.
Agency Response
In response to our audit report, Region 9 indicated:
• ADEQ had established an equitable system for allocating holiday and
vacation time.
• It required ADEQ to establish an equitable system for charging sick
leave.
• ADEQ had reconciled payroll source documents to the accounting
system and submitted revised Financial Status Reports for the
cooperative agreements. Region 9 staff reviewed the reconciliations
and found them acceptable.
• ADEQ had implemented a new labor distribution system addressing
most of the timekeeping concerns.
• ADEQ had developed procedures to monitor its intergovernmental
agreement. Region 9 staff reviewed the procedures and their
implementation, and found them acceptable.
• ADEQ had removed capital costs from the multi-site cooperative
agreement, and would develop a usage rate to be submitted to Region
9 for approval.
• ADEQ now followed proper LOG drawdown procedures.
• It had approved an ADEQ cost allocation plan covering costs that had
been excess cash.
• It had reviewed ADEQ's draft procedures for tracking capital assets and
its new inventory tracking system.
• It required ADEQ to submit to Region 9 procedures to segregate the
purchasing and receiving of goods.
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EPA Offirce of the Inspector General Annual Superfund Report to the Congress for Fiscal 1992 14
• It would withhold all Superfund cooperative agreement payments to
ADEQ if ADEQ did not fully comply with the audit recommendations by
June 30, 1993.
CALIFORNIA STATE WATER RESOURCES CONTROL BOARD
Scope and Objectives
The California State Controller performed on our behalf an interim audit of a
cooperative agreement awarded to the California State Water Resources
Control Board (SWRCB) to collect local data, assist in community relations,
provide technical assistance to EPA and support the search for potentially
responsible parties for the San Gabriel Valley site. Our audit objectives were to
determine:
a. The adequacy of SWRCB's accounting and financial management system to
meet Superfund management and recordkeeping guidance;
b. The eligibility of costs claimed through September 30, 1990; and
c. The adequacy of SWRCB's program oversight functions in accordance with
provisions of the cooperative agreement, and applicable State and Federal
laws and regulations.
Finding
The costs claimed fairly represented the financial information in accordance
with the financial provisions of the cooperative agreement. Since we found no
deficiencies, we made no recommendations and did not require the Agency to
respond to our report.
FINANCIAL RESULTS OF AUDIT
Amount audited
Amount accepted
Ineligible costs1
Unsupported costs2
Unnecessary/unreasonable costs3
Federal Share || Total Costs
$945,937
945,937
0
0
0
$945,937
945,937
0
0
0
1. Costs questioned because of an alleged violation of a provision of a law, regulation,
contract, grant, cooperative agreement or other agreement or document governing the
expenditure of funds.
2. Costs questioned because, at the time of the audit, they were not supported by ade-
quate documentation and/or had not been approved by responsible program officials.
3. Costs questioned because they were not necessary or not reasonable.
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EPA Offirce of the Inspector General Annual Suoerfund Report to the Congress for Fiscal 1992—15
IDAHO DEPARTMENT OF HEALTH AND WELFARE
Scope and Objectives
We contracted with an IPA firm to perform an interim audit of two
cooperative agreements awarded to the Idaho Department of Health and
Welfare (IDHW) for remedial activities at the Bunker Hill site, management
assistance for Federal-lead sites and the identification and ranking of hazardous
waste sites. Our audit objectives were to determine:
a. The reasonableness, allocability and allowability of the costs claimed;
b. IDHW's compliance with provisions of the cooperative agreements and
applicable EPA regulations and instructions; and
c. The adequacy, effectiveness and reliability of the accounting and
management controls exercised by IDHW in administering the cooperative
agreements.
The audit covered costs claimed by IDHW from January 15, 1985 through
December 30, 1990.
Findings
1. IDHW Needed to Allocate Leave Equitably
IDHW did not have established written procedures to allocate holiday and
leave costs equitably to cost objectives as required by Federal regulations.
IDHW charged employee holiday and leave costs as direct costs to projects
worked on during the previous pay period, or whatever the employee's
supervisor considered reasonable. We questioned $803,237 of personnel,
fringe benefit and related indirect costs as unsupported.
2. IDHW Needed to Improve Its Contract Award Procedures
IDHW did not follow Federal procurement requirements in the award of a
contract. IDHW awarded the contract to one contractor although it evaluated
another as more qualified. Although IDHW certified that its procurement
system met Federal requirements, we found these instances of non-compliance:
IDHW had no written justification documenting its selection of a less qualified
contractor; IDHW's procurement policies did not require negotiations with best
qualified offerers before award of a contract; and IDHW did not provide the
best qualified offerer an opportunity to provide additional information or change
its proposal before awarding the contract. We questioned $1,935,354 of
contractual service costs as unsupported due to the deficiencies in this contract
award.
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EPA Offirce of the Inspector General Annual Superfund Report to the Congress for Fiscal 1992 16
3. IDHW Failed to Follow Federal Regulations on Amending Contracts
IDHW did not perform cost and price analysis as required by Federal
regulations in awarding contract amendments worth more than $10,000. We
questioned $275,038 as unsupported for contract amendments of more than
$10,000.
4. IDHW's Letter of Credit Procedures Needed Improvement
IDHW's Letter-of-Credit (LOO procedures did not meet Federal
requirements. IDHW maintained excessive cash balances and requested
drawdowns that were not directly related and closely timed to actual cash
disbursements needs.
5. IDHW's Property Management System Needed Improvement
IDHW's property management system did not account for all equipment
purchased under one cooperative agreement. Equipment purchases were not
properly reported and entered into the inventory system.
FINANCIAL RESULTS OF AUDIT
Amount audited
Amount accepted
Ineligible costs1
Unsupported costs2
Unnecessary/unreasonable costs3
Federal Share
$4,055,181
1,041,552
0
3,013,629
0
Total Costs
$4,055,181
1,041,552
0
3,013,629
0
1. Costs questioned because of an alleged violation of a provision of a law, regulation,
contract, grant, cooperative agreement or other agreement or document governing the
expenditure of funds.
2. Costs questioned because, at the time of the audit, they were not supported by ade-
quate documentation and/or had not been approved by responsible program officials.
3. Costs questioned because they were not necessary or not reasonable.
Recommendations
We recommended that EPA Region 10:
• Require IDHW to:
o Establish procedures to allocate all employee holiday and leave
costs according to Federal regulations;
o Provide documentation to support the award of a contract to a
contractor not evaluated as best qualified;
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EPA Offirce of the Inspector General Annual Suoerfund Report to the Congress for Fiscal 1992 17
o Improve its procurement system to meet Federal requirements;
o Revise its Automated Clearing House (the new LOG system)
drawdown procedures to limit requests to three days' needs,
include documentation supporting drawdown requests, and review
requests for correct and justified amounts; and
o Reconcile its equipment purchases under Superfund cooperative
agreements to its property management system, and maintain
inventory records following its property management policies and
procedures.
• Advise IDHW that the costs questioned were disallowed for Federal
participation.
Agency Response
In response to our audit report, EPA Region 10 stated it:
• Directed IDHW to develop and implement an equitable system for
allocating leave costs, but did not disallow any costs associated with
this finding because benefit was derived from the work done by IDHW
and there are no defined criteria for what is equitable.
• Found that IDHW's contract award was consistent with Federal
regulations, and therefore did not disallow any costs associated with
this finding.
• Directed IDHW to perform cost and price analysis on all future contract
actions and fully document all procurement actions to show compliance
with Federal regulations.
• Directed IDHW to review its LOG procedures to make sure they are
consistent with new requirements, and spot check its cash balances to
make sure they fall within the three-day reserve requirement.
• Directed IDHW to perform a complete physical inventory of all
equipment purchased under the two cooperative agreements and
submit the inventory to EPA.
• Directed IDHW to repay EPA $275,038 in disallowed costs as a result
of the deficiencies in awarding contract amendments.
IDHW appealed the finding on contract amendments and EPA is considering
that appeal.
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EPA Offirce of the Inspector General Annual Suoerfund Report to the Congress for Fiscal 1992 18
LOS ANGELES DEPARTMENT OF WATER AND POWER
Scope and Objectives
The California State Controller performed on our behalf an interim audit of a
cooperative agreement awarded to the Los Angeles Department of Water and
Power (LADWP) for remedial activities at the San Fernando Valley site. Our
audit objectives were to determine the:
a. Adequacy of the LADWP's accounting and financial management system to
meet Superfund management and recordkeeping guidance;
b. Eligibility of costs claimed through September 30, 1990; and
c. Adequacy of the LADWP's program oversight functions according to
provisions of the cooperative agreements, and applicable State and Federal
laws and regulations.
The audit covered costs claimed by LADWP from March 6, 1986 through
September 30, 1990.
Findings
1. LADWP's Management of Site Health and Safety Plan Was Inadequate
LADWP did not adequately monitor implementation of the health and safety
plan that was a specific condition of the cooperative agreement. We found
indications of improper storage of potentially contaminated soil, unlocked and
easily accessible water storage tanks used for storing potentially contaminated
ground water, and no signs to warn the public of potential health hazards.
2. LADWP Needed Improved Financial Management Procedures
LADWP had not established financial management procedures needed to
administer the cooperative agreement effectively and its financial management
system did not comply with Federal regulations or the EPA State Superfund
Financial Management and Recordkeeping Guidance. Deficiencies included:
• No established centralized site-specific recordkeeping system;
• No established procedure for periodically reviewing and comparing
expenditures between the records of the Accounting and Superfund
Units.
• Inadequate separation of duties between Financial Status Report (FSR)
preparation and reimbursement activities.
• No procedures in place to verify information contained on Minority
Business Enterprise contractor's self-certification forms.
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EPA Offirce of the Inspector General Annual Suoerfund Report to the Congress for Fiscal 1992 19
• No written procedures for the FSR process, or outlining the
responsibilities of personnel involved in the process.
• No written procedures for contract monitoring.
• Failure to comply with repprting requirements included in the special
conditions of the cooperative agreement.
3. LADWP Omitted Important Subcontract Clause
LADWP omitted the required Privity of Subagreements clause from several
engineering subagreements, thus exposing EPA to possible future lawsuits. We
therefore questioned $4,354,690 of contract costs as unreasonable.
4. LADWP Claimed Ineligible Costs
LADWP claimed $2,321,195 of ineligible costs: $1,185,421 for supervision
and engineering costs claimed based on allocation rather than actual costs;
$805,710 for unallowable force account costs; $287,450 for contract retention
amounts claimed but not paid; $42,019 for contract storage costs beyond the
EPA approved amounts; and $595 for training expenses not approved by EPA.
FINANCIAL RESULTS OF AUDIT
Amount audited
Amount accepted
Ineligible costs1
Unsupported costs2
Unnecessary/unreasonable costs3
Federal Share
$8,583,891
1,908,006
2,321,195
0
4,354,690
Total Costs
$8,583,891
1,908,006
2,321,195
0
4,354,690
1. Costs questioned because of an alleged violation of a provision of a law, regulation,
contract, grant, cooperative agreement or other agreement or document governing the
expenditure of funds.
2. Costs questioned because, at the time of the audit, they were not supported by ade-
quate documentation and/or had not been approved by responsible program officials.
3. Costs questioned because they were not necessary or not reasonable.
Recommendations
We recommended that EPA Region 9:
• Require LADWP to comply with the health and safety plan. EPA should
review site problems and take needed administrative action.
• Review the LADWP self-monitoring program.
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EPA Offirce of the Inspector General Annual Superfund Report to the Congress for Fiscal 1992 20
• Have LADWP develop and implement competent inspection instructions
and guidelines and increase the frequency of site inspections.
• Require that training be provided to LADWP engineers and inspectors
on their oversight responsibilities and action to be taken.
• Have appropriate warning and information signs posted to inform the
public of the potential harm from intruding onto the sites.
• Have LADWP continue its reconstruction efforts to establish a complete
central filing system for site-specific files.
• Have LADWP management establish procedures for periodic review and
comparison of expenditures between the Accounting Unit reports and
Superfund Unit cost data to make sure the Superfund Unit has current,
complete, and accurate information and recorded information is
accurate.
• Have the LADWP segregate its FSR preparation process and
reimbursement activities to more than one individual.
• Have LADWP verify the information on the Minority Business
Enterprises' self-certifications.
• Have LADWP develop standardized desk procedures to detail each step
of the FSR preparation process and billing procedures for EPA
reimbursement.
• Have LADWP develop standardized desk procedures to detail each step
of contract monitoring.
• Have LADWP implement adequate monitoring and review procedures so
that it meets all cooperative agreement special conditions.
• Advise the LADWP that the ineligible costs questioned were disallowed
for Federal participation.
• Continue to question the unreasonable costs pending determination
that LADWP had amended its subagreements to include the Privity of
Subagreement clause.
Agency Response
In response to our audit report, Region 9 stated:
• LADWP had completed all field work under the cooperative agreement.
While it had not followed all the requirements of the health and safety
plan, there was no actual danger to the public. Any future grants
involving field work would follow an inspection checklist and EPA
would assess the need for warning signs.
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EPA Offirce of the Insoector General Annual Suoerfund Report to the Congress for Fiscal 1992 21
• Since the audit was conducted, LADWP and EPA met to review
Superfund records' maintenance requirements and LADWP had
reconciled source documents for three operable units and the
Basin wide remedial investigation.
• It required LADWP to establish procedures for periodic review and
comparison of expenditures between the Accounting Unit reports and
the Superfund Unit costs data.
• The person preparing the FSR no longer signed it.
• The Region concurred with the recommendation that LADWP verify the
information on the Minority Business Enterprises' self-certifications, and
was satisfied with LADWP's response.
• LADWP had submitted written desk procedures describing the FSR
preparation process and responsibilities of the respective personnel, and
EPA had reviewed and accepted them.
• EPA continued to classify allocated costs charged as direct costs as
ineligible pending submission by LADWP of evidence that the cognizant
audit group has approved the method of charging costs.
• LADWP had stopped claiming contract retention amounts until they
were paid. Since the questioned costs were released to the contractors
after the audit report was issued, the costs were now eligible.
However, EPA charged LADWP interest for the time between EPA
payments to LADWP and the release of the retention costs.
• LADWP withdrew the claim for the ineligible training class.
• EPA felt that the excess storage container costs were reasonable
because of the practical difficulty in obtaining prior EPA approval and
because the cost involved rebudgeting rather than exceeding the
budget.
• One LADWP contract contained the required privity clause and the
other contract had no claims filed during the period allowed by
California law.
• EPA determined that $2,279,176 questioned by the audit was
ineligible, of which LADWP had made corrections covering $265,461.
EPA required LADWP to repay the remaining $2,013,715.
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EPA Offirce of the Insoector General Annual Suoerfund Report to the Congress for Fiscal 1992 22
NEW JERSEY DEPARTMENT OF ENVIRONMENTAL PROTECTION - BURNT
FLY BOG
Scope and Objectives
We contracted with an I PA firm to perform an interim audit of a cooperative
agreement awarded to the New Jersey Department of Environmental Protection
(NJDEP) for remedial activities at the Burnt Fly Bog site. Our audit objectives
were to determine:
a. The adequacy, effectiveness and reliability of procurement, accounting and
management controls exercised by the State in administering the
cooperative agreement;
b. The State's compliance with provisions of the cooperative agreement and
applicable Federal regulations and instructions;
c. The reasonableness, allocability and allowability of costs claimed under the
cooperative agreement; and
d. Whether NJDEP followed Letter-of-Credit drawdown requirements.
The audit covered costs claimed by NJDEP from December 7, 1983 to
June 30, 1989.
Findings
1. NJDEP Did Not Submit Financial Status Reports (FSRs) Timelv
NJDEP did not submit an FSR within 90 days after completion of an activity
as required by the cooperative agreement.
2. Project Was Delayed
There was a delay of about a year in starting remedial work. Part of the
delay was due to the time required to modify and approve contracts. However,
poor performance by the contractor was the principal cause of delays.
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EPA Offirce of the Inspector General Annual Suoerfund Report to the Congress for Fiscal 1992 23
FINANCIAL RESULTS OF AUDIT
I Federal Share || Total Costs
Amount audited
Amount accepted
Ineligible costs1
Unsupported costs2
Unnecessary/unreasonable costs3
$15,601,140
15,601,140
0
0
0
$17,102,766
17,102,766
0
0
0
1. Costs questioned because of an alleged violation of a provision of a law, regulation,
contract, grant, cooperative agreement or other agreement or document governing the
expenditure of funds.
2. Costs questioned because, at the time of the audit, they were not supported by ade-
quate documentation and/or had not been approved by responsible program officials.
3. Costs questioned because they were not necessary or not reasonable.
Recommendation
We recommended that Region 2 require NJDEP to submit an FSR within
90 days after the completion of each activity under the cooperative agreement.
Agency Response
Because we did not view our findings as material, we did not require the
Agency to respond to our report.
NEW JERSEY DEPARTMENT OF ENVIRONMENTAL PROTECTION - COMBE
FILL NORTH
Scope and Objectives
We contracted with an IPA firm to perform an interim audit of a cooperative
agreement awarded to the New Jersey Department of Environmental Protection
(NJDEP) for remedial activities at the Combe Fill North site. The audit
objectives were to determine:
a. The adequacy, effectiveness and reliability of procurement, accounting and
management controls exercised by NJDEP in administering the cooperative
agreement;
b. NJDEP's compliance with provisions of the cooperative agreement and
applicable Federal regulations and instructions;
c. The reasonableness, allocability and allowability of costs claimed under the
cooperative agreement; and
d. Whether NJDEP followed Letter-of-Credit (LOO drawdown requirements.
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EPA Offirce of the inspector General Annual Suoerfund Report to the Congress for Fiscal 1992 24
The audit covered costs claimed by NJDEP from November 21, 1983
through June 30, 1989.
Findings
1. NJDEP Needs to Submit Financial Status Reports Timely
NJDEP did not submit its FSRs to EPA within 90 days after completion of
an activity as required by the cooperative agreement.
2. NJDEP Used Expired Term Contract
NJDEP awarded design services under an expired term contract. We
therefore questioned contractual costs of $231,809 as unsupported.
FINANCIAL RESULTS OF AUDIT
Amount audited
Amount accepted
Ineligible costs1
Unsupported costs2
Unnecessary/unreasonable costs3
Federal Share
$928,749
696,940
0
231,809
0
Total Costs
$929,125
697,316
0
231,809
0
1. Costs questioned because of an alleged violation of a provision of a law, regulation,
contract, grant, cooperative agreement or other agreement or document governing the
expenditure of funds.
2. Costs questioned because, at the time of the audit, they were not supported by ade-
quate documentation and/or had not been approved by responsible program officials.
3. Costs questioned because they were not necessary or not reasonable.
Recommendations
We recommended that EPA Region 2:
• Require NJDEP to submit FSRs upon completion of every activity
under the cooperative agreement.
• Not participate in the funding of the unsupported costs.
Agency Response
In response to the audit report, EPA Region 2 indicated it:
• Had requested that NJDEP review activities completed under the
cooperative agreement, and submit FSRs as required by the special
condition of the cooperative agreement.
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EPA Offirce of the Insnector General Annual Suoerfund Report to the Congress for Fiscal 1992 25
• Determined that the expiration of the term contract did not render
the contract invalid and therefore reinstated the questioned costs.
NEW JERSEY DEPARTMENT OF ENVIRONMENTAL PROTECTION - COMBE
FILL SOUTH
Scope and Objectives
We contracted with an IPA firm to perform an interim audit of a cooperative
agreement awarded to the New Jersey Department of Environmental Protection
(NJDEP) for remedial activities at the Combe Fill South site. The audit
objectives were to determine:
a. The adequacy, effectiveness and reliability of procurement, accounting and
management controls exercised by NJDEP in administering the cooperative
agreement;
b. NJDEP's compliance with provisions of the cooperative agreement and
applicable Federal regulations and instructions;
c. The reasonableness, alienability and allowability of costs claimed under the
cooperative agreement; and
d. Whether NJDEP followed Letter-of-Credit (LOG) drawdown requirements.
The audit covered costs claimed by NJDEP from December 23, 1983
through June 30, 1989.
Findings
1. NJDEP Needed to Submit Financial Status Reports Timelv
NJDEP did not submit its Financial Status Reports (FSR) to EPA within 90
days after completion of an activity as required by a special condition of the
cooperative agreement.
2. Region 2 Needed to Monitor NJDEP's Compliance with Progress Reports
Requirement
Before 1988 NJDEP submitted no quarterly progress reports to EPA as
required by the cooperative agreement. NJDEP took corrective action after this
was reported in a prior report on another site.
3. NJDEP Used Expired Term Contract
NJDEP awarded design services under an expired term contract. We
therefore questioned contractual costs of $92,566 as unsupported.
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EPA Offirce of the Inspector General Annual Suoerfund Report to the Congress for Fiscal 1992 26
FINANCIAL RESULTS OF AUDIT
Amount audited
Amount accepted
Ineligible costs1
Unsupported costs2
Unnecessary/unreasonable costs3
Federal Share
$1,363,398
1,270,832
0
92,566
0
Total Costs
$1,363,398
1,270,832
0
92,566
0
1. Costs questioned because of an alleged violation of a provision of a law, regulation,
contract, grant, cooperative agreement or other agreement or document governing the
expenditure of funds.
2. Costs questioned because, at the time of the audit, they were not supported by ade-
quate documentation and/or had not been approved by responsible program officials.
3. Costs questioned because they were not necessary or not reasonable.
Recommendations
We recommended that EPA Region 2:
• Require NJDEP to submit an FSR upon completion of each activity
under the cooperative agreement.
• Monitor NJDEP's compliance with the quarterly progress reports
requirement.
• Not participate in the funding of the unsupported costs.
Agency Response
In response to the audit report, EPA Region 2 indicated it:
• Requested that NJDEP review activities completed under the
cooperative agreement, and submit FSRs as required by the special
condition of the cooperative agreement.
• Had monitored and would continue to monitor NJDEP's compliance
with the quarterly progress reports requirements.
• Determined that the expiration of the term contract did not render
the contract invalid and therefore reinstated the questioned costs.
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EPA Offirce of the Inspector General Annual Suoerfund Report to the Congress for Fiscal 1992 27
NEW JERSEY DEPARTMENT OF ENVIRONMENTAL PROTECTION -
FLORENCE LAND RECONTOURING, INC. LANDFILL
Scope and Objectives
We contracted with an IPA firm to perform an interim audit of a cooperative
agreement awarded to the New Jersey Department of Environmental Protection
(NJDEP) for remedial activities at the Florence Land Recontouring, Inc. Landfill
site. The audit objectives were to determine:
a. The adequacy, effectiveness and reliability of procurement, accounting and
management controls exercised by NJDEP in administering the cooperative
agreement;
b. NJDEP's compliance with provisions of the cooperative agreement and
applicable Federal regulations and instructions;
c. The reasonableness, alienability and allowability of costs claimed under the
cooperative agreement; and
d. Whether NJDEP followed Letter-of-Credit (LOO drawdown requirements.
The audit covered costs claimed by NJDEP from March 28, 1984 through
June 30, 1989.
Findings
1. NJDEP Needs to Submit Financial Status Reports Timely
NJDEP did not submit its FSRs to EPA within 90 days after completion of
an activity as required by the cooperative agreement.
2. NJDEP Used Expired Term Contract
NJDEP awarded design services under an expired term contract. We
therefore questioned contractual costs of $237,748 as unsupported.
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EPA Offirce of the Insoector General Annual Suoerfund Report to the Congress for Fiscal 1992 28
FINANCIAL RESULTS OF AUDIT
Amount audited
Amount accepted
Ineligible costs1
Unsupported costs2
Unnecessary/unreasonable costs3
Federal Share
$906,134
668,386
0
237,748
0
Total Costs
$906,134
668,386
0
237,748
0
1. Costs questioned because of an alleged violation of a provision of a law, regulation.
contract, grant, cooperative agreement or other agreement or document governing the
expenditure of funds.
2. Costs questioned because, at the time of the audit, they were not supported by ade-
quate documentation and/or had not been approved by responsible program officials.
3. Costs questioned because they were not necessary or not reasonable.
Recommendations
We recommended that EPA Region 2:
• Require NJDEP to submit FSRs upon completion of every activity
under the cooperative agreement.
• Not participate in the funding of the unsupported costs.
Agency Response
In response to the audit report, EPA Region 2 indicated it:
• Had requested that NJDEP review activities completed under the
cooperative agreement, and submit FSRs as required by the special
condition of the cooperative agreement.
• Determined that the expiration of the term contract did not render
the contract invalid and therefore reinstated the questioned costs.
NEW JERSEY DEPARTMENT OF ENVIRONMENTAL PROTECTION - GEMS
LANDFILL
Scope and Objectives
We contracted with an IPA firm to perform an interim audit of a cooperative
agreement awarded to the New Jersey Department of Environmental Protection
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EPA Offirce of the Inspector General Annual Sunerfund Report to the Congress for Fiscal 1992 29
(NJDEP) for remedial activities at the GEMS Landfill site. Our audit objectives
were to determine:
a. The adequacy, effectiveness and reliability of procurement, accounting and
management controls exercised by the State in administering the
cooperative agreement;
b. The State's compliance with provisions of the cooperative agreement and
applicable Federal regulations and instructions;
c. The reasonableness, alienability and allowability of costs claimed under the
cooperative agreement; and
d. Whether NJDEP followed Letter-of-Credit drawdown requirements.
The audit covered costs claimed by NJDEP from May 22, 1986 to June 30,
1989.
Finding
NJDEP Claimed Unsupported Costs
NJDEP claimed $28,271 ($14,135 Federal share) of construction costs
using the prohibited multiplier method of compensation.
FINANCIAL RESULTS OF AUDIT
Amount audited
Amount accepted
Ineligible costs1
Unsupported costs2
Unnecessary/unreasonable costs3
Federal Share
$726,422
$712,287
0
14,135
0
Total Costs
$1,452,844
1,424,573
0
28,271
0
1. Costs questioned because of an alleged violation of a provision of a law, regulation,
contract, grant, cooperative agreement or other agreement or document governing the
expenditure of funds.
2. Costs questioned because, at the time of the audit, they were not supported by ade-
quate documentation and/or had not been approved by responsible program officials.
3. Costs questioned because they were not necessary or not reasonable.
Recommendation
We recommended that EPA Region 2 not participate in the funding of the
unsupported costs.
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EPA Offirce of the Inspector General Annual Suoerfund Report to the Congress for Fiscal 1992 30
Agency Response
In response to the audit report, EPA Region 2 obtained supporting
documentation from NJDEP on its use of the multiplier method, and determined
that NJDEP did not violate applicable regulations. The Region therefore found
the questioned costs allowable.
NEW JERSEY DEPARTMENT OF ENVIRONMENTAL PROTECTION - PRICE'S
LANDFILL
Scope and Objectives
We contracted with an IPA firm to perform an interim audit of a cooperative
agreement awarded to the New Jersey Department of Environmental Protection
(NJDEP) for remedial activities at the Price's Landfill site. Our audit objectives
were to determine:
a. The adequacy, effectiveness and reliability of procurement, accounting and
management controls exercised by the State in administering the
cooperative agreement;
b. NJDEP's compliance with provisions of the cooperative agreement and
applicable Federal regulations and instructions;
c. The reasonableness, alienability and allowability of costs claimed under the
cooperative agreement; and
d. Whether NJDEP followed Letter-of-Credit drawdown requirements.
The audit covered costs claimed by NJDEP from June 18,1982 to
June 30, 1989.
Finding
NJDEP Claimed Unsupported Costs
NJDEP claimed $741,429 in unsupported costs for design services
awarded under an expired term contract.
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EPA Offirce of the Inspector General Annual Suoerfund Report to the Congress for Fiscal 1992 31
FINANCIAL RESULTS OF AUDIT
Amount audited
Amount accepted
Ineligible costs1
Unsupported costs2
Unnecessary/unreasonable costs3
Federal Share
$4,927,304
4,185,875
0
741,429
0
Total Costs
$5,294,983
4,553,554
0
741 ,429
0
1. Costs questioned because of an alleged violation of a provision of a law, regulation,
contract, grant, cooperative agreement or other agreement or document governing the
expenditure of funds.
2. Costs questioned because, at the time of the audit, they were not supported by ade-
quate documentation and/or had not been approved by responsible program officials.
3. Costs questioned because they were not necessary or not reasonable.
Recommendation
We recommended that EPA Region 2 not participate in the funding of the
unsupported costs.
Agency Response
In response to the audit report, EPA Region 2 reviewed the contracting
issues. The Region found that NJDEP's substitution of another term contract
for the expired contract was an immaterial defect. It therefore allowed the
questioned costs.
NEW JERSEY DEPARTMENT OF ENVIRONMENTAL PROTECTION - SYNCON
RESINS
Scope and Objectives
We contracted with an IPA firm to perform an interim audit of a cooperative
agreement awarded to the New Jersey Department of Environmental Protection
(NJDEP) for remedial activities at the Syncon Resins site. The audit objectives
were to determine:
a. The adequacy, effectiveness and reliability of procurement, accounting and
management controls exercised by NJDEP in administering the cooperative
agreement;
b. NJDEP's compliance with provisions of the cooperative agreement and
applicable Federal regulations and instructions;
c. The reasonableness, allocability and allowability of costs claimed under the
cooperative agreement; and
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EPA Offirce of the Inspector General Annual Suoerfund Report to the Congress for Fiscal 1992 32
d. Whether NJDEP followed Letter-of-Credit (LOG) drawdown requirements.
The audit covered costs claimed by NJDEP from December 20, 1982
through June 30, 1989.
Findings
1. NJDEP Needs to Submit Financial Status Reports Timely
NJDEP did not submit its FSRs to EPA within 90 days after completion of
an activity as required by the cooperative agreement.
2. NJDEP Used Expired Term Contract
NJDEP awarded design services under an expired term contract. We
therefore questioned contractual costs of $584,021 as unsupported.
FINANCIAL RESULTS OF AUDIT
Amount audited
Amount accepted
Ineligible costs1
Unsupported costs2
Unnecessary/unreasonable costs3
Federal Share
$3,423,248
2,839,227
0
584,021
0
Total Costs
$3,650,486
3,066,465
0
584,021
0
1. Costs questioned because of an alleged violation of a provision of a law, regulation,
contract, grant, cooperative agreement or other agreement or document governing the
expenditure of funds.
2. Costs questioned because, at the time of the audit, they were not supported by ade-
quate documentation and/or had not been approved by responsible program officials.
3. Costs questioned because they were not necessary or not reasonable.
Recommendations
We recommended that EPA Region 2:
• Require NJDEP to submit FSRs upon completion of every activity
under the cooperative agreement.
• Not participate in the funding of the unsupported costs.
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EPA Offirce of the Inspector General Annual Suoerfund Report to the Congress for Fiscal 1992 33
Agency Response
In response to the audit report, EPA Region 2 indicated it:
• Had requested that NJDEP review activities completed under the
cooperative agreement, and submit FSRs as required by the special
condition of the cooperative agreement.
• Determined that the expiration of the term contract did not render
the contract invalid and therefore reinstated the questioned costs.
NORTH CAROLINA DEPARTMENT OF ENVIRONMENT, HEALTH AND
NATURAL RESOURCES
Scope and Objectives
We performed an interim audit of the costs claimed under two cooperative
agreements awarded to the North Carolina Department of Environment, Health,
and Natural Resources (DEHNR) to identify and rank hazardous waste sites, and
to produce a capacity assurance report. The audit objective was to determine
the reasonableness and allow/ability of costs claimed. The audit covered costs
claimed by DEHNR from July 1, 1989 to March 31, 1991, for one cooperative
agreement and from October 1, 1988 to September 30, 1990, for the other.
Findings
1. DEHNR Failed to Comply With Federal Letter-Of-Credit Regulations
DEHNR made letter-of-credit drawdowns in advance rather than as it
incurred costs, as required by Federal regulations.
2. DEHNR Failed to Comply With Federal Record Keeping Regulations
DEHNR did not comply with Federal regulations that required the
maintenance of verifiable records to support the matching contribution. It did
not maintain time sheets to support the salary cost claimed as a 10 percent
matching contribution on the cooperative agreement.
3. DEHNR Failed to Properly Account for Cost Sharing
DEHNR maintained separate accountability for project expenses paid for
with EPA funds and DEHNR funds by designating expenses as 100 percent EPA
expenses or as 100 percent DEHNR. This was inconsistent with the intent of
the cooperative agreement that EPA and DEHNR share all eligible expenses
based on the sharing percentage specified in the cooperative agreement.
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EPA Offirce of the Inspector General Annual Superfund Report to the Congress for Fiscal 1992 34
4. DEHNR Claimed Unsupported Costs
DEHNR claimed $14,203 for expenses not yet incurred and $7,714 for
undocumented salary expenses.
FINANCIAL RESULTS OF AUDIT
Amount audited
Amount accepted
Ineligible costs1
Unsupported costs2
Unnecessary/unreasonable costs3
Federal Share
$2,319,044
2,299,320
0
19,724
0
Total Costs
$2,335,358
2,313,441
0
21,917
0
1. Costs questioned because of an alleged violation of a provision of a law, regulation,
contract, grant, cooperative agreement or other agreement or document governing the
expenditure of funds.
2. Costs questioned because, at the time of the audit, they were not supported by ade-
quate documentation and/or had not been approved by responsible program officials.
3. Costs questioned because they were not necessary or not reasonable.
Recommendations
We recommended that EPA Region 4:
• Not allow DEHNR to make any more drawdowns for the Wastewater
Reduction Resource Center until it expended an $82,200 advance, and
require DEHNR to make no further drawdowns until it incurs the costs.
• Require DEHNR to document all time charges to EPA projects by time
sheets. The time sheets should be certified by the employee and
approved by a supervisory official.
• Require DEHNR to maintain uniform accountability for all eligible project
expenses and recognize that EPA and DEHNR must share each expense
based on the cost sharing percentages specified in the cooperative
agreement.
• Adjust the allowable costs according to our determination.
Agency Response
In response to our audit report, EPA Region 4 stated:
DEHNR had used the cash advance for project purposes and had agreed
to draw down future funds as it incurs costs.
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EPA Offirce of the Inspector General Annual Superfund Report to the Congress for Fiscal 1992 35
• DEHNR agreed that the questioned salary expenses were not supported
by time sheets and requested the substitution of the cost of office
space for the employees as their in-kind contribution. EPA found such
a charge not in accordance with Federal requirements, and therefore
determined that the costs questioned by the auditors were unallowable.
• It required DEHNR to use a system that prepares FSRs that claim only
the Federal share of costs incurred.
• It required DEHNR to refund EPA's overpayment to it.
NORTH CAROLINA STATE UNIVERSITY
Scope and Objective
We performed an interim audit of a grant awarded to North Carolina State
University (NCSU) for a Hazardous Substance Research Center serving EPA
Regions 4 and 6. Our audit objective was to determine the eligibility of the
grantee's claimed costs. The audit covered costs claimed by NCSU from
February 27, 1989 to April 30, 1991.
Findings
1. NCSU Claimed Costs for 39 Unrelated Projects
NCSU claimed costs for 69 projects, of which 39 were not related to the
grant. NCSU conducted these projects under contracts and grants provided by
third parties. We questioned as ineligible the $976,233 claimed for these
projects.
2. NCSU Claimed Excess Indirect Costs
NCSU claimed $115,115 for indirect costs, although the grant provided
only for $15,332. We questioned as ineligible the $99,783 difference.
3. Director Charged Time Devoted to Other Efforts
NCSU's application for the grant stated the Director would devote 100
percent of his effort to the grant. The solicitation required that the Director
devote at least 50 percent of his effort to the grant. The Director charged the
grant 95-97 percent of his effort for three semesters during which he taught
three courses. The Director charged instruction for 61 percent of his effort the
semester before the grant was awarded, and 62 percent for the semester the
grant was awarded. He instructed the same courses during all five semesters.
We therefore estimated that he should have charged about 61 percent of his
effort to instruction during the grant period. We questioned as ineligible
$97,763 of claimed costs associated with the Director's effort.
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EPA Offirce of the Inspector General Annual Suoerfund Report to the Congress for Fiscal 1992 36
4. 12 Projects Lacked Technical Support
We asked EPA's Office of Exploratory Research to review the technical
eligibility of the 30 projects we determined were grant projects. That Office
determined that 12 of the projects were unsupported. We questioned as
unsupported the $898,206 claimed for those projects not otherwise questioned
as ineligible.
5. NCSU's Internal Controls Inadequate
NCSU's internal controls were not adequate to identify and report claimed
costs properly under the grant. NCSU's controls could not identify the projects
associated with the grant. NCSU's financial records only associated 30 of the
69 projects claimed with the grant. NCSU's controls also were not sufficient to
prepare an accurate and complete FSR. The grant only required a final FSR
after the grant ended. We asked NCSU to prepare an FSR for the audit period.
NCSU provided an FSR containing significant math errors, duplicate costs and
projected costs. The cost schedules NCSU provided to support the FSR had
inconsistent formats and contained significant encumbered and unclassified
costs. During the audit, NCSU significantly revised the cost schedules five
times.
FINANCIAL RESULTS OF AUDIT
Amount audited
Amount accepted
Ineligible costs1
Unsupported costs2
Unnecessary/unreasonable costs3
Federal Share
$2,671,684
1,162,657
854,863
654,164
0
Total Costs
$3,668,384
1,596,399
1,173,779
898,206
0
1. Costs questioned because of an alleged violation of a provision of a law, regulation,
contract, grant, cooperative agreement or other agreement or document governing the
expenditure of funds.
2. Costs questioned because, at the time of the audit, they were not supported by ade-
quate documentation and/or had not been approved by responsible program officials.
3. Costs questioned because they were not necessary or not reasonable.
Recommendations
We recommended that EPA:
• Require NCSU to adopt and implement sufficient internal controls to
identify and monitor all claimed costs adequately, and maintain
continuous compliance with cost-sharing requirements.
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EPA Offirce of the inspector General Annual Superfund Report to the Congress for Fiscal 1992 37
• Adjust the grant costs according to our determination, and recover
excess EPA funds paid to NCSU.
Agency Response
This audit had not been resolved as of August 30, 1993.
PUERTO RICO ENVIRONMENTAL QUALITY BOARD - CORE PROGRAM
Scope and Objectives
We contracted with an IPA firm to perform an interim audit of a cooperative
agreement awarded to the Puerto Rico Environmental Quality Board (EQB) for
core program activities. The audit objective was to determine the allowability
of the costs claimed. The audit covered costs claimed by EQB from October 1,
1983 through February 28, 1990.
Findings
1. EQB's Accounting System Needs Improvement
EQB did not prepare schedules detailing the source of some expenditures
charged to the cooperative agreement. As a result, it was unable to furnish
supporting documentation for such expenditures as equipment, travel and
supplies. We questioned $40,887 in costs not supportted by source
documentation.
2. EQB Needs More Accurate Allocation of Employee Leave Costs
EQB allocated vacation, sick and other leave to the project based on the
percentage of personnel costs charged. If the indirect cost rate does not
include vacation, sick and other leave paid through direct salaries, the project
could be overcharged for vacation, sick and other leave for a particular period.
3. EQB Used Incorrect Non-Federal Share Rate
EQB used an incorrect rate to compute the non-Federal share of project
costs. This resulted in EQB understating an EPA reimbursement claim by
$1,210.
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EPA Offirce of the Inspector General Annual Suoerfund Report to the Congress for Fiscal 1992 38
FINANCIAL RESULTS OF AUDIT
Amount audited
Amount accepted
Ineligible costs1
Unsupported costs2
Unnecessary/unreasonable costs3
Federal Share
$106,232
68,040
0
38,192
0
Total Costs
$113,515
72,628
0
40,887
0
1. Costs questioned because of an alleged violation of a provision of a law, regulation,
contract, grant, cooperative agreement or other agreement or document governing the
expenditure of funds.
2. Costs questioned because, at the time of the audit, they were not supported by ade-
quate documentation and/or had not been approved by responsible program officials.
3. Costs questioned because they were not necessary or not reasonable.
Recommendations
We recommended that EPA Region 2:
• Require EQB to prepare schedules detailing the source of all
expenditures charged to cooperative agreements.
• Require EQB to analyze and adjust the allocation of vacation, sick and
other leave to the project for each employee at the end of the year.
• Require EQB to establish adequate internal control procedures to ensure
use of the approved non-Federal and Federal share rates, and correct
the past inaccurate report.
• Review documentation which EQB has available and evaluate
whether EPA should participate in funding the unsupported costs.
Agency Response
In response to our audit report, EPA Region 2 indicated:
• EQB provided adequate documentation for the unsupported costs,
except $9,445 that EQB cancelled before receiving reimbursement from
EPA.
• It requested EQB to develop corrective actions in response to the audit
recommendations on allocation of leave costs and use of the correct
non-Federal share rates.
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EPA Offirce of the Inspector General Annual Suoerfund Report to the Congress for Fiscal 1992 39
PUERTO RICO ENVIRONMENTAL QUALITY BOARD - FOLLOW-UP
Scope and Objectives
We contracted with an IPA firm to perform a special agreed upon
procedures review of the Puerto Rico Environmental Quality Board (EQB). The
objective of the review was to determine if EQB had adequately implemented
recommendations in a 1989 report entitled Puerto Rico Environmental Quality
Board - Superfund Review and Technical Assistance prepared by Arthur Young
for Region 2. 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. EQB Needed to Continue with Revisions of Memorandum of Agreement
The Arthur Young report recommended that EQB develop a written
Memorandum of Agreement (MOA) among its Program, Finance, Administration
and Legal Offices outlining their roles and responsibilities for Superfund project
management and administration. Our follow-up review showed that the EQB
now had an MOA addressing the current roles and responsibilities of each
department, but it needed to be revised to incorporate the additional roles and
responsibilities each department will share under the Superfund program.
2. EQB Needed Procedures for Month-bv-Month Project Budgets
The Arthur Young report recommended that EQB develop procedures
requiring the establishment of month-by-month project budgets for its
cooperative agreements and the routine review of project budgets and
expenses. EQB determined it would be more feasible to implement this
recommendation after EPA awards it a site-specific cooperative agreement.
3. Policies and Procedures Needed to Be Communicated to Personnel
The Arthur Young report recommended that program management
communicate new policies and procedures effectively to program personnel.
This would include training sessions on Superfund-specific cost documentation
and recordkeeping requirements for all affected personnel. EQB stated it could
not fully implement this recommendation until EPA approved their September
1990 Status Report.
4. Further Improvements Needed for Several Implemented Recommendations
While EQB had implemented many of Arthur Young's recommendations, the
IPA firm found that EQB needed to make further improvements:
• EQB did not compare total hours reported in time distribution reports
and the hours did not agree with the standard number of hours to be
charged for the period.
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EPA Offirce of the Inspector General Annual Superfund Report to the Congress for Fiscal 1992 40
• EQB's site file documentation did not include a column to record the
check number when it makes a payment.
• EQB's contract administration procedures did not include a requirement
to supply EPA with information on minority and women's business
contractors.
• EQB had not yet selected an appropriate automated accounting system.
• EQB did not have written procedures describing the processing of
Superfund program documents so that the Treasury Department could
properly handle them.
• EQB's instructions on computing and allocating travel costs to
Superfund were not clear.
• EQB's travel authorization and expense liquidation form did not include
a line for the Superfund authorization date.
Recommendations
We recommended that EPA Region 2 require EQB to:
• Proceed with the revision of the MOA.
• Develop procedures to establish month-by-month project budgets when
EPA awards it a site-specific cooperative agreement.
• Communicate new policies and procedures effectively to personnel, and
provide training sessions once EPA approves the EQB status report and
EQB revises the MOA.
• Inform employees annually of the total minimum hours they need to
account for each month in the time distribution report.
• Compare the total hours reported monthly by each employee with the
total minimum hours to be accounted for.
• Provide a column in the site file documentation for the check number.
• Include in its contract administration procedures a requirement to
supply EPA with information on minority and women's business
contractors.
• Implement a new automated accounting system.
• Develop written procedures on processing Superfund documents for
proper Treasury Department handling.
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EPA Offirce of the Inspector General Annual Suoerfund Report to the Congress for Fiscal 1992 41
• Clarify instructions on computing and allocating travel costs to
Superfund.
• Include a line on its travel authorization and expense liquidation form
for the Superfund authorization date.
We also recommended that EPA Region 2 make a follow-up visit when it
grants EQB its first site-specific cooperative agreement to determine if its
accounting and administrative systems are adequate.
Agency Response
In response to our audit report, EPA Region 2 indicated EQB:
• Developed a written MO A among its Program, Budget and Finance,
Administration and Legal offices outlining their Superfund roles and
responsibilities, which Region 2 reviewed and found fully addressed the
audit recommendation.
• Would provide monthly variance reports by line item, comparing State
and Federal budget projections to actual expenditures, until a new
project reporting system was operational.
• Was now providing staff training on Superfund cost documentation and
recordkeeping requirements on an ongoing basis.
• Would distribute to employees an annual listing showing total hours to
be accounted for each month, and would add to its written procedures
a comparison of hours reported on time distribution reports with the
total to be accounted for each month.
• Would record check numbers in site file documentation.
• Would include in EQB Administrative Procedures the requirement to
supply EPA with minority and women's business information.
• Was developing an automated accounting system to help automate all
the accounts for the Program.
PUERTO RICO ENVIRONMENTAL QUALITY BOARD - FRONTERA CREEK
Scope and Objectives
We contracted with an IPA firm to perform an interim audit of a cooperative
agreement awarded to the Puerto Rico Environmental Quality Board (EQB) for
management assistance at the Frontera Creek site. Our audit objective was to
determine the allowability of costs claimed. The audit covered costs claimed by
EQB from December 31, 1987 to December 31, 1989.
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EPA Offirce of the Inspector General Annual Suoerfund Report to the Congress for Fiscal 1992 42
Findings
1. EQB Needs More Accurate Allocation of Employee Leave Costs
EQB allocated vacation, sick and other leave to the project based on the
percentage of personnel costs charged. If the indirect cost rate does not
include vacation, sick and other leave paid through direct salaries, the project
could be overcharged for vacation, sick and other leave for a particular period.
2. EQB Incorrectly Charged Ineligible Fringe Benefit Costs
EQB incorrectly charged to the program retirement benefits paid to
provisional employees not eligible for the retirement plan, and associated
indirect costs. We did not question these amounts because they were
immaterial.
FINANCIAL RESULTS OF AUDIT
Amount audited
Amount accepted
Ineligible costs1
Unsupported costs2
Unnecessary/unreasonable costs3
Federal Share
$19,820
19,820
0
0
0
Total Costs
$19,820
19,820
0
0
0
1. Costs questioned because of an alleged violation of a provision of a law, regulation,
contract, grant, cooperative agreement or other agreement or document governing the
expenditure of funds.
2. Costs questioned because, at the time of the audit, they were not supported by ade-
quate documentation and/or had not been approved by responsible program officials.
3. Costs questioned because they were not necessary or not reasonable.
Recommendations
We recommended that EPA Region 2 require EQB to:
• Analyze and adjust the allocation of vacation, sick and other leave to
the project for each employee at the end of the year.
• Establish adequate internal control procedures to make sure it does not
charge ineligible employees' fringe benefits to the program.
Agency Response
Because we did not view our findings as material, we did not require the
Agency to respond to our report.
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EPA Offirce of the Inspector General Annual Suoerfund Report to the Congress for Fiscal 1992 43
PUERTO RICO ENVIRONMENTAL QUALITY BOARD - SITE ASSESSMENT
PROGRAM
Scope and Objectives
We contracted with an IPA firm to perform an interim audit of a cooperative
agreement awarded to the Puerto Rico Environmental Quality Board (EQB) to
identify and rank hazardous waste sites. Our audit objective was to determine
the allowability of costs claimed. The audit covered costs claimed by EQB from
September 15, 1983 to February 28, 1990.
Finding
Costs Not Supported bv Documentation
EQB could not provide accounting records and detailed supporting
documentation for costs claimed. EQB stated it lost the working papers in the
move to another building because of Hurricane Hugo.
FINANCIAL RESULTS OF AUDIT
Amount audited
Amount accepted
Ineligible costs1
Unsupported costs2
Unnecessary/unreasonable costs3
Federal Share
$248,063
0
0
248,063
0
Total Costs
$248,063
0
0
248,063
0
1. Costs questioned because of an alleged violation of a provision of a law, regulation,
contract, grant, cooperative agreement or other agreement or document governing the
expenditure of funds.
2. Costs questioned because, at the time of the audit, they were not supported by ade-
quate documentation and/or had not been approved by responsible program officials.
3. Costs questioned because they were not necessary or not reasonable.
Recommendation
We recommended that EPA Region 2 not participate in funding the
unsupported costs.
Agency Response
This audit has not yet been resolved due to review of documentation EQB
located after the audit for the unsupported costs.
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EPA Offirce of the Inspector General Annual Suoerfund Report to the Congress for Fiscal 1992 44
WASHINGTON DEPARTMENT OF ECOLOGY
Scope and Objectives
We contracted with an I PA firm to perform a final audit of a cooperative
agreement awarded to the Washington Department of Ecology (WDOE) for
activities at a number of Superfund sites. The audit objectives were to
determine:
a. The reasonableness, allowability and allocability of the costs claimed;
b. The adequacy, effectiveness and reliability of procurement, accounting and
management controls exercised by WDOE in administering the cooperative
agreement; and
c. WDOE's compliance with applicable EPA regulations and the provisions of
the cooperative agreement.
The audit covered costs claimed by WDOE from April 9, 1984 to
October 1, 1989.
Findings
1. WDOE's Procurement Procedures Needed Improvement
WDOE did not obtain EPA approval before awarding all contracts under the
agreement, as required because its procedures did not ensure procurements
complied with Federal regulations. WDOE also (a) did not perform cost and
price analysis as required by Federal regulations, (b) awarded two cost-plus-
percentage-of-cost contracts prohibited by Federal regulations, (c) did not
obtain conflict of interest certifications from bidders or offerers as required by
the cooperative agreement on one contract, (d) did not have required
documentation in their procurement files, and (e) did not include contract
provisions for defective cost or price data in subagreements as required by
Federal regulations.
2. WDOE Needed To Allocate Employee Leave Equitably
WDOE allocated leave costs depending on the project the employees
worked on during the previous one or two months. WDOE may not have
equitably allocated leave costs since the employee may have earned the leave
while working on several projects.
3. WDOE Needed To Strengthen Its Contractor Monitoring System
WDOE did not consistently apply its policies and procedures in evaluating
contractor performance, under the terms of their contracts. Project officers did
not always prepare Performance Evaluation Reports (PERs) before WDOE paid
contractors. Additionally PERs were not sent to the fiscal office to support final
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EPA Offirce of the Inspector General Annual Suoerfund Report to the Congress for Fiscal 1992 45
payments on contractor invoices. Accordingly, WDOE could not show that
contractor payments were properly authorized.
4. WDOE's Property Management System Needed Improvement
WDOE did not consistently perform physical inventories of equipment as
required by WDOE property management requirements and Federal regulations.
Physical inventories were the responsibility of the individual program units,
which performed them only when time permitted. Without the physical
inventories, WDOE could not assure that it properly safeguarded, maintained
and used for project purposes property purchased under the cooperative
agreement.
5. WDOE Failed To Maintain Suoerfund Cost Pool Documentation
WDOE did not maintain documentation for State Motor Pool charges in the
project site files as required by Federal regulations. Without complete cost
documentation files, cost recovery efforts are hampered.
6. WDOE Claimed Ineligible Costs and Unsupported Costs
WDOE claimed ineligible costs for a cost-plus-percentage-of-costs-contract
that is unallowable under Federal regulations. WDOE also claimed unsupported
costs for (a) contractual services costs that did not have prior review and
approval, (b) direct labor costs that were not equitably allocated to cost
objectives, and (c) indirect and fringe benefits costs relating to questioned
direct labor costs.
FINANCIAL RESULTS OF AUDIT
Amount audited
Amount accepted
Ineligible costs1
Unsupported costs2
Unnecessary/unreasonable costs3
Federal Share
$3,698,784
433,103
259,541
3,006,140
0
Total Costs
$4,152,835
486,269
291,401
3,375,165
0
1 . Costs questioned because of an alleged violation of a provision of a law, regulation,
contract, grant, cooperative agreement or other agreement or document governing the
expenditure of funds.
2. Costs questioned because, at the time of the audit, they were not supported by ade-
quate documentation and/or had not been approved by responsible program officials.
3. Costs questioned because they were not necessary or not reasonable.
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EPA Offirce of the Inspector General Annual Superfund Report to the Congress for Fiscal 1992 46
Recommendations
We recommended that EPA Region 10:
• Require WDOE to improve its procurement system to meet the Federal
regulation requirements or obtain EPA's approval before awarding
contracts.
• Require WDOE to establish procedures to allocate all employee holiday
and leave costs according to Federal regulations.
• Require WDOE to comply with their established contractor performance
monitoring procedures.
• Require WDOE to install controls that ensure program units perform
physical inventories of personal property timely.
• Require WDOE to maintain all supporting documentation for State
Motor Pool charges in the project files.
• Not participate in the questioned costs, and recover funds due EPA.
Agency Response
This audit had not been resolved as of August 30, 1993, due to differences
between EPA Region 10 and the OIG that they were still seeking to resolve.
COMITE PRO-RESCATE DE LA SALUD Y EL AMBIENTE DE VEGA ALTA,
INC.
Scope and Objectives
We contracted with an I PA firm to perform a preliminary review of the
internal control structure of Comite Pro-rescate de la Salud y el Ambiente de
Vega Alta, Inc. (the Committee), as it relates to a technical assistance grant
awarded to them. Our audit objectives were to determine the adequacy,
effectiveness and reliability of the procurement, accounting and management
controls exercised by the Committee in administering the grant.
Findings
The Committee had developed an adequate internal control structure to
record, process and report grant financial transactions. However, the
Committee had not adequately documented its internal controls.
Recommendation
We recommended that EPA Region 2 continue to monitor the Committee's
progress in developing a good internal control system, including the
documentation supporting it.
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EPA Offirce of the Inspector General Annual Suoerfund Report to the Congress for Fiscal 1992 47
Agency Response
Because we did not view our findings as material, we did not require the
Agency to respond to our report.
MANAGEMENT OF REGION 7 COOPERATIVE AGREEMENTS
Scope and Objectives
We performed a survey of EPA Region 7's management of Superfund
cooperative agreements. Our survey purpose was to identify potential issues
concerning States' compliance with Superfund laws and regulations, and
States' capabilities to manage the Superfund program. We performed our
field work between May and November 1991.
Findings
1. States Needed Complete Written Suoerfund Internal Control Procedures
Iowa's Superfund personnel did not have written internal control
procedures for Superfund. Without adequate written procedures, Iowa could
not be sure it had safeguarded assets, properly recorded and accounted for
revenues and expenses, and met program objectives.
2. Consistent. Complete Files Needed to Support Cost Recovery
Missouri Superfund officials did not maintain Superfund records consistent
with Federal regulations. They did not maintain site-specific files, and their files
did not contain travel documentation or vehicle usage rates. In addition, they
were not reconciling travel expenses to employee time sheets. States need to
follow Federal regulations to ensure consistent and complete recordkeeping,
and fully safeguard EPA's ability to assemble a complete, accurate cost
recovery package timely.
Recommendations
We recommended that EPA Region 7:
• Emphasize to State Superfund management officials the value of
written internal controls and the importance of recordkeeping
requirements considered vital to EPA's cost recovery effort.
• Ensure that Iowa adequately documents the State's internal controls for
Superfund.
• Ensure that Missouri establishes timetables for compliance with Federal
recordkeeping requirements, and follow up to ensure that records are
complete and properly stored.
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EPA Offirce of the Inspector General Annual Suoerfund Report to the Congress for Fiscal 1992 48
• Include an assessment of States' compliance with internal control,
accounting and recordkeeping procedures in the Region's annual State
Consolidated Oversight Reviews.
Agency Response
In response to our draft report, EPA Region 7 stated it:
• Had addressed the importance of internal control documentation and
cost recovery procedures in 1991 Consolidated Oversight Review
reports for Iowa and Missouri.
• Held a State Superfund Workshop providing information concerning the
legal aspects of cost recovery, accounting for Superfund costs and
Superfund records management.
• Would continue to focus on internal controls during its Consolidated
Oversight Reviews.
In response to our final report, EPA Region 7 also requested that Missouri
review its recordkeeping for compliance with regulatory requirements.
MANAGEMENT OF REGION 8 COOPERATIVE AGREEMENTS
Scope and Objectives
We performed a survey of EPA Region 8's management of Superfund
cooperative agreements. Our survey purpose was to identify potential issues
concerning States' compliance with Superfund laws and regulations, and
States' capabilities to manage the Superfund program. We performed our
fieldwork between May and November 1991.
Findings
1. States Needed Complete Written Suoerfund Internal Control Procedures
North Dakota and South Dakota did not have written internal control
procedures for Superfund, and Colorado's procedures were incomplete.
Without adequate written procedures, States could not be sure they had
safeguarded assets, properly recorded and accounted for revenues and
expenses, and met program objectives.
2. Consistent. Complete Files Needed to Support Cost Recovery
North Dakota and South Dakota did not maintain Superfund records
consistent with Federal regulations. North Dakota assembled site-specific cost
documentation files annually rather than updating the files as events occurred,
and stored Superfund financial and technical files separately until site cleanup
was complete. South Dakota did not include employee time sheets in site files.
States need to follow Federal regulations to ensure consistent and complete
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EPA Offirce of the Inspector General Annual Superfund Report to the Congress for Fiscal 1992 49
recordkeeping, and fully safeguard EPA's ability to assemble a complete,
accurate cost recovery package timely.
3. Consistent. Equitable Allocation of Leave Costs Needed to Support Cost
Recovery
South Dakota's method for charging paid leave was inconsistent,
inequitable and not in compliance with mandatory Federal cost principles.
States need to establish procedures that result in a consistent and equitable
allocation of all costs, including those for employee leave, to avoid unnecessary
questioned costs and help EPA maximize cost recovery.
Recommendations
We recommended that EPA Region 8:
• Emphasize to State Superfund management officials the value of
written internal controls and the importance of recordkeeping
requirements considered vital to EPA's cost recovery effort.
• Ensure that Colorado and South Dakota adequately document State
internal controls for Superfund.
• Require South Dakota to implement acceptable methods of allocating
leave and follow up to make sure that South Dakota complies with
OMB Circular A-87.
• Include an assessment of States' compliance with internal control,
recordkeeping and leave allocation procedures in the Region's annual
State Consolidated Oversight Reviews.
Agency Response
In response to our report, EPA Region 8 indicated it:
• Had completed Management Assistance Program (MAP) reviews in
South and North Dakota, and planned MAP reviews for Utah,
Wyoming, Montana and Colorado.
• Would address the value of written procedures and controls at the next
State environmental directors meeting.
• Observed through its MAP review that South Dakota had developed
written pojicies and procedures governing most financial management
activities, including Superfund. South Dakota had agreed to:
o Implement a short-term procedure to reconcile time sheets and
travel on a sample basis before implementation of an on-line
electronic timekeeping system.
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EPA Offirce of the Inspector General Annual Suoerfund Report to the Congress for Fiscal 1992 50
o Study development and incorporation of desk-top procedures used
by another State.
o Maintain site-specific files.
• Had obtained agreement from Colorado to develop a process in the
short term to follow and set priorities, and to revise all division policies
in the long term.
• Had recommended to South Dakota several alternatives to address the
inequitable distribution of leave, and would follow up to determine
status of implementation.
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EPA Offirce of tha Inspector General Annual Suoerfund Report to the Congress for Fiscal 1992 51
REMEDIAL INVESTIGATION AND FEASIBILITY STUDY
In fiscal 1992, we issued a technical report on remedial investigation/
feasibility study (RI/FS) activities at the Koppers Texarkana site. The OIG
Technical Assistance Staff conducted this review. That report contained no
recommendations, and required no response from the Agency. We summarize
this review below.
KOPPERS TEXARKANA SITE, TEXARKANA, TEXAS
Scope and Objectives
Our review objectives for the Koppers Texarkana site in Texarkana, Texas,
were to evaluate the remedial planning process with respect to:
a. Completeness and accuracy;
b. Adherence to Agency guidelines; and
c. Technical basis for evaluating the remedial alternatives.
Our review considered all phases of the RI/FS, the Record of Decision
(ROD) and the amended ROD.
Findings
The remedial planning activities at the site were generally thorough and
consistent with NCP requirements. However, there were technical deficiencies
in the methodology used during the remedial planning process and in selecting
remediation measures. Technical deficiencies included:
• The investigation regarding the fate of underground storage tanks used
by Koppers while the site was active was inadequate.
• Characterization of the site hydrogeology was incomplete.
• The nature and extent of sediment, soil and ground water
contamination were not adequately characterized.
• Results of treatability tests indicate that the selected soil treatment
alternatives may not meet treatment goals.
• Important technical issues related to the effectiveness of the selected
ground water collection, treatment and recharge alternative were
apparently not considered. There is reason to question the ability of
the selected alternative to meet the remediation objectives in the ROD.
These deficiencies may result in delays in achieving remediation at the site
due to the need to undertake additional data gathering and analyses during
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EPA Offirce of the Inspector General Annual Superfund Report to the Congress for Fiscal 1992 52
remedial design. Yet another ROD amendment could be needed if underground
storage tanks remain for which the selected remedy did not account. Design
and implementation of the treatment systems for soil and ground water may
suffer delays if the actual sediment, soil and ground water contamination at the
site differ markedly from that presented in the remedial planning documents.
While the cost of responding to the deficiencies may escalate, the PRP is
responsible for these costs under a consent agreement.
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EPA Offirce of the Inspector General Annual Superfund Report to the Congress for Fiscal 1992 53
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 1992.
ALTERNATIVE REMEDIAL CONTRACT STRATEGY (ARCS) CONTRACTS IN
REGIONS 1.3 AND 5
Scope and Objectives
We performed an audit of the Superfund ARCS contracts in Region 3 and
special reviews of the ARCS contracts in Regions 1 and 5. Our review
objectives were to evaluate whether ARCS:
a. Accelerated site remediation by expediting site studies;
b. Improved contractor performance;
c. Increased efficiency and accountability; and
d. Program management charges were eligible, reasonable, consistent with
contract terms and not objectionable to taxpayers.
Our reviews covered the 19 ARCS contracts awarded for the 3 regions.
We examined the 90 work assignments issued in the initial 2 years of these
contracts for Fund-lead projects. We concentrated our analysis on the 68
assignments for full-scale projects such as RI/FSs, Remedial Designs and
Remedial Actions (RAs).
We issued an audit report to Region 3 and a consolidated report to the
Assistant Administrator for Solid Waste and Emergency Response and the
Acting Assistant Administrator for Administration and Resources Management.
We included the first three findings summarized below in both reports. The
fourth finding applied only to Region 3.
findings
1. Delays in Completing Work Assignments Postponed Cleanups
We found that by and large the ARCS program did not achieve its objective
of accelerating the remediation process by expediting site studies. Only 7 of
the 68 work assignments reviewed were completed as scheduled. Another 19
assignments were completed beyond their schedule. Many of the remaining 42
overdue assignments, if completed on their amended schedules, would have
exceeded EPA's goal by over a year; 11 by over 2 years. In Region 3, the chief
cause of the failure was contractor ineptitude. In Region 1, there were lesser
problems with contractor performance, and staff utilization and funding
constraints also caused delays. We found no consistent reason for the Region
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EPA Offirce of the Inspector General Annual Suoerfund Report to the Congress for Fiscal 1992 54
5 delays. Regional personnel told us delays occurred for a variety of reasons
including misdirected data samples, inexperienced contractor and EPA
personnel, and a lack of contractor personnel.
2. Program Management Ratios
Underutilization of the ARCS contracts affected program management cost
ratios. In their contract proposals, the ARCS contractors projected amounts for
program management and remedial planning over the 10-year life of the
contracts. Based on full utilization, the contractors expected program
management costs to range from 6.7 to 19.1 percent of estimated total costs.
However, EPA did not fully use the contracts for several reasons. In the first
place, EPA built in excess capacity to allow for the termination of contracts
upon poor performance. Secondly, potentially responsible parties (PRPs)
performed more cleanups than envisioned, resulting in less work available under
the ARCS program. Thirdly, the contractors experienced great difficulty in
reaching the RA stage because they did not complete their RI/FS projects
timely.
3. ARCS Cost Estimates Were Flawed
None of the regions reviewed computed independent g9vernment cost
estimates as required. As a result, EPA did not always achieve the ARCS goals
of increased efficiency and accountability.
4. ARCS Distribution of Workload Was Skewed
For Region 3, the distribution of the level of effort hours was skewed.
More than 40 percent of the hours had gone to one contractor, despite the
original plan to have two large and three smaller contracts. One reason for this
was the Region did not have an annual allocation plan, as recommended by the
ARCS Contracts Users' Manual.
Recommendations
We recommended that EPA Headquarters:
• Emphasize to regions the need to reassess ARCS capacity
requirements, terminate the worst performing contractors, and withhold
all award fees for work assignments delayed by lack of performance.
• Implement recommendations of the Administrator's Task Force.
• Emphasize to regions the need to prepare independent Government
estimates for all ARCS work assignments and for all subsequent
requests for revision of work assignments.
We recommended that EPA Region 3:
• Reassess ARCS capacity requirements.
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EPA Offirce of the Inspector General Annual Suoerfund Report to the Congress for Fiscal 1992 55
• Terminate for default the ARCS contractors with the worst
performance records.
• Withhold all award fees for a work assignment when lack of
performance causes delay.
• Expeditiously implement the corrective actions in its ARCS Contracts
Vulnerability Review.
• Prepare independent Government estimates for all ARCS work
assignments and for all subsequent requests for revision of work
assignments.
• Distribute future ARCS work assignments in accordance with the ARCS
Contracts Users' Manual, after considering the ratios of past work
assignment distribution.
Agency Consolidated Headquarters Response
In response to our report, EPA stated it:
• Revised the ARCS capacity projections in conjunction with the regions.
• Would consider contract terminations.
• Was working toward improvement of the award fee process to provide
better incentives for excellent performance and disincentives for poor
performance.
• Issued a policy and implementing guidance requiring the development
of independent Government estimates.
• Was addressing the remaining recommendations from the
Administrator's Task Force report.
Agency Region 3 Response
In response to our draft report, EPA Region 3 indicated it:
• Had analyzed actual and projected level of effort for Region 3 ARCS
contracts.
• Withheld Phase I award fees for particular evaluation periods when lack
of performance caused a delay.
• Developed an action plan identifying lead offices and proposed
completion dates for the areas identified in the ARCS Vulnerability
Review.
• Mandated the preparation of independent Government estimates.
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EPA Offirce of the Inspector General Annual Suoerfund Report to the Congress for Fiscal 1992 56
In response to our final report, EPA Region 3 further indicated it had
developed an Annual ARCS Allocation Plan for work assignment distribution in
accordance with the ARCS Contract Users' Manual.
FOLLOW-UP OF EPA'S NEGOTIATION, AWARD AND MANAGEMENT OF
CONTRACTOR-OWNED EQUIPMENT FOR EMERGENCY RESPONSE
CLEANUP SERVICES CONTRACTS
Scope and Objectives
We performed an audit of EPA's corrective actions in response to our audit
report on EPA's Planning, Negotiation, Awarding and Administering of
Emergency Response Services Contracts (E5E26-05-0101-61508,
September 23, 1986). We also evaluated how the Emergency Response
Branch (ERB) of EPA's Procurement and Contracts Management Division
managed the contract requirements included in the ERCS contracts to
strengthen normal contract management. In addition, we audited ERB's efforts
to finalize provisional equipment rates and definitize completed delivery orders.
We compared our sampled contracts to each other to find if contract
requirements were consistent. We also determined whether contractors met all
reporting requirements and if they were timely with their report submissions.
Our specific audit objectives were to determine if ERB:
a. Developed a sound and reasonable basis for negotiating fixed equipment
rates;
b. Implemented effective cost controls to limit reimbursement to contractors
to the purchase price for company-owned equipment;
c. Established the necessary management controls to assure contractor
compliance with contract requirements; and
d. Definitized completed delivery orders issued under ERCS contracts.
Our review included the 4 Generation II zone contracts, 2 Generation III
mini-zone contracts and 4 of the largest 11 regional contracts. During the
period of our audit, EPA had a universe of 34 zone, regional and site-specific
contracts. We performed audit work at ERB and at regional contracting offices
in Regions 2, 4 and 5. The audit covered ERB's activities and functions related
to ERCS contracts between April 1987 and March 1991. We conducted our
audit work between January 1991 and June 1991..
Findings
1. ERB's Methodology and Data Used to Negotiate Equipment Rates Still
Needed Improvement
ERB continued to rely on price analysis rather than cost data to determine
the reasonableness of proposed fixed contract equipment rates. In response to
our 1986 report, ERB agreed to use cost analysis, push for contractor
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EPA Offirce of the Inspector General Annual Superfund Report to the Congress for Fiscal 1992 57
submissions of cost data, and use cost and pricing data for negotiations. They
committed to using provisional rates when they were unable to obtain cost and
pricing data during negotiations or could not use price analysis to justify
reasonable rates. However, we found contractors were still not providing cost
data needed to evaluate their proposed rates because they had inadequate cost
accounting and equipment utilization systems. ERB had been awarding
contracts to these same contractors for 10 years without insisting on cost data
and improvements to accounting systems. Without cost data, ERB used price
analysis techniques to negotiate fixed rates for equipment rather than
establishing provisional rates. ERB relied on their estimated equipment rates for
pricing various equipment items although they could not show the
reasonableness of their estimates or support the rates they calculated. As a
result, ERB negotiated rates that were usually unreasonably high.
2. Contract Management - Improvements Needed
EPA's administration and management of the ERCS contracts needed
improvements. Weak administration and management allowed contractor
noncompliance with contract requirements and the untimely definitization of
delivery orders. ERB also had not finalized provisional equipment rates timely or
established needed ERCS data bases for use in price analysis. Finally, ERB did
not make sure that controls designed to limit contractors' reimbursement for
company-owned equipment worked properly. ERB told us that staffing,
incomplete data and higher priority work contributed to these weaknesses.
Recommendations
We recommended that EPA:
• Review contractor accounting systems before awarding contracts.
When they find inadequate systems, they should require contractors to
correct their systems before contract award or condition the contract
to require correction of deficiencies within a specified time.
• Avoid awarding contracts based on price competition when the level of
competition is not high.
• Use cost and actual equipment utilization data to negotiate fixed
equipment rates or negotiate provisional equipment rates until
contractors can provide actual cost and utilization data.
• Update ERB's independent equipment estimates, and maintain support
for both the computation methodology and the reasonableness of the
estimates.
• Establish a plan for eliminating the backlog of undefinitized delivery
orders, and establish timeliness criteria for processing future delivery
orders.
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• Include in the contract limits on the contractor's recoupment of costs
for fixed equipment rates.
• Establish controls to monitor contractor compliance with contract
requirements, including obtaining the purchase price of each equipment
item used and receiving required reports.
• Obtain data from the contractors needed to finalize provisional rates,
and finalize them annually.
Agency Response
In response to our draft report, EPA stated it:
• Would attempt to require cost data.
• Would continue their efforts to require contractors to improve their
accounting systems and maintain equipment utilization information.
• Were developing a strategy to increase competition and attract new
contractors.
• Established a Headquarters team to assist regional contracting officers
in negotiating ERGS contracts and to develop standardized special
clauses for ERCS contracts.
• Was making a concerted effort to definitize provisional equipment rates
annually.
• Was continuing delivery order definitization efforts. EPA had definitized
more than 500 delivery orders since 1988. EPA was adding additional
staff to the Headquarters definitization team. The Agency planned to
complete a delivery order definitization manual and provide training to
regional contracting personnel.
• Would place additional emphasis on tracking receipt of required
contractor reports and would pursue sanctions where appropriate.
In response to our final report, EPA further stated it:
• Had developed several clauses mandatory for inclusion in all ERCS
contracts where it finds accounting systems to be deficient, inadequate
or needing improvement.
• Had developed an ERCS accounting system guidance document for
contractors.
• Would use actual cost and equipment utilization data to negotiate fixed
or provisional equipment rates until there is an acceptable level of
competition for ERCS contracts.
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EPA Offirce of the Inspector General Annual Suoerfund Report to the Congress for Fiscal 1992 59
• Had developed a data base on ERCS rates to track fixed and provisional
rates. This data base would be used in negotiating future contracts
and definitizing provisional rates.
• Planned to hold pre-solicitation conferences in regions where
competition has been seriously lacking to determine what solicitation
factors may deter vendors from submitting proposals.
• Had developed mandatory clauses for inclusion in ERCS contracts on
Limitation on Reimbursement for Rental Equipment, Limitation on Fixed-
Rate Equipment Charges, and Fixed Equipment Rate Redetermination.
• Was developing an advanced contract administration course of On-
Scene Coordinators and Remedial Project Managers.
REGION 2'S MANAGEMENT OF MINI-ERCS CONTRACTORS
Scope and Objectives
We performed a special review of the adequacy of EPA Region 2's
monitoring of mini-ERCS contractors. The specific objective of our review was
to determine whether the Region was managing the mini-ERCS contracts
properly. This issue came to our attention while conducting an audit of one
mini-ERCS contractor's costs. We conducted our review at Region 2's Edison,
New Jersey office for Removals and Emergency Preparedness Programs. We
conducted our field work from October 1991 through May 1992. 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.
Findings
1. Inadequate Monitoring of Mini-ERCS Contractors
Region 2 had not adequately monitored work performed by a mini-ERCS
contractor during cleanups of four hazardous waste sites we reviewed. On-
Scene Coordinators (OSCs) and other Region 2 officials were unaware of some
mini-ERCS contractual terms and failed to resolve apparently conflicting clauses
in the contract. Region 2 did not enforce contract clauses requiring withholding
of retainage from payments to the contractor, or the obtaining of competitive
bids and OSC approval before subcontracting for transportation and disposal.
OSCs did not document their approval of overtime .for contractor personnel.
OSCs did not maintain or adequately complete logs required to document
removal costs. Region 2 did not provide proper supervision of new OSCs.
As a result, the contractor incurred significant costs for labor, materials and
subcontractors that we found ineligible or unsupported. Also, some site
cleanups were delayed or not accomplished as timely and efficiently as
possible. Such delays can increase the detrimental effects on public health and
environment caused by the sites.
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EPA Offirce of the Inspector General Annual Superfund Report to the Congress for Fiscal 1992 60
2. Untimely Deobliaation of Excess Funds
Region 2 was not timely deobligating excess funds on physically completed
delivery orders issued for emergency cleanup services. Of 31 delivery orders
issued between September 30, 1988, and September 29, 1991, 12 were
closed with excess funds totalling- more than $343,000. The Region took
between 5 and 24 months (average of 14 months) after physically completing
site work to deobligate these excess funds. Most of the remaining 19 delivery
orders were physically completed and the Region transferred any remaining
work to other contractors for completion. These delivery orders had an
estimated unliquidated balance of $342,000.
These conditions were caused by the lack of (i) priority given to
deobligating funds, (ii) written procedures and policies requiring the deobligation
of excess funds, (iii) communication between the OSCs and the Contracting
Officer, and (iv) awareness that excess funds deobligated in subsequent years
revert to the Superfund program. As a result, about $685,000 of Superfund
monies remained unnecessarily idle instead of funding other Superfund site
cleanups. In addition, the Federal government lost substantial interest income
while these funds remained unliquidated.
Recommendations
We recommended that EPA Region 2:
• Maintain required logs, and reconcile them to the 1900-55s (daily cost
reports) and contractor invoices.
• Approve and adequately document any authorized overtime.
• Make sure that Contracting Officers (i) periodically brief OSCs on
contract terms, conditions and requirements; (ii) review the contract
before issuing any delivery orders to make sure that conflicting terms
are removed; and (iii) systematically notify the project officer and
deputy project officer in writing of any contract modifications.
• Perform detailed reviews of invoices submitted to make sure charges
are reasonable and allowable.
• Enforce all contractual terms.
• Make sure that the project officer or the deputy project officer monitors
new OSCs to ensure compliance with all regulations.
• Establish and implement an internal control system to track Superfund
site completion dates to make sure it receives required reports and
expeditiously deobligates funds.
• Identify and timely deobligate any excess Superfund unliquidated funds
for the delivery orders we reviewed.
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EPA Offirce of the Inspector General Annual Suoerfund Report to the Congress for Fiscal 1992 61
Agency Response
In response to the draft report, EPA Region 2 indicated it:
• Was developing internal procedures for all removal activities.
• Was beginning to issue guidance to program offices on various contract
management issues.
• Was distributing contract and delivery order modifications to the project
officer, the deputy project officer and OSCs.
• Had taken steps to make sure that the necessary documentation is
provided for the subcontractor selection process. It has distributed
internal guidance/procedures and will hold training sessions for OSCs.
• Was reviewing their OSC training program to determine what changes
were needed.
• Was developing internal procedures to inform all affected parties of site
completion dates.
• Was reviewing the deobligation process, and had deobligated an
additional $51,480.
In response to the final report, EPA Region 2 further indicated it:
• Would include ERCS contractors in its on-site voucher validation
reviews, provided resources are available.
• Had begun to hold quarterly all-hands meetings to discuss contract
management issues and specific problems with individual ERCS
contractors.
COST RECOVERY EFFORTS AGAINST POTENTIALLY RESPONSIBLE
PARTIES (PRPs)
Scope and Objectives
We performed a limited scope audit survey of Region 1 's efforts to identify
costs for recovery from PRPs. The purpose of our review was to determine if
EPA had adequate policies and procedures to identify and collect supporting
documents for all costs associated with Superfund cleanups for cost recovery
purposes. We reviewed cost recovery efforts for both removal and remedial
activities. Our review covered the Region's cost recovery activities from
October 1, 1987 to June 30, 1990. We conducted our review from July 16,
1990 to January 31, 1991 and included interviews and reviews of cost
document packages for both removal and remedial activities.
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EPA Offirce of the Inspector General Annual Superfund Report to the Congress for Fiscal 1992 62
Findings
1. Region 1 Needed to Maintain Adequate Documentation of Reconciliations
Cost recovery coordinators for sites not on the National Priorities List (NPL)
did not maintain adequate documentation of their reconciliations of cost
document packages. Also, cost recovery personnel did not know they were
required to retain the Software Package for Unique Reports (SPUR) reports as
part of the reconciliation/documentation process. As a result, cost recovery
coordinators cannot explain discrepancies between the Financial Management
System (FMS) and the cost summaries. To be sure of Superfund cost
documentation integrity in litigation and in negotiations with PRPs, EPA's costs
must be complete, accurate, fully reconciled and documented.
2. Interaaencv Agreement (IAG) Costs Not Identified for Cost Recovery
EPA was not identifying recoverable costs of all other Federal agencies
working on non-NPL removal sites. EPA personnel responsible for identifying
costs incurred by the Agency for Toxic Substances and Disease Registry
(ATSDR) did not know how to account properly for these costs. As a result,
EPA did not identify these costs for recovery.
3. Site-Specific Time Sheets Were Not Attached to Travel Vouchers
Site-specific travel vouchers did not have corresponding site-specific payroll
time sheets attached. We reviewed 65 vouchers for travel related to 5 removal
and remedial sites from April 1986 through December 1990. Only eight had
corresponding time sheets attached. Attaching time sheets to travel vouchers
assures that travel and personnel charges correspond appropriately. EPA
guidance requires time sheets to be attached to site-specific travel vouchers.
4. Need to Update Site Files Semiannuallv
The Financial Management Office had not updated site files semiannually as
required by EPA procedures. The Chief of the Superfund Finance Section said
he was aware of this requirement, but did not have the time or personnel to
make these reviews timely. Timely reconciliation of information contained in
the site-specific files with the FMS helps ensure that documentation of
recoverable costs is complete and accurate.
Recommendations
We recommended that EPA Region 1 adopt a reconciliation plan to make
sure that all cost documentation packages maintained by removal and remedial
cost recovery coordinators include current cost documentation and reconcile
each site-specific file with FMS at least semiannually.
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EPA Offirce of the Inspector General Annual Suoerfund Report to the Congress for Fiscal 1992 63
Agency Response
In response to our draft report, Region 1 stated it:
• Was now keeping the SPUR reports as a standard part of the
documentation package.
• Now requested that EPA Headquarters provide ATSDR costs for all cost
documentation packages.
• Was coordinating efforts to make sure that time sheets were attached
to vouchers for site-specific travel.
• Would not perform the semiannual reconciliations of FMS to site files
because the requirement to do so was being eliminated.
In response to our final report, Region 1 stated it would comply with
revised requirements to update files when the revised policy is issued. Until
then, it would continue to update its files as needed.
COST RECOVERY NEGOTIATIONS
Scope and Objectives
We performed an audit of the cost recovery negotiation process by which
the EPA seeks agreement with PRPs to reimburse the Agency for its cleanup
costs. Our audit objectives were to determine whether the Agency:
a. Could have collected more dollars through its negotiations; and
b. Adequately documented reasons for settling for reduced final cost recovery
amounts.
We conducted our review from June 10, 1991 to January 27, 1992 at EPA
Headquarters and Region 2. The review concentrated on Region 2 cost
recovery settlements negotiated and completed in fiscal years 1990 and 1991.
We interviewed Headquarters and Region 2 personnel and reviewed six case
files. We judgmentally selected the 6 cases from 29 settlements at 27 sites
during the 2 fiscal years. We limited the scope of our review to the six cases
because preliminary results were essentially identical with those in a July 1991
General Accounting Office report.
Findings
1. Region Not Recovering All Costs
The Region was not maximizing its recovery of costs from PRPs. As a
result, EPA did not collect $2,453,300 in potentially recoverable costs for the
six sites we reviewed. CERCLA authorizes EPA to recover from PRPs all costs
of response activities. EPA collected all costs in only one of the six sites
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EPA Offirce of the Inspector General Annual Superfund Report to the Congress for Fiscal 1992 64
reviewed. This occurred because the Agency did not always identify and
attempt to collect interest and Department of Justice (DOJ) costs. In four of
six cases reviewed, the Region did not recover accrued interest of at least
$336,878. For one site, interest was not calculated at all. The Region did not
seek recovery of more than $65,000 DOJ spent on EPA's behalf. In four of the
six cases reviewed, DOJ costs were not reimbursed. In two of the six cases,
perceived excessive contractor costs or poor performance limited the Region's
ability to recoup expenditures.
2. Poor Documentation of Negotiation Activities
Region 2 did not adequately document pertinent negotiation activities. In
four of the six cases reviewed, EPA had inadequately documented negotiation
activities after issuance of the demand letter, particularly events involving
offers and counteroffers. There was little evidence of negotiation meetings
with PRPs or interagency meetings conducted by Agency officials. In addition,
we found little documentation justifying EPA's negotiation strategy for
settlements. For example, in one case where EPA only recovered $500,000 of
the $1,800,000 claimed cost, the case attorney stated that she did not see any
reason for documenting every negotiation step or EPA's bottom-line strategy
since she knew and remembered all that transpired. However, without
adequate documentation management cannot be sure that the Agency recovers
the maximum possible prior costs.
Recommendations
We recommended that EPA Region 2 require:
• Inclusion of all costs (i.e., interest and DOJ) in cost recovery
settlements or adequate justification for not including them.
• Close monitoring of contractor performance during site cleanup so that
poor contractor performance will not be a bargaining issue.
• Adequate documentation of (1) reasonable bottom-line strategies
before beginning negotiations; (2) key decisions and significant events
occurring during negotiations; and (3) the post-settlement analysis with
a comparison of the settlement outcome to bottom-line positions,
including the reasons for any deviations.
Agency Response
In response to the report Region 2 stated it:
• Reminded DOJ of the need to quantify its past costs.
• Would prepare 10-point settlement analyses explaining the basis for
any compromises of past costs and require concurrence of Regional
management.
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EPA Offirce of the Inspector General Annual Suoerfund Report to the Congress for Fiscal 1992 65
REGION 2'S POTENTIALLY RESPONSIBLE PARTY SEARCH PROGRAM
Scope and Objectives
We performed an audit of Region 2's PRP search program. Our audit
objectives were to determine whether the Region was:
a. Timely and adequately conducting PRP searches; and
b. Effectively identifying all PRPs.
We conducted our review from August 8, 1990 to May 31, 1991 and
focused on PRP searches performed on sites proposed for the NPL between
October 1, 1987 and September 30, 1990. We judgmentally selected 9 cases
from 22 sites, excluding Federal facilities, chosen from CERCLIS. We selected
these nine cases because the PRP searches were conducted and substantially
completed between fiscal 1988 and fiscal 1990.
Findings
1. Inadequate Management of TES Conducted Searches
Region 2 inadequately managed some baseline PRP searches conducted by
a technical enforcement support (TES) contractor. The contractor consistently
submitted deliverables (i.e., baseline reports) late, EPA extended deadlines,
searches required additional Federal funds for completion, EPA eliminated or
reduced certain required tasks, and the contractor stopped work for long
periods until amendments extended the period of performance. All of the TES
contractor searches reviewed exceeded their original level of effort (LOE) for
either hours or dollars. The LOE for hours increased from 21 to 223 percent
while the LOE for dollars increased from 19 to 153 percent. These conditions
were due to inadequate preparation of a PRP search plan, lack of effective
procedures for managing completion of searches, other remedial project
manager (RPM) priorities, and unorganized search files. As a result, PRP
searches were not effectively and timely completed.
2. Region 2 Not Meeting Search Timeliness Requirements
PRP searches were not always completed on time. Six of nine searches
reviewed were not completed at least 90 days before the projected obligation
of Federal funds for a remedial investigation/feasibility study (RI/FS). These
searches were completed two to 20 months late. Also, none of the seven TES
draft and final baseline search reports reviewed were completed when required.
Five of the seven draft reports were completed between 5 and 13 months after
the date specified in the work plan. This occurred because of poor planning
and inadequate regional oversight. As a result, EPA may have used more than
$6 million in Superfund monies on cleanups instead of PRP funding on eight of
the nine sites with no assurance of later cost recovery.
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EPA Offirce of the Inspector General Annual Superfund Report to the Congress for Fiscal 1992 66
3. Reports Not Prepared on In-house Searches
Region 2 did not prepare PRP search reports for searches conducted by
Region 2 staff. The Region did not document either of the two regional
searches reviewed with the required report. RPMs told us they were not aware
that in-house search results had to be summarized in a written report. Also, the
Region had not developed or implemented adequate regional guidance, gave in-
house search reports a low priority, did not provide timely training, and had
limited resources. As a result, EPA lacked assurance that adequate and timely
searches were performed and required tasks were sufficiently completed to
gather site information, establish PRP liability, and enhance cost recovery
actions. The lack of a formal search report also increases the potential for a
new RPM duplicating prior work. This is especially true in Region 2 because of
its high RPM turnover.
4. Underutilization of PRP Tracking System
The Region did not effectively use its Superfund Litigation System, an
electronic tracking system intended to track and monitor PRP identification
efforts. Regional search staff were not always adequately monitoring or fully
aware of the status of searches in progress. Five sites had incomplete
information inputs and the other four were not even in the System. This
occurred because the Region had not fully implemented the System or
developed procedures for its use. In addition, the Region did not encourage
employees to use the System, or make sure they were aware that an electronic
tracking system was available. As a result, the Region was not properly
monitoring the status of search activities and could not be sure it adequately
identified all PRPs involved in Superfund site activity.
5. PRP Financial Status and Assessment Not Adequately Performed
The Region did not fully comply with EPA search requirements for obtaining
and assessing needed financial information. EPA uses this information to
determine a company's or individual's ability to pay for response actions and to
facilitate enforcement actions. All nine cases reviewed lacked documentation
to show that the Region made adequate financial viability determinations for all
identified PRPs. This condition occurred because some regional officials were
unaware or chose not to use the financial assessment capabilities of EPA's
National Enforcement Investigations Center (NEIC) despite EPA guidance to the
contrary. Some Superfund officials told us they believed NEIC could only
provide Dun and Bradstreet reports, while others believed ability to pay
determinations could be deferred to the remedial design/remedial action
negotiation stage. The Region sometimes pursued "deep pocket" PRPs to the
exclusion of less viable ones. As a result, some searches were incomplete, and
may have to be expanded. EPA also could be losing an opportunity to get
identified PRPs to fund cleanup activity. In addition, using NEIC resources
could lower the cost of searches by eliminating duplication of PRPs involved at
multiple sites.
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EPA Offirce of the Inspector General Annual Suoerfund Report to the Congress for Fiscal 1992 67
6. Actions to Identify PRPs Need Improvement
Region 2 needs to more effectively follow up on search report
recommendations to identify additional PRPs. For one site where no viable
PRPs were found, the Region did not implement a search report
recommendation to research whether a party associated with the site was a
PRP. On another site, where PRPs had not agreed to perform the RI/FS, the
Region did not timely send 104(e) letters to obtain information on other PRPs.
These conditions occurred because regional search teams did not adequately
coordinate their efforts and management did not follow policies and procedures
to ensure adequate review of search results. As a result, the Region could not
be sure it had tried to identify all PRPs and given them an opportunity to
perform or pay for the site cleanup.
Recommendations
We recommended that the EPA Region 2:
• Fully implement Headquarters guidance and procedures for planning,
coordinating, tracking, monitoring and completing search activities
timely and effectively; and provide supplemental regional procedures
for regional search teams as needed.
• Evaluate current PRP search contract management to ensure adequate
funding of work assignments and the allowance of sufficient time to
complete remedial PRP searches within periods of performance.
• Make sure that PRP baseline searches are sufficiently completed 90
days before obligation of RI/FS funds. The Region should provide
written justification for any commitment of Superfund monies before
completing the baseline search.
• Complete ongoing effort to provide a systematic approach for
maintaining search files.
• Require standardized PRP search documentation for in-house searches.
• Complete and document the determination and assessment of PRPs'
financial status and use NEIC capabilities.
• Curtail use of "deep pocket" approach unless adequately justified in
limited instances.
• Effectively use tracking system to monitor efforts to identify PRPs.
• Timely follow up on search report recommendations or provide
adequate justification for not pursuing further actions.
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EPA Offirce of the Inspector General Annual Superfund Report to the Congress for Fiscal 1992 68
Agency Response
In response to our draft report, EPA Region 2 indicated it:
• Implemented the Headquarters June 1989 guidance and is developing
supplemental regional procedures.
• Formed a PRP Search Total Quality Management work group to
evaluate current contract management practices.
• Provides written justification to Headquarters concerning the PRP
search status and the commitment of Trust Fund monies.
• Established a PRP search file room to maintain organized site and
administrative record files.
• Would develop a standardized memo to document in-house PRP
searches.
• Uses NEIC to obtain Dun & Bradstreet reports, access the Superfund
Financial Assessment System and search other data bases.
• Now reviewed all baseline search reports to determine the need for
follow-up work.
In response to our final report, EPA Region 2 further indicated it was
developing and refining a newly expanded tracking system called the Superfund
Enforcement Support System.
REGION 7'S POTENTIALLY RESPONSIBLE PARTY SEARCH PROGRAM
Scope and Objectives
We performed an audit of Region 7's PRP search program. Our audit
objectives were to determine whether Region 7:
a. Conducted PRP searches timely and adequately;
b. Provided sufficient resources to conduct PRP searches;
c. Took appropriate actions to identify all PRPs; and
d. Implemented sufficient internal controls for the PRP search process.
We performed our audit from February 1991 through September 1991. We
judgmentally selected 9 of 131 sites from CERCLIS. We selected 5 NPL sites
and 4 non-NPL sites having 20 completed searches. Our selection focused on
sites with multiple, high cost search efforts substantially completed between
fiscal 1986 and fiscal 1991.
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EPA Off irce of the Inspector General Annual Superfund Report to the Congress for Fiscal 1 992 69
Findings
1. Region 7 Should Complete and Document Search Results Timely
Region 7 did not complete searches timely and adequately document PRP
search task results for nine Superfund sites. The RPMs did not require
contractors either to document their search results or to perform all search
tasks. RPMs also delayed starting baseline and follow-up searches, did not use
the best type of contract to obtain complete search results, did not require
contractors to use personnel skilled in search techniques, and did not
effectively coordinate search plans. Consequently, the Region continued to
incur additional PRP search costs for the same sites year after year and to lack
timely information for clear identification of PRPs. For five of nine sites, the
RPMs increased the contractors' LOEs by 9,358 hours at a cost of $428,146,
about a 220 percent increase, to perform search task efforts that should have
been completed more timely.
2. The Suoerfund Branch Needed Better PRP Search Internal Controls
The Superfund Branch did not have adequate internal controls for its PRP
searches. The Branch had not adequately evaluated its internal controls in
accordance with Office of Management and Budget Circular A-123. The
Region had not properly emphasized the internal control program. It had not
required the Branch to establish proper internal control objectives and
techniques and perform annual internal control reviews. The Region also had
not provided sufficient training in identifying and evaluating internal controls.
As a result, the Superfund Branch did not identify PRP search control
weaknesses, and the Regional Administrator did not report PRP search
weaknesses or improvements needed in the internal controls. Because the
Branch did not identify the control weaknesses, it did not improve
documentation, completeness and timeliness of searches, and incurred
additional search costs.
Recommendations
We recommended that EPA Region 7:
• Establish procedures to make sure baseline searches and follow-up
searches start timely.
•
Require RPMs to justify increasing contract LOEs, costs and
performance periods, and contracting for follow-up searches.
Establish procedures to make sure search contractors perform baseline
tasks and RPMs maintain search documentation, including rationale for
not performing all baseline tasks.
Require RPMs to request civil investigators and attorneys evaluate the
adequacy of prior searches to determine need for another search, and
future searches to determine their sufficiency.
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EPA Offirce of the Inspector General Annual Suoerfund Report to the Congress for Fiscal 1992 70
• Establish controls to ensure that the PRP search information in the
CERCLIS is accurate and updated timely.
• Require RPMs to send information request letters to PRPs as early as
practical in the search process.
• Require TES contractors to use skilled investigators to perform
investigative PRP search tasks.
• Take appropriate administrative actions when unsatisfactory contractor
performance occurs.
• Phase out use of TES contracts for PRP searches and use firm-fixed-
price contracts instead.
• Identify RPM functions that should be performed by investigators
and/or contracting personnel and use them to perform those functions.
• Test internal controls for PRP searches, document the review and
report weak internal controls.
• Develop internal control objectives for PRP search tasks and control
techniques for each objective.
• Emphasize the importance of the internal control program and train
managers and employees in their responsibilities in this area.
Agency Response
In response to our draft report, Region 7 indicated it would:
• Reevaluate the statements of work for further improvements in search
timeliness, LOE estimates and quality of the investigations.
• Develop an internal control technique to monitor timely search
initiation.
• Document in site files justifications for delays in starting searches.
• Work with Headquarters to make sure the Region receives contract
documents for closed contracts.
• Assemble a team comprised of a civil investigator, attorney and RPM
for each search.
• Use the PRP Search Work Assignment Close Out Request form to
document baseline search tasks not required, search team agreement
that search criteria were met, and the need for a follow-up search.
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EPA Offirce of the Inspector General Annual Suaerfund Report to the Congress for Fiscal 1992 71
• Correct CERCLIS data discrepancies in search start and completion
dates.
• Pursue PRPs using 104(e) letters early in the search process and assign
responsibilities for sending the letters to search team members.
• Modify contract documents to more accurately reflect the appropriate
skill mix (including investigators) needed to conduct searches and
require the contractor to comply with this skill mix.
• Continue to explore the use of 8(a) contractors to conduct PRP
searches.
• Have the Regional Project Officer lead the search team on contractor
- performance matters.
• Consider increasing the number of civil investigators.
• Continue to train RPMs on both the PRP search process and financial
evaluations.
• Review PRP search internal controls after strengthening them.
• Develop internal control objectives and techniques for the appropriate
categories of PRP search tasks.
• Expand the management control plan and schedule internal control
reviews and/or alternate internal control reviews for high risk areas as
needed.
• Emphasize the importance of the internal control program to managers
and supervisors, identify internal control training options, and schedule
training during fiscal 1993.
SAMPLE MANAGEMENT OFFICE
Scope and Objectives
We performed an audit of EPA's Sample Management Office (SMO), which
has primary responsibility for scheduling and documenting the samples sent by
EPA regions for analysis under the Contract Laboratory Program (CLP). Our
audit objective was to determine whether the SMO was efficiently operated and
effectively monitored by EPA.
We performed the review at EPA Headquarters, the SMO contractor's
office, Region 3 and EPA's facility at Research Triangle Park, North Carolina.
We conducted our field work between November 19, 1990 and March 27,
1992.
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EPA Qffirce Of the Inspector General Annual Sunerfund Report to the Congress for Fiscal 1992 7?
Findings .
1. Samples Not Analyzed Bv the Best Available Laboratory
EPA used laboratories with poor Contract Compliance Screening (CCS)
performance histories while laboratories with superior CCS performance
histories were not fully used. This was because of EPA's ineffective
administration and SMO scheduling procedures. As a result, samples were not
always analyzed by the best laboratories available to the Agency.
2. SMO Contract Proved Detrimental
0.* Jne Procedures used to obtain the services of the contractor operating the
SMO were detrimental to EPA. The lack of competition allowed the same
contractpr to operate the SMO for more than a decade, increasing EPA's
vulnerability to contractor operations and elevating EPA's susceptibility to cost
inefficiencies and conflict of interest situations.
-3. Confusion Over Roles
Both EPA Headquarters and the SMO contractor exceeded their authority
on occasion. For expediency, the Agency at times improperly influenced the
contractor to assign tasks to specific contractor employees. The contractor
made some decisions that were inherently EPA's to make, and lent itself the
appearance of being a Government entity.
4. Laboratory Contracts Not Closed
Because EPA failed to close CLP contracts, we estimated that nearly $20
million remained obligated unnecessarily. Laboratories owed EPA refunds of
about $350,000, and did not refund another $250,000 timely. Some of these
funds were unavailable to the Government for up to six years. Several
responsible EPA personnel told us that this occurred because EPA considered
closing contracts a low priority. It is essential that EPA close contracts timely
because the deobligated amounts and refunds can be used to fulfill other CLP
or Superfund requirements.
5. Unnecessary Incentives Paid to Laboratories
EPA received minimal benefit from almost $400,000 of incentives paid to
laboratories for providing sample analysis results earlier than contractually
required. Often EPA paid incentives for results received only one day early.
6. SAS Procurements Required Improvement
,*A J»n-e SMO contractor did not always procure Special Analytical Services
(SAS) in accordance with contractual requirements. During fiscal 1991, the
SMO awarded 1,500 SAS subcontracts valued at $23 million. Our review of
SAS subcontract awards showed that (a) the SMO made procurements without
price reasonableness determinations, (b) documentation of reasons for
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EPA Offirce of the Inspector General Annual Suoerfund Report to the Congress for Fiscal 1992 73
cancellation of procurements was lacking, and (c) administrative costs could be
decreased if the SMO consolidated smaller procurements.
Recommendations
We recommended that EPA:
• Consider CCS performance along with other criteria in selecting
laboratories to analyze samples.
• Study why contract modifications to increase the minimum number of
samples specified in the contracts are not completed timely; and take
appropriate action to eliminate delays.
• . Make sure that laboratories on PO hold or cure notice do not receive
samples.
• Intensify efforts to increase competition during the next SMO
solicitation, including splitting current requirements into more than one
contract.
• Stop assigning inherently governmental functions to the SMO
contractor, and assigning tasks to specific contractor employees.
• Instruct the SMO contractor to change its stationery and lobby
directory to eliminate any inference that it is an EPA component.
• Make sure that contracts are closed in accordance with the Federal
Acquisition Regulations (FAR). This should include deobligating funds
and obtaining refunds timely.
• Eliminate incentive clauses from future CLP contracts.
• Make sure that the CLP contractor:
o Performs price reasonableness determinations before awarding
each SAS procurement, and documents the basis for the
determinations.
o Documents the reasons for cancellations of procurements. These
reasons should be reviewed periodically and action taken to reduce
the number of cancellations, if practical.
o Takes all reasonable efforts to combine smaller SAS procurements.
o Merges procurement files into one file.
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EPA Qffirce of the Inspector General Annual Suoerfund Report to the Congress for Fiscal 1992 74
Agency Response
In response to our draft report, EPA stated:
• It would consider technical portions of CCS performance along with
other factors to compare laboratory performance and determine which
laboratories should be asked to analyze additional samples.
• It was studying the most effective contract configuration to meet
future analytical services needs while ensuring an adequate competitive
environment.
• The directory in the contractor's lobby was changed to eliminate the
reference to EPA.
• It had instructed the contractor to cease using stationery referencing
the EPA, CLP or SMO, and to identify itself by its company name in any
dealings with the public.
• It was enforcing instructions from the Project Officer to Agency staff
regarding the inappropriateness of situations cited.
• It had informed the contractor through letters and discussions of its
responsibilities to avoid inherently governmental activities, including
training new staff in these principles.
• It would assure that EPA does not assign tasks to specific contractor
employees by strict compliance with its tasking/approval process.
• The SMO established a separate section to deal primarily with
closeouts.
• It would perform a process review of the SMO section dealing with
closeouts.
• It would not incorporate positive incentives into future CLP Invitation
for Bid contracts.
• It would direct the SMO to document the reasons for cancellations of
procurements, and produce a quarterly report by region for one year
summarizing the cancellations and the reasons for them.
• It would take all reasonable efforts to combine small SAS procurement
requests.
• It would continue its efforts to merge procurement files into one file.
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EPA Offirce of the Inspector General Annual Suoerfund Reoort to the Conaress for Fiscal 1992 75
In response to our final report, EPA further stated it:
• Would conduct a study to identify problems within the contract funding
system, and implement appropriate procedures to eliminate the delays
in completing contract modifications.
• Would develop and implement appropriate procedures to make sure
contractors on hold do not receive samples.
• Would actively pursue alternatives to its current contract mechanisms
and would foster an appropriate competitive environment.
• Would evaluate the effectiveness of controls in place to prevent
assigning of tasks to the SMO contractor that are inherently
. governmental functions and the assignment of tasks to specific
contractor employees, and implement modified procedures if needed.
• Would review for adequacy and timeliness the price reasonableness
documentation by the SMO contractor where the FAR requires such
documentation, and remind the SMO contractor of its responsibilities in
this area.
ENVIRONMENTAL MONITORING SYSTEMS LABORATORY (EMSL)-LAS
VEGAS CONTRACT LABORATORY PROGRAM (CLP) QUALITY
ASSURANCE/QUALITY CONTROL (QA/QC) PROGRAM
Scope and Objectives
We performed an audit of EMSL's CLP QA/QC program to determine
whether it was effective in ensuring that data analyses received in support of
the Superfund program are of high quality and whether the Agency was taking
effective corrective action when instances of poor or unacceptable laboratory
performance were disclosed. Our specific audit objectives were to determine
whether:
a. EMSL's QA/QC controls were adequate to evaluate laboratory performance
and whether these controls were being effectively implemented;
b. EMSL was reporting all CLP laboratory deficiencies timely and accurately;
and
c. EPA timely initiated appropriate follow-up actions against poor performing
CLP contractors resulting in corrective actions.
Our review included QA/QC audits performed and reported by EMSL during
fiscal years 1988 through 1990. Our review focused on the EMSL controls and
effectiveness of audits done on laboratories conducting routine analytical
services (RAS) work for organic and inorganic analyses. We judgmentally
selected 16 organic laboratories (4 of which also conducted inorganic analyses)
to evaluate the effectiveness of EMSL's program to identify and report
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EPA Offirce of the Inspector General Annual Superfund Report to the Congress for Fiscal 1992 76
performance problems to appropriate program officials. These laboratories
represented about 16 percent of the contract laboratories through most of the
audited period. We selected a cross section of laboratories with large and small
value contracts whose QA/QC results showed poor performance. We
conducted our audit field work between March 1990 and April 1991.
Findings
1. EMSL's QA/QC Audit Coverage Needed Increased Attention
. While EMSL had made significant improvements in its QA/QC audit
coverage, it did not conduct enough gas chromatography/mass spectrometry
(GC/MS) tape audits, data audits, on-site audits or remedial performance
evaluation audits to achieve its CLP audit frequency goals. Except for the
routine quarterly blinds, EMSL did not achieve its established QA/QC audit
frequency goals. Frequent and timely QA/QC audits help identify performance
deficiencies so that timely follow-up action can be initiated. An effective
QA/QC program improves assurance that laboratories are producing data of
known and acceptable quality. EMSL staff identified funding and limited
availability of trained personnel as reasons for not conducting the targeted
number of QA/QC audits. EMSL also needed to increase its audit management
planning, controls and oversight.
2. Tracking Procedures and System for QA/QC Audit Results Needed
EMSL had not estabjished effective tracking procedures and systems for
evaluating QA/QC historical audit performance by laboratory. This diminished
EMSL's ability to monitor individual laboratory QA/QC performance trends to
identify poor performing laboratories. As a result, additional QA/QC audits and
needed administrative or contractual actions against laboratories were
significantly delayed or not taken. This condition was first reported to EMSL
management in 1983, but remained uncorrected through fiscal 1991. EMSL
began developing a system, but it did not project full implementation until early
fiscal 1995. Timely development of an integrated tracking system would
greatly help to improve the overall quality of CLP analytical data.
3. EMSL's Reporting Systems Needed Improvement
We found a number of weaknesses in EMSL's reporting of laboratory
contract noncompliance and operating deficiencies. Because of these
weaknesses, contract compliance deficiencies were not always reported, nor
were laboratories with recurring deficiencies highlighted. EMSL also does not
have adequate systems for rating the overall performance of laboratories.
Consequently, the National Program Office (NPO) was unable to take timely and
appropriate actions against contractors. We attributed this condition to a need
for increased management oversight over reporting of CLP QA/QC results, and
NPO encouragement to work with CLP contractors rather than holding them
responsible for contract performance. Incomplete reporting systems provide
opportunities for poor performing laboratories to continue non-compliant
activities and make it difficulty for program managers to monitor and take
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EPA Qfflrce of the Inspector General Annual Suoerfund Report to the Congress far Fiscal 1992 77
appropriate actions. Improvements in EMSL's reporting systems could
significantly help the Agency administer CLP contracts. This in turn would lead
to increased assurance that the Superfund program is producing analytical data
of known and acceptable quality.
Recommendations
We recommended that EPA:
• Initiate controls to make sure all laboratories receive at least one
GC/MS tape audit a year.
• Establish clear goals for performance of QA/QC audits on each
laboratory, including an emphasis on timely audits of poor performing
laboratories.
• Update the EMSL CLP Quality Assurance Program Plan (QAPP) and
associated Quality Assurance Project Plans (QAPjPs) to reflect revised
procedures and controls, and prepare a QAPjP for the GC/MS tape
auditing program.
• Establish procedures to make sure it:
o Gives poor performing labpratories increased QA/QC audit
emphasis following identified periods of poor performance;
o Timely processes remedial performance evaluations on laboratories
that fail quarterly blinds;
o Sends first quarter quarterly blinds to all new contract laboratories
for analysis; and
o Identifies poor performing laboratories to procurement officials
before award of any new CLP contracts.
• Immediately pursue additional funding for the Laboratory Performance
Database (LPD) system to minimize delays in its completion and
implementation.
• Develop interim procedures to compile laboratory QA/QC histories
identifying QA/QC audit coverage deficiencies so that resources can be
directed at those laboratories with significant gaps in coverage.
• Initiate a design review of the LPD system to determine whether the
current system is sufficient to provide comprehensive historical
performance data by laboratory needed by EMSL to fulfill its QA/QC
responsibilities.
• Coordinate LPD development with the NPO to prevent the possible
duplication of like data base systems.
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EPA Offirce of the Inspector General Annual Sunerfund Report to the Congress for Fiscal 1992 78
• Develop procedures for the identification and reporting of laboratory
non-compliance with contract deliverables to the NPO, Technical
Project Officers (TPOs) and the Contracting Officer.
• Establish procedures and controls to ensure timely reporting of repeat
problems in audits to the NPO and TPOs.
• Establish procedures and controls for use of consistent and accurate
rating systems for on-site, data and GC/MS tape audits.
Agency Response
In response to our draft report, EPA stated:
• EMSL-Las Vegas would work with the NPO to develop a mutually
supported process for targeting QA/QC audits.
• EMSL-Las Vegas would work with the NPO to establish necessary
controls and assure that appropriate resources are available to perform
at least one GC/MS tape audit at each laboratory per year.
• EMSL-Las Vegas would work with the NPO to clearly identify program
needs for audits and develop alternative mechanisms to handle
unscheduled support requiring program resources.
• EMSL-Las Vegas would work with the NPO to develop procedures and
controls for use of consistent and accurate rating systems for on-site,
data and GC/MS tape audits.
In response to our final report, EPA further stated:
• EMSL-Las Vegas had initiated written agreements with the NPO to
document audit goals for each fiscal year, and EMSL-Las Vegas will
provide quarterly reports documenting progress toward these goals.
• Historical data tape deficiencies and incidences of laboratory non-
compliance with contract deliverable requirements would be reported
with the data tape audit reports submitted to the TPOs.
• Ten percent of the CLP organic laboratories with the lowest
performance through the previous quarter would receive increased audit
attention.
• It documented the tape audit program in a standard operating
procedure.
• It would rank CLP organic laboratories quarterly by performance based
on quarterly blind and audit defects. This ranking would be one
criterion used to select laboratories for audit each quarter.
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EPA Offirce of the Inspector General Annual Suoarfund Report to tha Congress for Fiscal 1992 79
• It was sending quarterly blinds to all laboratories contractually capable
of receiving samples from the Sample Management Office.
• It would provide a summary report to the contracting officer on the
historical performance of all laboratories before award of new
contracts.
• It would provide additional funding to bring the LPD into conformance
with life cycle management requirements.
• It would generate quarterly historical laboratory performance reports to
track QA/QC performance for fiscal 1993.
• External reviewers conducted an LPD peer review.
• It made revisions to contract work plans and planning documents to
reflect revised technical procedures and controls.
REGION 9'S ADMINISTRATION OF THE STRINGFELLOW COOPERATIVE
AGREEMENT
Scope and Objectives
We performed an audit of EPA Region 9's administration of its cooperative
agreement with the California Department of Health Services (DHS) for the
Strmgfellow Superfund site. Our primary audit objectives were to determine
whether:
a. Management procedures were adequate to assure that remediation of the
Stringfellow site health hazard was being addressed in the shortest possible
time;
b. The construction and initiation of operations of the Stringfellow interim
source control pretreatment facility was accomplished efficiently and
effectively; and
c. The Region and DHS had adequately defined their roles and responsibilities
to assure attainment of the Stringfellow cooperative agreement objectives.
Our review covered management procedures in effect through May 31,
1991. We conducted our field work at EPA Region 9 in San Francisco, DHS in
Sacramento, the Santa Ana Water Project Authority (SAWPA) in Riverside, and
the Stringfellow site in Glen Avon, all in California.
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EPA Offirce of the Inspector General Annual Superfund Report to the Congress for Fiscal 1992 80
Findings
1. Laboratory Analyses of Ground Water Samples Were Defective
The laboratory analyzing ground water samples under the cooperative
agreement falsified its records over a 62-month period. Laboratory employees
backdated documents to indicate they performed analyses during the 14-day
maximum holding time. The contractor advised DHS it had exceeded the 14-
day limit on about 44 percent of the samples taken at the site during a 25-
month period. In addition, the contractor may not have properly calibrated
laboratory equipment used to analyze the samples. These problems resulted in
DHS claiming, and EPA paying, more than $1.2 million for questionable
laboratory costs. DHS concluded that the laboratory problems did not affect its
decision on the reliability of the Stringfellow RI/FS, but we found
documentation for this conclusion lacking. Since EPA funded 90 percent of the
cooperative agreement costs, it was important that the Region make sure the
cooperative agreement funded only acceptable contract work. In view of the
Region's ultimate responsibility for the acceptability of remedial actions at the
site, it was important that the Region and DHS work together for the
satisfactory resolution of the impact of the laboratory problems.
2. The RI/FS Process Was Not Well Managed
The Region and DHS did not manage the Stringfellow RI/FS process well.
This contributed to the extension of the estimated completion date by more
than six years, and an estimated cost increase of more than 700 percent from
about $1.6 million to at least $11.2 million. The delays have also prolonged
the long-term environmental risks posed by the site. The Region's involvement
in the RI/FS process was minimal, although a cooperative agreement
contemplates substantial Federal involvement. We found little indication that
the Region took an active role in the project, although it was aware that DHS
was experiencing significant difficulties with the RI/FS subcontractor and
cooperative agreement management. The subcontractor generally did not
complete work products in a timely or acceptable manner. DHS required the
subcontractor to resubmit some work plans and reports several times before
approving them, and DHS did not always complete its reviews of the work
plans expeditiously. Public comments indicated that the draft feasibility study
(FS) did not include an important alternative in its list of recommended
alternatives. This contributed to delays in completing the final FS.
3. Construction and Start UP of Pretreatment Plant Was Not Adequately
Managed
Management problems directly contributed to delays in completing and
starting operation of a pretreatment plan at the site, and a $3.5 million increase
in design and construction costs. The increase in design and construction costs
was primarily due to a design change that more than doubled the capacity of
the plant. The increased capacity appeared to exceed requirements. Also,
immediately before starting plant operations, DHS advised the Region it would
not operate the plant. This contributed to a 7-month delay in starting plant
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EPA Offirce of the Inspector General Annual Suoerftind Report to the Congress for Fiscal 1992 81
operations. It also necessitated continued hauling of extracted ground water
for off-site disposal, prolonging environmental risks to the public. DHS caused
other difficulties by giving responsibility for design and construction to a local
agency, SAWPA. SAWPA refused to turn over the constructed plant for start
up or to provide a permit for disposal of the plant's effluent until the Region
provided funds to indemnify SAWPA against possible liability for receiving the
effluent into a sewer interceptor it manages. The Region's agreement to such a
fund raised precedent-setting policy and cost questions that needed to be
addressed. The Region also agreed to pay SAWPA a monthly fixed rate for
accepting the effluent without reviewing the reasonableness of the rate.
4. Lead Role Responsibilities Under the Cooperative Agreement Needed to Be
Reassessed
The division of responsibilities between the Region and DHS needed to be
reassessed to assure successful completion of the site remediation process.
The U.S. District Court designated the State as a potentially responsible party
(PRP) for the site in June 1989. At the end of our field work, the Region had
not decided whether to change DHS lead role responsibilities. DHS retention of
a lead role could give the appearance of a conflict of interest. We also found
that the responsibilities and commitments established for DHS project oversight
in the 1986 Stringfellow Action Plan needed to be updated to reflect current
requirements. DHS was not meeting staffing commitments established in the
Plan.
Recommendations
We recommended that EPA Region 9:
• Document the basis for conclusions that the sample holding time
violations did not adversely affect the reliability of the Stringfellow
RI/FS conclusions.
• Advise DHS that laboratory equipment used to analyze Stringfellow
ground water samples requires calibration, and consider the impact of
the lack of calibration on the reliability of the RI/FS conclusions.
• Determine the allowability of laboratory analysis costs claimed and paid
under the cooperative agreement.
• Increase its involvement in the Stringfellow cooperative agreement
process, including more emphasis on reviewing and evaluating whether
DHS is meeting time and cost schedules.
• Assess why the final FS report cannot be issued, and expedite its
completion.
• If DHS uses another subcontractor to assist in completion of the RI/FS,
make sure that DHS and the subcontractor follow good procurement
practices and subcontract terms.
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EPA Offirce of the Inspector General Annual Suoerfund Report to the Congress for Fiscal 1992 82
• Reassess the Region's role in the cooperative agreement to make sure
it actively involves itself in the project.
• Review the circumstances surrounding the oversizing of the
pretreatment plant, and determine whether additional costs associated
with the oversizing should be funded under the cooperative agreement.
• Advise DHS that it will recover additional costs to obtain "as-built"
drawings for the pretreatment facility as duplicate costs.
• Review the reasonableness of the monthly fixed rate for disposal of the
pretreatment plant effluent, and make appropriate adjustments.
• Determine whether DHS should continue its lead role responsibility for
the site in view of the court ruling naming the State as a PRP.
• Review and update DHS requirements and responsibilities included in
the Stringfellow Action Plan.
Agency Response
This audit had not been resolved as of August 30, 1993.
CERCLIS REPORTING AND POST-IMPLEMENTATION FOLLOW-UP
Scope and Objectives
We performed a follow-up review of corrective actions taken in response to
two prior OIG reviews on Comprehensive Environmental Response,
Compensation, and Liability Information System (CERCLIS) reporting and post-
implementation. The objective of our follow-up review was to verify the
implementation of agreed-upon actions in response to those reviews.
We conducted our field work from November 1991 to January 1992 at
Headquarters, Region 2, Region 3 and a support contractor's office. We
analyzed eight fiscal 1991 CERCLIS reports for data quality and six fiscal 1991
CERCLIS reports for program documentation quality. Because this review
found material weaknesses related to CERCLIS reporting, we also reviewed the
Federal Managers' Financial Integrity Act (FMFIA) evaluation process within the
Office of Solid Waste and Emergency Response (OSWER) to determine why it
did not identify these weaknesses.
Findings
1. FINC-4 Reporting Deficiencies Documented the Need to Reinstate the
Download of Official Aaencv Financial Data to CERCLIS
CERCLIS reporting and documentation problems continued to be pervasive,
despite the implementation of some of our prior recommendations. Findings 2
and 3 discuss the breadth of these problems throughout CERCLIS. However,
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EPA Qffirce of the Inspector General Annual Superfund Report to the Congress for Fiscal 1992 83
FINC-4, the Remedial/Removal Site Specific Funding Report, exemplified them
both. The FINC-4 had more severe problems than other reports we analyzed.
We found more than $1.3 billion of financial data errors, as well as missing
outlay data and audit trail information. Further, the FINC-4 errors also may be
in official Agency accounting records contained in the Integrated Financial
Management System (IFMS). Reporting errors and omissions came from
various sources. Erroneous data may have been downloaded from the Financial
Management System (FMS), the Agency's official accounting system until
1989, and never reconciled. Also, FINC-4 programs did not include essential
reasonableness, completeness, and edit checks to preclude errors. Further
data quality reviews were virtually non-existent.
Inaccurate reporting causes users to lose confidence in system reliability,
provides a poor basis for managerial decision-making, and may cause resources
to be wasted. Poor documentation makes it difficult for programmers to learn
how a program works and make needed changes, may result in costly program
rewrites, and causes both programmers and users to distrust the system.
2. Quality of CERCLIS Renortino Still Needed Improvement
While our review of seven CERCLIS reports showed that some reporting
inconsistencies found in the original audit were resolved, many reporting
'Po?cu-n.cies.remalned- F°r example, we identified financial data errors of about
591 million in one CERCLIS report. Errors had accumulated over a long time
because data quality reviews were ineffective. Further, CERCLIS programs did
not contain essential reasonableness, completeness and edit checks.
3- CERCLIS Program Documentation Still Needed Significant Improvement
While some changes had been made since the original review, CERCLIS
Proairarndocurnentation stl" re°.ulred significant improvement. In all five
CERCLIS reports we reviewed, we found many discrepancies and
inconsistencies among the CERCLIS Reports Library write-ups, the Superfund
Comprehensive Accomplishments Plan Reports Library write-ups, and the
source code. Consequently, programmers may have difficulty learning how a
program works and making needed changes. Significant documentation
deficiencies may even result in complete and costly program rewrites. Also,
discrepancies between documentation and outputs cause both programmers
a"d users to distrust a system. These deficiencies were due primarily to
CERCLIS management not making sure that contractors responsible for report
development provided and maintained suitable documentation.
4- Superfynd Program Management Required More Flexibility than Available
Wltn CJcHLLIS
The production and maintenance of CERCLIS reports was costly and
inefficient. Because of the dynamic reporting requirements of the Superfund
program, CERCLIS reports changed frequently. However, instead of using the
CERCLIS ad-hoc reporting capability, new CERCLIS report programs were
created using customized programs. These conditions led to reporting and
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EPA Offirce of the Inspector General Annual Suoerfund Report to the Congress for Fiscal 1992 84
documentation errors and inconsistencies, difficulty in monitoring change
control processes effectively, redundancy of documentation, and development
of duplicate systems. These problems occurred primarily because of CERCLIS
design deficiencies.
5. OSWERjs FMFIA process Did Not Sufficiently Address the Risks Associated
FMFIA requires a periodic evaluation by each executive agency of its
system of internal accounting and administrative controls and submission of an
annual statement of assurance to the President and the Congress on its internal
control systems. The reporting and system design deficiencies we identified
were material weaknesses meeting EPA's materiality criteria for FMFIA
reporting. However, OSWER's FMFIA process did not identify these
weaknesses, and none of its planned internal control reviews (ICRs) or alternate
internal control reviews (AlCRs) would address them.
Recommendations
We recommended that EPA:
• Require IFMS, Financial Management Division and CERCLIS officials to
work together to establish accuracy in IFMS CERCLIS-related data.
• Discontinue FINC-4 reporting and replace it with IFMS reporting once it
establishes IFMS reporting accuracy.
• Correct the specific deficiencies identified in the report.
• Include essential reasonableness, completeness and edit checks in
programs.
• Develop error reports to capture inaccurate/incomplete CERCLIS
transactions separately for each report in production.
• Develop written procedures and controls for report programming
documentation.
• Assess whether CERCLIS can be altered to provide more flexibility for
information retrieval.
• Establish a FMFIA event cycle specific to CERCLIS reporting and
system design and include the appropriate control objectives and
techniques.
• Update the appropriate FMFIA risk assessment to more adequately
reflect the high risks associated with CERCLIS.
• Schedule a formal AICR specifically addressing reporting and system
design of CERCLIS.
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EPA Qffiree Pf thfl Inspector General Annual Suoerfund Report to the Congress for Fiscal 1992 85
Agency Response
In response to our report, EPA indicated it:
• Had formed a work group on the transfer of data between IFMS and
CERCLIS, and planned a test transfer.
• Archived the FINC-4 report until it reconciled the differences between
CERCLIS and IFMS.
• Investigated specific report deficiencies identified and would correct
them.
• Would begin routine error trapping.
• Would publish new report development edit procedures and evaluate
their effectiveness.
• Would assess whether the CERCLIS reporting process can be made
more flexible.
* Rf.vj??d tne OSWER event cycle documentation as part of its annual
FMFIA process.
• Would conduct a risk assessment of Superfund Headquarters.
• Would consider scheduling an internal study of CERCLIS reporting.
FACILITY (E-TEC1-
Scope and Objectives
We performed a special review of concerns raised by local officials and
Members of Congress regarding EPA's proposed E-TEC. The primary concern
was whether EPA violated provisions in the fiscal 1991 and 1992
appropriations bills. The 1991 bill severely limited use of money appropriated in
earlier fiscal years for E-TEC. The 1992 bill eliminated any remaining use of the
funds except for investigating an alternate site for the facility.
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. Since we found no conditions requiring corrective actions, we
made no recommendations and closed the report upon issuance.
Conclusions
_EPA spent none of the $6.1 million appropriated by Congress for E-TEC on
E-TEC after the congressional prohibition. EPA had not begun to implement E-
TEC. Activities EPA conducted in a building planned for inclusion in the E-TEC
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EPA Qffirce of the Inspector General Annual Suoerfund Report to the Congress for Fiscal 1992 86
were fundamentally different from the type and extent of research and
demonstration activities envisioned for E-TEC. EPA brought only small samples
(treatability test quantities) of hazardous waste into the building. The existence
of a nearby toxic pond containing U.S. Army wastes did not affect the
presentation of issues in the draft and final environmental impact statements on
t~ I CV«.
UNANNOUNCED SITE REVIEW OF SOBEL BROTHERS REMOVAL
Scope and Objectives
We performed an unannounced site review at the Sobel Brothers Superfund
removal site in Perth Amboy, New Jersey. Our review objectives were to
determine the adequacy of the On-Scene Coordinator's (OSC):
a. Compliance with removal directives and guidance; and
b. Controls in monitoring the cleanup work and on-sfte spending.
We conducted our limited review at EPA Region 2's Response and
Prevention Branch offices in Edison, New Jersey. We judgmentally sampled
contractor cost reports submitted from January 16, 1991 to June 30 1991
We also reviewed all site entry/exit, OSC and Technical Assistance Team (TAT)
logs prepared when we started pur review. Our sample was not a statistically
valid sample and therefore our findings cannot be projected. However, we
believe it was adequate to show some deficiencies. We conducted our limited
review from July 22, 1991, to August 8, 1991. We made our unannounced
site visit on July 23, 1991.
Finding
Improvements Needed in Monitoring Contractor Activities and Cnsf«
Jne OSC needed to improve monitoring of contractor activities and costs.
We found that (1) entry/exit logs did not reconcile with hours claimed for
contractor personnel; (2) the contractor claimed on-site and office work costs
during demobilization periods without independent documentation of hours
charged; (3) the OSC and TAT personnel sometimes arrived at the site after
contractor personnel; (4) the contractor claimed overtime without prior
approval; and (5) the OSC did not always issue work orders. The OSC told us
she relied on the ERCS contractor to report removal activities properly,
especially those performed outside her presence. As a result, the OSC could
not accurately verify the ERCS contractor's costs, and the contractor could be
claiming unallowable and excessive costs.
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EPA Offirce of the Inspector General Annual Suoerfund Report to the Congress for Fiscal 1992 87
Recommendations
We recommended that EPA Region 2 OSCs:
• Maintain daily entry/exit logs and more accurately detail information in
the OSC log.
• Make sure an EPA representative arrives at the site before contractor
employees.
• Comply with contract requirements requiring approval of overtime.
• Prepare work orders when changes in site work are scheduled.
Agency Response
In response to our final report, EPA Region 2 indicated it:
• Was developing/revising internal procedures for all removal activities,
including procedures to collect site data needed for proper cost
documentation and to authorize and document overtime.
• Had taken corrective action through the performance evaluation
process for the TAT's failure to be on site with the ERGS contractor as
ordered.
UNANNOUNCED SITE REVIEW OF INTERNATIONAL DEPOSITORY
REMOVAL
Scope and Objectives
We performed an unannounced site review at the International Depository
Inc. Superfund removal site in North Kingston, Rhode Island. Our review
objectives were to determine the adequacy of the OSC's:
a. Compliance with removal directives and guidance; and
b. Controls in monitoring the cleanup work and on-site spending.
We conducted our limited review at the site from August 12, 1991, to
August 15, 1991. We judgmentally sampled contractor cost reports, site
entry/exit logs, OSC logs and TAT logs for the period June 17, 1991 through
August 14, 1991. Our sample was not a statistically valid sample.
Findings
Overall, the OSC was adequately monitoring the cleanup work and on-site
spending of the TAT and ERCS contractors, and generally complying with
prescribed EPA directives and guidance. However, we noted two weaknesses
in the documentation of the site entry/exit log. One employee would
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EPA Qfffree of the Inspector General Annual Superfund Rennrt to the Congress for Fiscal 1992 88
sometimes sign a group of employees in or out. Requiring employees to sign
only for themselves would reduce the chance of inappropriate entries.
Personnel leaving and re-entering the site did not sign themselves in and out on
the entry/exit log as required.
Recommendations
We made no recommendations because the OSC corrected the indicated
weaknesses during our review.
Agency Response
During our review, the OSC instructed personnel to sign the entry/exit log
only for themselves, and departures and re-entries began to be documented.
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EPA Offirce of the Inspector General Annual Suoerfiind Report to the Congress for Fiscal 1992 89
INTERAGENCY AGREEMENTS
EPA enters into interagency agreements (lAGs) with several other Federal
agencies to perform Superfund tasks. The Offices of Inspector General or other
audit organizations of the receiving agencies audit the cost records for these
agreements and/or their agency's performance. The EPA OIG also issues these
audit reports to EPA with a coyer letter, which includes recommendations for
EPA action if appropriate. In fiscal 1992, we issued 10 of these reports to EPA
management. We summarize the 10 audits below by agency audited. We
recommended EPA action on only one of these audits. CERCLA requires other
Inspectors General, like EPA's, annually to audit their agency's use of the
Superfund and report on that audit to the Congress.
AGENCY FOR TOXIC SUBSTANCES AND DISEASE REGISTRY
The Department of Health and Human Services (HHS) OIG audited the
Agency for Toxic Substances and Disease Registry (ATSDR) to determine
whether ATSDR had a system to account for costs incurred by specific
hazardous waste site and whether such a system could produce accurate and
reliable data for EPA cost recovery actions. The ATSDR receives funds through
an interagency agreement with EPA to perform health assessments and other
activities related to toxic substance contamination. The HHS OIG audit found
that ATSDR had not timely met EPA requirements to establish a system to
identify costs incurred for health assessments and other work by hazardous
waste site. In June 1987, ATSDR informed EPA that it was establishing a
system. In January 1989, ATSDR awarded a contract to begin development of
the system. In January 1990, ATSDR completed the part of the system related
to direct costs. The part of the system related to indirect costs was not yet
operational at the time of the audit.
The ATSDR expects that the new cost accounting system, when
completed, will identify all its costs incurred at each site. It plans to use the
system to identify costs incurred since October 1988. Costs incurred for fiscal
years 1987 and 1988 would still not be accounted for by specific site. The
HHS OIG estimated that direct costs for these years exceeded $19 million.
The HHS OIG recommended that ATSDR identify by specific site the costs
it incurred for fiscal years 1987 and 1988 and include in its FMFIA reviews an
assessment of the operational status and effectiveness of methods used to
identify costs by site. ATSDR, the Department of Justice and EPA met on the
fiscal 1987 and 1988 costs and determined .that reconstruction of the direct
and indirect costs for these years would not be an efficient use of Superfund
monies, would not necessarily result in additional cost recoveries, and would be
difficult to defend in court. ATSDR concurred with the other recommendation.
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EPA Offirce of the Inspector General Annual Sunerfund Report to the Congress for Fiscal 1992 90
U.S. ARMY CORPS OF ENGINEERS
The U.S. Army Audit Agency audited the fiscal 1990 Superfund financial
transactions of the U.S. Army Corps of Engineers. The Corps is responsible for
managing the design and construction of Federal cleanup sites. During fiscal
1990, the Corps recorded obligations of about $188.4 million and
disbursements of about $124.4 million. The U.S. Army Audit Agency audited
about $231 million in obligations, about $74.8 million in deobligations and
about $106.7 million in disbursements. The Agency found that about 94
percent of the transactions were valid and supported. However, they found
about $88.6 million of transactions in one Corps district were unsupported
The district improperly used Superfund projects to transfer $88.2 million to a
revolving fund temporarily to make the fund's financial condition look better.
This district also transferred about $406,000 of costs to Superfund projects at
the end of the year without support. The Corps agreed to take corrective
action on both issues.
DEPARTMENT OF ENERGY
The Department of Energy (DOE) OIG conducted an audit of fiscal 1990
Superfund costs incurred by various DOE offices. The DOE OIG evaluated the
accounting records and other documentation supporting costs incurred for
seven lAGs with claimed costs of $7,917,845. The audit disclosed no
questioned or unresolved costs.
FEDERAL ENERGY MANAGEMENT AGENCY
The Federal Energy Management Agency (FEMA) OIG audited FEMA's
administration of the permanent and temporary relocation components of the
Superfund program for fiscal 1989. The FEMA OIG audited $1.2 million of the
$3.9 million in expenses incurred in fiscal 1989. The FEMA auditors found
that, for the most part, FEMA had effectively administered the permanent and
temporary relocation program and spent funds for eligible purposes. However,
the FEMA OIG found $129,675 in unsupported costs and $5,823 in
overpayments. The FEMA OIG also noted weaknesses in FEMA's monitoring of
contractors. The FEMA management agreed to take corrective actions on the
audit findings.
DEPARTMENT OF THE INTERIOR BUREAU OF MINES
The Department of the Interior (DOI) OIG audited the Bureau of Mine's
accounting for Superfund monies for fiscal years 1987, 1988 and 1989. The
Bureau of Mines conducts preliminary surveys of damages to natural resources
and provides technical assistance to programs affecting environmental quality.
EPA reimbursed the Bureau $792,973 for work performed between July 1,
1987 and September 30, 1989, and the DOI OIG selected $554,112 of these
costs for audit. The DOI OIG found the Bureau had not maintained accurate and
complete records for costs totaling $308,417. The DOI OIG also found that the
Bureau had not developed indirect cost rates according to EPA guidance. The
Bureau agreed to implement corrective action.
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EPA Qffircfl pf the Ingpgctpr General Annual Suoerfund Report to the Congress for Fiscal 1 992 91
Recommendation to EPA
We recommended that EPA help the Bureau complete corrective action.
Agency Response
In response to our audit report, EPA managers asked the DOI DIG to
arrange for the Bureau of Mines to contact appropriate EPA officials to resolve
issues relating to questioned costs.
DEPARTMENT OF THE INTERIOR BUREAU OF RECLAMATION
ioolhe 99' OI,G-fluA't£d the Bureau °f Reclamation's accounting for fiscal
1 989 and fiscal 1 990 Superfund expenditures in two separate audits. The
Bureau provides technical assistance to EPA in responding to releases of
hazardous substances, pollutants and contaminants into the environment The
technical assistance included managing remedial investigations and feasibility
5£?Rfii?SP"3nfiL5P?FS^tJ?Ps' ?nd mana9'ng and overseeing construction.
Jhe P?iS!G "ientlfied 29 lAGs with total claimed costs of $5;227,703 for
fiscal 1989. Of this total, the DOI OIG sampled and reviewed $2.1 million.
T5?P2Lludltors found that the Bureau: (1) did not adequately support
9213,568 in travel, automated data processing and other costs; (2) did not
adequately support $32 881 in fiscal 1988 unsupported costs reported in a
prior audit; (3) incurred $356 in costs beyond budgeted amounts and $9,038 in
costs for one project not covered by an IAG; and (4) did not timely submit a
Minority Business Utilization Report. The DOI OIG also did not express an
opinion on indirect costs and supervisory distributive costs claimed for
Superfund projects in fiscal years 1 988 and 1 989. The Bureau agreed to
correct the deficiencies cited.
*o« no the P^-S10 ide.ntified 33 lAGs with claimed costs of
S26,O91,1 10, and sampled $23 million. The Bureau did not sufficientlv
document fiscal 1990 costs totaling $738,876. The Bureau also did not
sufficiently document $33,013 in fiscal 1989 costs and did not claim $43,310
in fiscal 1988 costs incurred. The Bureau also incurred $643,243 beyond
amounts authorized in four lAGs and $1 1 ,207 for projects not covered by lAGs
but did not claim any of these costs. Although the Bureau timely submitted the
Minority Business Utilization Report to DOI's Office of Small and Disadvantaged
Business Utilization Office, that Office did notsend the report to EPA until 11
SX? P3.8!.."16 due date- Tne Bureau took corrective actions on all the DOI
OIG s findings.
DEPARTMENT OF THE INTERIOR U.S. FISH AND WILDLIFE SERVICE
<• Th.eoPJ?' °1G ^idited the u-s- Fish and Wildlife Service's accounting for
fiscal 1 989 and 1 990 reimbursable Superfund expenditures. The Service
provides technical assistance to survey damages to natural resources from
releases of hazardous substances, pollutants and contaminants into the
environment. The DOI auditors identified 13 lAGs with claimed costs of
$48,479 in fiscal 1989 and 19 lAGs with claimed costs of $236,347 for fiscal
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EPA Offirce of the Inspector General Annual Suoerfund Report to the Congress for Fiscal 1992 92
1990. The DOI OIG found that the Service did not sufficiently document costs
totaling $45,435. The Service also did not timely submit Minority Business
Utilization Reports.
DEPARTMENT OF THE INTERIOR OFFICE OF ENVIRONMENTAL AFFAIRS
The DOI OIG audited the DOI Office of Environmental Affairs' accounting
for fiscal 1990 reimbursable Superfund expenditures. The Office conducted
preliminary natural resource surveys and provided technical assistance in
surveying damages to natural resources from hazardous substances. The DOI
OIG audited $1,281,523 of the $1,291,433 claimed, and found adequate
support for these costs. They also found that the Office returned unobligated
balances for prior year's lAGs to the Agency and established procedures to
return unobligated balances from the current year's lAGs.
DEPARTMENT OF JUSTICE
The Department of Justice (DOJ) OIG conducted a compliance audit of the
DOJ Environment and Natural Resources Division's (ENRD) implementation of
^??^5n EPA for fiscal .199°- The DOJ conducts all Superfund litigation. The
DOJ OIG found no material discrepancies in the costs ENRD reported to EPA
However, the ENRD did not sign about 59 percent of travel authorizations until
after the travel had begun or was completed. The ENRD concurred with the
recommendations and took corrective actions.
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EPA Offircg of the Inspector General Annual Superfund Report to the Congress for Fiscal 1992 93
CONTRACTS
The OIG is responsible for conducting and supervising independent and
objective audits of Superfund programs and operations. To carry out this
responsibility, the OIG performs financial and compliance audits of EPA
contractors. Each Public Law authorizing EPA to award contracts provides the
Agency authority to audit and examine the books and records of the contrac-
tors 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 manage-
ment systems are adequate to account for costs claimed; and (2) costs claimed
are reasonable, allowable, and allocable, in accordance with applicable laws and
regulations, to the sponsored project.
Audits of contracts not only yield financial benefits to the Agency, but also
aid in improving Agency management. We expect to devote increased
resources to auditing EPA contractors and subcontractors given the increased
size of the program and EPA's conduct of more actual cleanups. These audits
also play an integral part in supporting EPA's cost recovery actions.
Of the 149 contract audit reports we issued in fiscal 1992, 36 covered
incurred costs under EPA contracts. The financial results of these audits were
as follows:
FINANCIAL RESULTS OF INCURRED COST CONTRACT AUDITS
~^^^^^^^^^^=
Federal Share II Total
Amount audited
Amount accepted
Ineligible costs1
Unsupported costs2
Unnecessary/unreasonable costs3
$175,726,199
172,453.335
2,135,759
1,137.105
0
$183,271,643
179,998,779
2,135.759
1.137.105
0
1. Costs questioned because of an alleged violation of a provision of a law, regulation,
contract, grant, cooperative agreement or other agreement or document governing the
expenditure of funds.
2. Costs questioned because, at the time of the audit, they were not supported by ade-
quate documentation and/or had not been approved by responsible program officials.
3. Costs questioned because they were not necessary or not reasonable.
Another 66 of our audits were initial pricing reviews in which we
reviewed costs proposed by offerers or bidders seeking EPA contract awards.
Because these are only proposed costs, our reviews do not question costs but
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'EPA Offirce of the Inspector General Annual Superfund Report to the Congress for Fiscal 1992 94
rather recommend as efficiencies costs that we believe EPA should not incur.
The combined financial results of the initial pricing reviews were as follows:
Total Costs Audited $ 942,744,118
Total Recommended Efficiencies $ 93,606,490
We also issued 30 reports on proposed indirect cost rates, 14 system
survey reports, and 2 program review reports on EPA contractors. In addition,
we issued one report on selected portions of the Disclosure Statement and Plan
filed with the United States Bankruptcy Court by a firm which had been ordered
to perform a Superfund cleanup of its former operations location.
The OIG can choose to have the audits performed by in-house staff,
independent public accounting firms or another Federal audit agency. During
fiscal 1992, our Superfund contract audits were performed as follows:
Audits Performed by OIG Staff 5
Audits Performed by Independent Public Accountants 38
Audits Performed by Defense Contract Audit Agency 106
Exhibit I contains a listing of all Superfund audit reports issued by the OIG
during fiscal 1992.
We summarize six particularly significant contract audit reports on four EPA
Superfund contractors below.
CH2M HILL INC.
Scope and Objective
We contracted with an IPA firm to perform audits of final indirect cost rate
proposals for 1987, 1988 and 1989 submitted by CH2M Hill, Inc. The
objective of the three audits was to determine whether the costs included in
the indirect cost pool and base were reasonable, allowable and allocable to the
benefiting programs.
Findings
1. Internal Controls Needed Strengthening
Hill needed to improve their documentation procedures for the processing
of labor transfer, adjustment and correction transactions. We found these
transactions could be initiated by telephone, without written confirmation. Hill
needed to improve the preparation and correction of employee time sheets. We
found time sheet corrections without documentation of who made the
corrections and the use of whiteout in making time sheet corrections.
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EPA Offirce Of the Inspector General Annual Sunerfund Report to the Congress for Fiscal 1992 95
2. Hill Needed to Improve Regulatory Compliance
We found two areas of material noncompliance with regulatory
requirements. Hill did not specifically identify and segregate at the time of
expenditure unallowable costs for social club dues, lobbying, relocation, meals
and lodging. Hill also did not properly compute bid and proposal costs. Proper
computation of these costs was needed to determine whether Hill reached
thresholds on these costs and whether advance agreements were required.
3. Hill Claimed Unallowable Costs
As indicated in the table below, we questioned large amounts of costs
claimed by Hill. Some major areas of questioned costs were bid and proposal
costs, Key Employee Bonus costs, excess deferred rent costs and excess
capital lease costs.
YEAR
1987
1988
1989
FINANCIAL RESULTS OF AUDITS
INDIRECT COST POOLS ($000)
Proposed
103,222.1
121,935.5
141,500.4
Accepted
96,095.5
104,784.9
125,026.5
Questioned
7,126.6
17,150.6
16.473.9
Recommendations
We recommended that EPA:
Advise Hill that the questioned costs are unallowable for Federal
participation and negotiate the final indirect cost rates based upon
these disallowances.
Document its decision on the allowability of each element of cost
we questioned to help in future audits.
Advise Hill to adjust interim and final billings under flexibly priced
agreements to reflect the final negotiated indirect cost rate.
Consider entering into advance agreements to establish
understandings with Hill on selected elements of cost we
questioned.
Require Hill to:
o Maintain the details of labor correction and transfer
transactions in its Project Control System.
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EPA Offirce of the Inspector General Annual Sunerfund Report to the Confess for Fiscal 1992 96
o Document its manual data processing controls over
verification of transactions, and reconcile payroll hours and
general ledger amounts with Project Control System hours
and amounts.
o Maintain written documentation for labor transfers,
adjustments and correction transactions.
o Prepare time sheets in ink, and document (including
identifying the person making changes) time sheet
corrections, alterations, adjustments or transfers.
o Identify and remove unallowable costs from its final indirect
cost rate claims.
o Accumulate and monitor bid and proposal costs including all
allocable indirect costs, and not claim costs over applicable
limits.
• Advise Hill to resubmit final indirect cost rate proposals for 1990
and 1991 consistent with the result of rate negotiations for audited
years.
• Establish an Agencywide policy on the treatment of Voluntary
Management Reductions by contractors from their indirect cost rate
pools.
Agency Response
In response to the audit reports, EPA indicated:
• It had negotiated indirect cost rate agreements with Hill based upon
the audit reports.
• It was negotiating adyance agreements and memorandums of
understanding with Hill where cost allowability issues were raised
in the audit reports.
• Hill had eliminated or reduced reported internal control conditions
to an acceptable level of risk.
* Hj[l nad agreed to revise its submissions for fiscal years 1990 and
1991 consistent with the results of negotiations.
• It had established an Agencywide policy not to accept Voluntary
Management Reductions.
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EPA Offirce of the Inspector General Annual Suoerfund Report to the Congress for Fiscal 1992 97
NUS CORPORATION
Scope and Objective
The Defense Contract Audit Agency (DCAA) performed on our behalf an
interim audit of 1989 claimed costs by NUS Corporation on a contract to
provide hazardous materials incident response training. The audit also reviewed
NUS compliance with special provisions of the contract.
Findings
1. NUS Did Not Segregate Costs bv Contract Period
NUS books did not show a clear cut-off between the base period and the
first option period of the contract. DCAA therefore could not determine the
appropriateness of the labor hour and dollars booked by period. NUS also did
not segregate its billings by period, as required by the contract. NUS claimed
that the contracting officer waived this billing requirement, but could not
provide documentation to support this assertion.
2. NUS Exceeded Contract Funding Limitations and Work Assignment Ceilings
NUS billed $695,753 more in base period effort costs than allowed by the
contract, and $41,543 in overtime premiums beyond the contractual limit for
these costs. NUS also exceeded work assignment hour ceilings 14 times
totalling 2,858 hours, and dollar ceilings 15 times totalling $142,494 plus the
cost of the excess hours.
3. NUS Did Not Always Obtain Consent for Subcontractors
NUS did not obtain EPA's consent before employing two subcontractors.
NUS also billed more than the contract allowed for two approved
subcontractors.
4. NUS Acquired Property Without EPA Approval
NUS acquired property items costing $303,957 without receiving the
required EPA approval.
5. NUS Did Not Reconcile Progress Reports and Voucher
The hours reported on its monthly progress reports and on its voucher did
not agree. NUS did not try to reconcile the two reports, and DCAA could not
reconcile the variances.
6. NUS Violated Its Travel Regulations
NUS travel regulations required employees to rent only subcompact and
compact cars. We found that NUS spent at least $40,048 on the rental of non-
compact cars.
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EPA Offirce of the Inspector General Annual Suoerfund Report to the Congress for Fiscal 1992 98
7. NUS Employees Did Not Meet Contract Qualification Requirements
Twenty NUS employees charged under the contract did not meet the
minimum education and experience qualifications required by the contract.
FINANCIAL RESULTS OF AUDIT
Amount audited
Amount accepted
Ineligible costs1
Unsupported costs2
Unnecessary/unreasonable costs3
Federal Share
$9,310,470
7,869,419
1,441,051
0
0
Total Costs
$9,310,470
7,869,419
1,441,051
0
0
1 . Costs questioned because of an alleged violation of a provision of a law, regulation,
contract, grant, cooperative agreement or other agreement or document governing the
expenditure of funds.
2. Costs questioned because, at the time of the audit, they were not supported by ade-
quate documentation and/or had not been approved by responsible program officials.
3. Costs questioned because they were not necessary or not reasonable.
Recommendations
DCAA made no specific recommendations in its audit report, but we
asked EPA to make a final determination on the costs questioned and to
respond to the report findings.
Agency Response
In response to the audit report, EPA indicated:
• It had issued a contract modification correcting the contract
periods charged for payments to NUS. With these corrections,
NUS did not exceed the base period limit.
• NUS was not required to obtain written consent for the two
subcontracts because they were fixed price subcontracts of less
than $25,000. Except in one instance, contract modifications
provided subcontract funding limits which NUS did not exceed.
EPA asked for further documentation from the auditors on the
remaining unresolved case.
• EPA determined that NUS billed $41,543 more in overtime costs
than allowed. EPA will either disallow or ratify these costs.
• EPA advised NUS to request adjustments in work assignment
ceiling amount when it exceeds estimates of hours and dollars.
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EPA Offircg of the Inspector General Annual Sunerfund Report to the Congress for Fiscal 1 992 99
• All items but one of contractor acquired property were under
contract thresholds for approval or were approved in contract
modifications. EPA will either disallow or ratify the remaining item.
• EPA determined that reconciliation of the progress reports and
vouchers is not feasible. NUS does not have final monthly hour
and cost data before the progress reports are due.
• NUS now requires employees to justify and receive advance written
approval for the rental of non-compact vehicles.
S&D ENVIRONMENTAL SERVICES, INC.
Scope and Objective
We performed ah interim audit of costs claimed under an S&D
S2S5fhan8ln«rvlc^f lnc' 1egj^2 ERCS contract. The audit covered costs
?, fed ?V,,S&D, from, September 30, 1988 to September 29, 1991. We
judgmentally selected for review 4 of the 31 delivery orders issued to S&D
»SfS ^anua? ?' il989 and April 18' 1991' We selected delivery oTders
awarded in each of the contract's three years. We made this selection to
determine if problems found in the base year were corrected or repeated
£n~?o^-the Co™3* Period. We believe the deficiencies we found were
orders conditions that we would find if we reviewed all 31 delivery
Findings
"•• Inadequate Accounting System to Report Costs Under EPA Contrary
S&D,'S ^counting system and procedures were not generally
aScu™la?e and verify costs under the EPA contract. S&D did not
an adequate job cost or other accounting system to report costs
^^S^SSSS^Y, 'SK1' S&° "**£££ Removal C°st Management
bystem (RCMS) mandated by EPA for use on ERCS contracts to report and
track costs and produce vouchers. The RCMS does not provide assurance that
the company incurred costs tracked. There were inadequate checks and
balances against the RCMS and within S&D's own accounting system We
found significant inconsistencies between billed amounts and invoices that we
could not reconcile.
2- Lack of Written Accounting or Internal Control Procedures
S&D did not have written accounting manuals. S&D needed written
accounting procedures to make sure it recorded, accumulated and reported
costs uniformly and consistently. S&D also did not have a written internal
control procedure manual. Therefore we were unable to determine if S&D
followed proper procedures. Written internal controls are essential to the
proper conduct of business with full accountability for resources
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EPA Offirce of the Inspector General Annual Suoerfund Reoort to the Conaress for Fiscal 1992 100
3. Lack of Adequate Timekeeping System
Employees did not sign daily time cards or time sheets, nor did supervisors
review them periodically. Time cards were often handwritten, blank,
incomplete or missing. The time card did not differentiate between direct,
indirect and unallowable labor, and the employees did not allocate time among
these categories. Often the time clock imprint on the time card did not reflect
the correct month and date. We questioned direct labor claims of $313,437 as
unsupported due to timekeeping deficiencies, billing discrepancies and lack of
time cards to support hours charged.
4. Lack of an Adequate Inventory Control System
S&D did not have an adequate or consistent inventory control or pricing
system to account for materials used at EPA sites. We therefore could not
reconcile the quantities and prices billed with the quantity purchased and placed
into inventory. S&D billed EPA for many months at one price although S&D
made daily or weekly purchases from different vendors at different prices. S&D
- based many unit prices on invoices from a related entity that had higher prices
than unrelated purchases. We questioned as unsupported $24,455 of $43,497
claimed for materials because the charges were not supported by adequate
documentation. In some cases, S&D could not provide invoices to support
charges. In other cases, S&D used the same invoices to support charges on
many sites.
5. Lack of Equipment Logs
S&D did not maintain equipment logs to identify equipment it used on EPA
sites. S&D should have documented in logs for individual sites dates and hours
equipment used, serial numbers and other important information. The contract
required equipment usage logs. Because S&D did not maintain documentation,
we could not verify usage. We also found S&D claimed some equipment not
authorized in the contract.
6. Inadequate Subcontractor Selection Procedures
S&D did not maintain an adequate subcontractor log required by the
contract. We found deficiencies in S&D's procedures for procuring
transportation and disposal subcontractors and its documentation of the basis
of such selections. We questioned as unsupported $201,985 in subcontracting
costs because S&D did not receive at least three cost estimates as required,
and did not ensure adequate competition and reasonable prices. S&D also
billed EPA before paying subcontractors.
7. S&D Billed at Wrong Labor Category Rates
Although the contract required S&D to bill only at the rate of an employee's
normally assigned category of labor, we found S&D improperly billed EPA at
higher rates that it did not actually pay. We therefore questioned $30,241 of
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EPA Offlrce of the Inspector General Annual Superfund Report to the Congress for Fiscal 1992 101
claims for direct labor as ineligible, and estimated that the ineligible amount for
all sites was about $200,000.
FINANCIAL RESULTS OF AUDIT
Amount audited
Amount accepted
Ineligible costs1
Unsupported costs2
Unnecessary/unreasonable costs3
Federal Share
$943,718
373,600
30.241
539,877
0
Total Costs
$943,718
373,600
30.241
539,877
0
1. Costs questioned because of an alleged violation of a provision of a law, regulation,
contract, grant, cooperative agreement or other agreement or document governing the
expenditure of funds.
2. Costs questioned because, at the time of the audit, they were not supported by ade-
quate documentation and/or had not been approved by responsible program officials.
3. Costs questioned because they were not necessary or not reasonable.
Recommendations
We recommended that EPA:
• Require S&D to:
Implement an adequate cost accounting system maintaining
separate cost accounts for each delivery order or job site.
Establish and implement adequate accounting and internal
control procedures outlined in procedural manuals.
Require employees to sign and supervisors to approve daily
time cards or time sheets identifying hours worked by an
assigned job number.
Establish, implement and periodically review adequate
timekeeping policies and procedures. A labor distribution
report should identify all direct and indirect time charges for
specific account numbers and should reconcile to other
documents.
Develop and maintain an adequate inventory control and
pricing system to identify quantities purchased and
withdrawn from inventory for use on jobs. The system
should identify specific jobs or sites where S&D used the
quantities to support the claimed costs.
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EPA Offirce of the Inspector General Annual Sunerfund Report to the Congress for Fiscal 1992 102
o Avoid purchases from any entity related to S&D officers
unless EPA provides written approval and justification.
o Maintain adequate equipment usage logs to identify and
document the usage through serial numbers, dates, hours
and site names.
o Procure transportation and disposal subcontractors and
document the procurements as required by the contract and
EPA policies and procedures. S&D should provide adequate
justification where it uses less than full and open
competition.
• Adjust the allowable costs according to our determination and
recover any excess amounts paid to S&D.
Agency Response
This audit was not resolved as of August 30, 1993.
VESTA TECHNOLOGY, LTD.
Scope and Objective
DCAA performed on our behalf an interim audit of claimed delay costs of
vesta Technology, Ltd., an incineration subcontractor to Reidel Environmental
Services, Inc. The purpose of the audit was to determine the reasonableness
and allowability of the claimed delay costs. DCAA did not receive an audit
report on $264,259 of the claimed costs incurred by a second tier
subcontractor in time to include its results in the audit report. DCAA could
question additional costs based on that audit.
Findings
1- Vesta Claimed Delay Costs for Periods Covered by Basic Contract
Vesta claimed that the government caused 74 days of delay. After
reviewing Vesta's critical path analysis showing an intended 43-day standby
period, DCAA found that Vesta was entitled to claim costs for only 35 days of
delay.
2. Vesta Claimed Excessive Daily Rate for Equipment
Vesta claimed a daily rate of $2,173 for its incinerator, based on cost of
depreciation, interest and cost of repairs. Since no repairs would be needed
during down time, we questioned the cost of repairs. Interest is not allowable
as a contract expense. DCAA figured a daily rate of $1,338 based on the cost
of depreciation and a facilities capital cost of money factor.
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EPA Offirce Of the Inspector General Annual Sunerfund Report to the Congress for Fiscal 1992 103
3. Vesta Claimed Costs Covered Under Basic Contract
Vesta claimed delay costs of $54,509 for a tent it owned based on a daily
rental rate. DCAA determined that Vesta fully recovered the cost of the tent
during the basic contract, and thus incurred no additional cost for the delay
period. Vesta also claimed $1,975 in petty cash expenses and $22,134 in
travel rotation expenses covered under the basic contract.
4. Vesta Included Variable Costs in Overhead
Vesta's computation of extended overhead costs included variable costs for
its home office, while it should have included only fixed costs. DCAA
computed a daily chargeable cost of $881, instead of the $2,169 claimed bv
Vesta.
5. Vesta Improperly Charged for Water Pressure Loss
Vesta claimed $5,376 for delays due to losses of water pressure on two
days. Vesta provided no evidence that the Government caused these losses.
DCAA also noted that Vesta's critical path included some down time.
6. Vesta Improperly Claimed Profit on Delay Costs
Vesta claimed $88,160 in profit on delay costs. Federal regulations do not
allow profit to be applied to delay costs.
7. Vesta Did Not Prepare Proposal Properly
Vesta did not prepare its proposal according to Federal regulations. Its cost
and pricing data were not adequate. The proposal was not acceptable as a
basis for negotiating a fair and reasonable price.
FINANCIAL RESULTS OF AUDIT
Amount audited
Amount accepted
Ineligible costs1
Unsupported costs2
Unnecessary/unreasonable costs3
$1,241.678
453,697
523.722
264,259
0
$1.241.678
453,697
523.722
264,259
0
2.
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
Costs questioned because, at the time of the audit, they were not supported bv ade-
quate .documentation and/or had not been approved by responsible program officials
For this audit, the unsupported costs were those for which a separate audit report had
not yet been completed.
3. Costs questioned because they were not necessary or not reasonable.
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EPA Offirce of the Inspector General Annual Superfund Report to the Congress for Fiscal 1992 104
Recommendations
We made no specific recommendations in our audit report, but asked EPA
to provide a report of action addressing the questioned costs.
Agency Response
This audit had not been resolved as of August 30, 1993.
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EPA Offirce of the Inspector General Annual Sunerfund Report tr» the Congress for Fiscal 1992 1Q5
ASSISTANCE TO EPA MANAGEMENT
Besides performing audits and investigations, the DIG responds to EPA
management requests for OIG input in the development of regulations, manuals
directives, guidance and procurements. These are proactive efforts to prevent
problems that might later result in negative audit findings or investigative
results. The OIG reviews and comments on draft documents prepared by
Agency offices. Sometimes an OIG staff person attends meetings of an EPA
work group to provide input. Fiscal 1992 was an active year for OIG
preventive assistance to EPA management in the Superfund area. Besides
helping EPA management, we coordinate with other Federal agencies. We also
seek to improve Superfund audit and investigative capabilities of our OIG and of
other Federal OIGs.
CFO Act Implementation
The Chief Financial Officers (CFO) Act was enacted in November 1990 to
improve agency accounting systems, financial management activities and
internal controls. Since then we have actively worked with Agency officials to
implement the Act. The requirement that EPA prepare annual financial
statements covering its trust funds, revolving funds and commercial activities
includes the Hazardous Substance Superfund.
The financial statements prepared by the Agency must include performance
measurement information summarizing program results. The performance
measurement information is intended to provide Agency managers, the Office
of Management, and Budget (OMB). Congress and others with information to
assess the efficiency and effectiveness of Agency programs. To identify
performance measures to include in the Agency's fiscal 1992 financial
statements, the Agency's CFO convened a work group. The OIG actively
participated in this work group by attending work group meetings, reviewing
and commenting on draft performance measures, and meeting with OMB and
Agency personnel to discuss the measures. We plan to continue this effort as
the Agency works to refine the performance measures reported.
Contract Management
We have provided considerable assistance to EPA in improving its contract
management. We participated in the Agency's Alternative Remedial
Contracting Strategy (ARCS) Council established to identify and implement
improvements to ARCS contract management. EPA began implementina
improvements recommended by the Administrator's Task Force on
Jmplementation of the Superfund ARCS. As a part of these improvements, the
OIG has enhanced our efforts to identify contractors for whom we should
assume audit cognizance, improved coordination with the Defense Contract
Audit Agency on timely audits of EPA contractors, and enhanced our
monitoring and reporting procedures to better track needed financial audits of
EPA contractors. We also participated in an Agency task force that developed
guidance for EPA staff on preparing independent Government cost estimates
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EPA Offirce of the Inspector General Annual Sunerfund Report to the Congress for Fiscal 1992 106
The ARCS Task Force, EPA OIG and GAO audits, and Congressional hearings
had identified the need for such guidance.
In June of 1992 OMB created interagency "SWAT Teams" to assess
contract administration and auditing practices of 12 civilian agencies. OMB
was responding to contract administration problems identified through audits
(including EPA OIG audits), Congressional reviews and news media reports.
The OIG actively participated in the EPA SWAT Team, which recommended 31
improvements in EPA operations and 45 improvements in Government-wide
operations. The changes will clarify the allowability of costs and the records
contractors must maintain to support claimed costs. Superfund is EPA's
heaviest user of contract resources.
Closeout/Deobligation of Assistance Agreements
We have been part of the Agency's Superfund Closeout/Deobligation Task
Force. EPA established this Task Force to review and improve EPA policies and
procedures for closeout of grants, cooperative agreements and interagency
agreements, and the deobligation of unneeded funds from them. During fiscal
1992, we participated in a Task Force meeting and commented on draft policies
and procedures.
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 (and other
appropriate audit organizations) of the mandated audit requirements. The
Superfund Amendments and Reauthorization Act of 1986 (SARA) requires " . .
:, the Inspector General of each department, agency or instrumentality of the
United States which is carrying out any authority ..." under SARA to
conduct an annual audit of uses of the Superfund. In July 1987, we formed a
work group of 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.
During fiscal 1992, the work group met once to resolve questions on
ongoing audits and discuss the relationship of the SARA annual audit
requirements with the CFO Act annual audit requirements. We also met and
talked by telephone with staff of other OIGs and audit organizations in response
to individual needs.
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EPA Offircg of the Inspector General Annual Suoerfund Report to the Conoress for Fiscal 1992 107
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.
We require all OIG employees and OIG audit services contractor employees
performing Superfund audits to take this course. We also offer the course to
other Federal OlGs and audit organizations who perform audits in their own
agencies. We presented this course to five OIG audit divisions in fiscal 1992.
We include the course in the OIG Training and Development Sources course
catalog.
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EPA Offirce of the Inspector General Annual Suoerfund Report to the Congress for Fiscal 1992 108
INVESTIGATIVE ACTIVITY
During fiscal 1992, our Superfund investigative efforts resulted in 11
indictments and 22 convictions. Fines and recoveries, including those
associated with civil actions, totalled about $1.43 million. One settlement
agreement resulted in a cost avoidance of $353,723. At the end of fiscal
1992, we had 65 active Superfund investigations underway, 32 percent of our
active OIG investigations at EPA.
The OIG Office of Investigations has had a major investigative initiative
underway within the Superfund program, directed at fraud in the Contract
Laboratory Program (CLP). Laboratory analyses under the CLP are the empirical
basis for the entire Superfund program. Based on CLP testing for the presence
of hazardous chemicals, the Superfund program decides which cleanups to
begin and how to carry them out. Fraudulent analyses could endanger the
public health and safety and result in unneeded spending on cleanups. In
addition, fraudulent analyses could hinder the Department of Justice's efforts to
collect the cost of cleanups from the responsible parties. We achieved
significant results during fiscal 1992. We describe several actions resulting
from the contract laboratory investigations below.
Two Ohio Lab Employees Banned from CLP and Company Fined
In February 1992, Analytical Services Corporation of Findlay, Ohio, pled
guilty to making a false claim to EPA for $31,676.48 and agreed to pay a
criminal fine of $500,000. ETC Toxicon, a defunct CLP laboratory formerly
owned by Analytical, had falsified test data under two EPA contracts.
In April 1992, two employees of Analytical Services Corp. admitted to
falsifying data submitted to EPA. The two agreed to a pre-trial diversion
agreement which banned them from CLP work for three years. The employees
claimed that a former manager directed them to submit the false data. The
former manager admitted to so directing them.
*>ioA)*?r5fparate civil a9reement, the corporation agreed to pay the government
$490,000.
New York Lab President Convicted of Fraud
The president of Nancp Environmental Services, Inc., of Dutchess County
New York, was convicted in September 1992 of mail fraud and submitting false
statements to EPA, as well as conspiring to submit false statements. The
charges related to analyses of soil and water samples for EPA. Arun Gaind, the
president, and Sohail Jahani, a supervisor, engaged in a scheme of setting back
the dates on the computer data systems to which gas chromatograph/mass
spectrometer (GC/MS) instruments were attached to make it appear that
sample analyses were performed within EPA-approved holding times when they
were not. Jahani pled guilty in May 1992 to conspiracy to defraud EPA, and
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EPA Office of the Inspector General Annual Suoerfund Report to the Congress for Rscal 1992 109
James Daly, another supervisor at Nanco, pled guilty in October 1991 to
causing false submissions to be made to EPA.
Louisiana Testing Firm. 3 Employees Submitted False Claims
Three employees of Environmental Industrial Research Associates, Inc.
(EIRA) in Louisiana, Annette M. Savoy, Sylvia I. Leibe, and Elizabeth Y.
Olavesen, pled guilty in November 1991 to making false claims to EPA for
analyses of soil and water taken from Superfund sites. EPA requires the use of
GC/MS instruments, properly calibrated, in making the analyses. An operator
can manually override calibration readings of the GC/MS instruments, making it
seem that the instrument is correctly calibrated. This avoids the time-
consuming process of recalibration. The defendants overrode the readings and
taught other EIRA employees how to do so, resulting in the submittal of false
information to EPA. The three employees were sentenced in July 1992 to 6
years probation and $1,325 in fines.
In February 1992, EIRA pled guilty to one count of conspiracy to defraud
the government with respect to claims. The corporation voluntarily removed
itself from government contract bidding as a pre-condition to sentencing.
Connecticut Lab Company Vice President Pleads Guilty
Robert Q. Bradley, vice president of a Connecticut company, YWC Inc.,
pled guilty in October 1991 to making a false statement to EPA. Bradley was
sentenced to 2 years probation and fined $1,000.
YWC, a wholly-owned subsidiary of SRK Holding, Inc., pled guilty in
December 1990 to two counts of making false statements to EPA and was
fined $500,000. EPA's contract with YWC required the company to analyze
w»™ sa.mP|es within 7 days of receipt and soil samples within 10 days.
YWC s York Laboratories Division facility division in Monroe, Connecticut, was
charged with backdating more than 60 analyses and using a then-approved
laboratory at Whippany, New Jersey, to do the analyses. In addition to the
criminal fine, YWC also entered into civil and administrative settlements. Under
the civil settlement, YWC agreed to pay EPA $150,000 in damages for the
defective samples. In the administrative settlement, YWC agreed that the two
laboratories involved in the fraud, located in Monroe, Connecticut, and
Whippany, New Jersey, would not take on further Government-financed work.
Pennsylvania Lab Employees Plead Guilty
Charles Daniel Workman, an employee of Geo-Con, Inc., pled guilty in
October 1991 to a charge of conspiracy to defraud the government with
respect to claims concerning the cleanup of the Bruin Lagoon Superfund site in
Butler County, Pennsylvania. Another Geo-Con employee, Terry Lee Tebben,
pled guilty in January 1992 to one count of making false statements. Tebben
was sentenced in March 1992 to 2 months home detention and 2 years
probation. Workman was sentenced in May 1992 to 5 months home detention
and 1 year probation.
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PPA Offircc of the Inspector General Annual Sunerfund Report to the Congress for Fiscal 1992 110
EPA funded a $4 million contract with Geo-Con to clean up the lagoon,
which was contaminated with, among other things, sulfuric and hydrochloric
acid. The adjacent Bruin Oil Company had used the lagoon for disposal of
wastes since the 1930's. EPA expected the cleanup work would cause the
emission of hazardous gases, including sulfur dioxide, creating a potential
hazard not only to the Geo-Con employees but also to nearby residents.
The investigation uncovered two major frauds committed by Geo-Con
employees during the performance of that contract. Tebben, Geo-Con's health
and safety engineer, used the finger of a rubber glove and grease to cover up
the air monitors required by the contract, causing them to give false readings
on the amount of hazardous gases being released, and falsely stated that the
measurements reported in the air monitoring reports were accurate. Workman,
Geo-Con's site superintendent, forced air through the water treatment system
meter, causing a reading showing more contaminated water treated than had
been. As a result, Geo-Con submitted $62,000 in false claims to EPA for
reimbursement for water treated.
Based on the guilty pleas, Tebben and Workman were also suspended, and
subsequently debarred, from receiving government contracts and assistance for
3 years. Also, based on the investigative findings, Geo-Con, Inc., entered into
a civil settlement, in which it agreed to pay the government $312,000 and to
withdraw its $353,723 contract claim.
New Jersey Lab Firm Vice President Pleads Guilty
In July 1992, Richard Posner, a former vice president of United States
Testing Company of Hoboken, New Jersey, a subsidiary of SGS North America,
Inc., pled guilty to a charge of making a false statement to EPA. Posner
admitted that he caused company employees to falsify information contained in
his laboratory's report on the chemical analysis of a Performance Evaluation
test submitted by EPA as part of its laboratory evaluation procedure. As
previously reported, in April 1991 the company was ordered to pay a $100 000
criminal fine and to repay the entire contract price of $869,486.90 as
restitution to the United States.
U.S. Testing admitted to backdating tests of water and soil samples at
Superfund sites. By "peak shaving" (manual manipulation of calibration), which
violated the required testing sequence, U.S. Testing sought to disguise its
failure to conduct timely tests.
California Lab Officer and Corporation Enter Pleas
In August 1992, Anita C. Rudd, former vice president of I-CHEM Research
Inc., Hayward, California, and the corporation pled guilty to having made a false
claim to EPA under the CLP for $35,086.
From June 1983 until December 1987, I-CHEM was EPA's sole supplier for
contaminant-free sample containers used to collect site samples for CLP
analysis and evaluation. The supply contracts required quality assurance
-------
EPA Qffirce of the Inspector General Annual Suparfund Report to the Congress for Fiscal 1992 111
testing. The investigation reveajed that I-CHEM defrauded EPA by intentionally
not performing the required quality control testing on the containers and by
creating records to disguise that fact.
In a separate action resulting from this investigation, I-CHEM, Anita C.
Rudd, and Marvin W. Rudd, co-owner and former president of I-CHEM, entered
into a civil settlement agreement to pay the government $435,000. I-CHEM
and Anita Rudd (now president and CEO of I-CHEM) also signed a compliance
agreement with EPA, voluntarily excluding them from participation in
government contracts or grants for 18 months.
Prosecutive action continued in fiscal 1993, with Marvin Rudd, co-owner
and former president of I-CHEM, pleading guilty to two counts of making false
claims.
In addition to the CLP activity, an EPA OIG investigation resulted in the
following prosecution:
EPA Official Claimed Degrees Not Earned
A former EPA official who served as on-scene coordinator at hazardous
waste cleanup sites was sentenced for making false declarations during his
testimony as an expert witness at a Federal criminal trial in 1988. The
defendant was sentenced to 3 months of home detention (with electronic
surveillance at his own expense), 3 years probation, a fine of $2,000 and loss
of his EPA job. He had falsely claimed to hold Bachelor of Science degree and
Master of Science degrees, and to have written a Master's thesis. The
defendant also made false statements concerning his academic credentials in
other sworn statements, including various applications for Federal employment
a Questionnaire for Sensitive Position, and depositions and affidavits in civil '
lawsuits.
-------
EPA Offirce of the Inspector General Annual Sunerfiind Report to the Congress for Fiscal 1992 112
SUPERFUND AUDIT REPORTS
ISSUED DURING FISCAL 1992
EXHIBIT I
1 OF 7
INTERNAL AND MANAGEMENT AUDITS AND SPECIAL REVIEWS
Final
Report
Number Description
Reviews Required By CERCLA
2100237 AGENCY FY90 REPORT ACCURACY/REASONABLENESS
2400030 AGENCY FY90 REPORT-REG. 4 ACCOMPLISHMENTS
2400031 AGENCY FY90 REPORT-REG. 5 ACCOMPLISHMENTS
2400033 AGENCY FY90 REPORT-REPORT TIMELINESS
2100662 RESPONSE CLAIMS AUDIT, FISCAL 1991
2400079 RI/FS REVIEW-KOPPERS TEXARKANA, TX
2100660 TRUST FUND AUDIT, FISCAL 1991
Audit
Control Number
E1SFG1-11-0015
E1SFG1-11-0015
E1SFG1-11-0015
E1SFG1-11-0015
E9HFF2-11-0031
E1SGG2-14-0017
P1SFF1-11-0026
Date
Report
Issued
2/11/92
3/31/92
I 1 f mm
3/31/92
1 ™ t ~ mf
3/31/92
9/30/92
9/29/92
It
9/30/92
Performance Audits
2100209 ARCS CONTRACTS-CONSOLIDATED REPORT
2100200 ARCS CONTRACTS-REGION 3
2100624 CONTRACT LAB PROG QA/QC-EMSL LAS VEGAS
2100164 COST RECOVERY EFFORTS AGAINST PRPS
2100501 COST RECOVERY NEGOTIATIONS-REGION 2
2100268 RESPONSIBLE PARTY SEARCHES-REGION 2
2100301 RESPONSIBLE PARTY SEARCHES-REGION 7
2100666 SAMPLE MANAGEMENT OFFICE
2300063 STRINGFELLOW SITE MANAGEMENT BY REGION 9
2100063 UNANNOUNCED SITE VISIT-SOBEL BROTHERS,
NJ
E1SGE2-
E1SGA1-
E1SKFO-
E1SHCO-
E1SJC1-
E1SJCO-
E1SJF1-
E1SKF1-
E1SG*7-
E1SHF1-
•03-0145
•03-0054
•09-0137
•01-0261
•02-0113
•02-0303
•07-0047
03-0065
09-0219
02-0132
Follow-Up Reviews
2400027 CERCLIS REPORTING & POST-IMPLEMENTATION
2100292 ERCS NEGOTIATION, AWARD 6 CONTRACT MGMT.
E1SFG1-15-5001
E1SHD1-06-5054
Special Reviews
2400048 ALLEGATION REVIEW-HAZ. WASTE RES. LAB., NJ E6FKG2-02-0072
2400074 CONTRACT MANAGEMENT OF SSD ERCS BY REGION 2 E1SHG2-02-0020
2400005 UNANNOUNCED SITE VISIT-QUONSET POINT, RI E1SHG1-01-0216
2/ 3/92
2/ 3/92
9/21/92
I/ 2/92
7/27/92
3/17/92
3/31/92
9/30/92
7/30/92
11/18/91
3/27/92
3/27/92
6/24/92
9/10/92
12/16/91
-------
EPA Qffircg of the Inspector General Annual Sunerfund Report to the Congress for Fiscal 1992 113
EXHIBIT I
2 OF 7
SUPERFUND AUDIT REPORTS
ISSUED DURING FISCAL 1992
Final
Report
Number Auditee
COOPERATIVE AGREEMENTS
2™!7 AZ DEPT OF ENV* QOALITY-RI/FS, CORE, PA/SI
2300087 CA ST. WATER RES. CONTR. BD.-SAN GABRIEL
2100612. ID DEPT OF HEALTH & WELFARE-BUNKER HILL
2300043 LOS ANGELES WATER & POWER-SAN FERNANDO VLY
2100212 NJ DEPT OF ENV. PROT. -BURNT FLY BOG
2100215 NJ DEPT OF ENV. PROT. -COMBE FILL NORTH
2100216 NJ DEPT OF ENV. PROT. -COMBE FILL SOUTH
2100217 NJ DEPT OF ENV. PROT . -FLORENCE LANDFILL
2100218 NJ DEPT OF ENV. PROT. -GEMS LANDFILL
2100213 NJ DEPT OF ENV. PROT. -PRICE'S LANDFILL
2100214 NJ DEPT OF ENV. PROT.-SYNCON RESINS
o?22?2! NC DEPT °P ENVIRONMENT-PA/SI, CORE PROGRAM
2100132 PR ENV. QUALITY BOARD-CORE PROGRAM
2300054 PR ENV. QUALITY BOARD-FOLLOW-UP REVIEW
2100103 PR ENV. QUALITY BOARD-FRONTERA CREEK
2100134 PR ENV. QUALITY BOARD-PA/SI PROGRAM
oJSSfli REG1°N 7 COOPERATIVE AGREEMENT SURVEY
2100670 REGION 8 COOPERATIVE AGREEMENT SURVEY
2100583 TX WATER COMM. CONTRACTOR-WOODWARD CLYDE
2100299 WA DEPARTMENT OF ECOLOGY-MULTI-SITE
GRANTS
2300045 N. CAROLINA STATE U. HAZ. SUBST. RES. CTR.
2100145 VEGA ALTA SITE, PR, TECHNICAL ASST. GRANT
INTERAGENCY AGREEMENTS
o™Z!l AGENC* TOR TOXIC SUBST. & DISEASE REGISTRY
2100502 ARMY CORPS OF ENGINEERS-FISCAL 1990
2100057 ENERGY DEPARTMENT-FISCAL 1990
2100075 FED. EMERG. MANAGEMENT AGENCY-FISCAL' 1989
2100290 INTERIOR DEPT. BUREAU OF MINES-FY 1987-89
2100341 INTERIOR DEPT. BUREAU OF RECL.-FY 1989
2100513 INTERIOR DEPT. BUREAU OF RECL.-FY 1990
2100342 INTERIOR DEPT. FISH 6 WILDLIFE-FY 1989-90
2100343 INTERIOR DEPT. OFC. OF ENV. AFFAIRS-FY 1990
2100344 JUSTICE DEPARTMENT-FISCAL 1990
Audit
Control Number
P5BFL1-09-0149
S5BGN1-09-0133
P5BGL1-10-0046
. S5BGNO-09-0303
P5BGLO-02-0246
P5BGLO-02-0249
P5BGLO-02-0250
P5BGLO-02-0251
P5BGLO-02-0252
P5BGLO-02-0247
P5BGLO-02-0248
E5BFN1-04-0268
P5BGLO-02-0280
P5EGN1-02-0138
P5BGLO-02-0279
P5BGLO-02-0278
E5FGQ1-07-0064
E5FGQ1-08-0064
D5BGL2-06-0156
P5CGLO-10-0066
E5BKN1-04-0290
P5BGLO-02-0335
M5BFLO-11-0038
M5BFL2-11-0043
M5BFL2-11-0021
M5BFL1-11-0040
M5BFL1-11-0035
M5BFL1-11-0036
M5BFL2-11-0024
M5BFL2-11-0024
M5BFL2-11-0024
M5BFL2-11-0047
Date
Report
Issued
9/29/92
9/30/92
9/15/92
3/13/92
2/ 5/92
2/ 5/92
2/ 5/92
2/ 5/92
2/ 5/92
2/ 5/92
2/ 5/92
2/19/92
12/19/91
6/25/92
12/ 5/91
12/19/91
4/27/92
4/27/92
9/ 8/92
3/30/92
3/26/92
12/20/91
11/26/91
7/30/92
11/13/91
11/26/91
3/26/92
4/29/92
8/ 6/92
4/29/92
4/29/92
4/29/92
-------
EPA Offirce of the Inspector General Annual Superfund Report to the Congress for Fiscal 1992 114
SUPERFUND AUDIT REPORTS
ISSUED DURING FISCAL 1992
EXHIBIT I
3 OF 7
CONTRACT AUDITS
Final
Report
Number Auditee
Initial Pricing Reviews
2100181 APEX ENVIRONMENTAL, MO
2100486 APEX ENVIRONMENTAL, MO
2100170 BOOZ-ALLEN-HAMILTON, MD
2100489 BOOZ-ALLEN-HAMILTON, MD
2300083 BRUCE COMPANY, DC
2100119 CBIS FEDERAL, INC., VA
2100249 CENTEL FEDERAL SYSTEMS, VA
2100072 CH2M HILL, INC., OR
2100254 CITY ENVIRONMENTAL, MI
2100179 CMC, INC., KY
2100092 COMPUTER DATA SYSTEMS, INC., MD
2100227 COMPUTER DATA SYSTEMS, INC., MD
2100090 CORPORATE INFORMATION SYSTEMS, VA
2100056 DYNAMAC, INC., MD
2100169 DYNAMAC, INC., MD
2100177 E&K HAZARDOUS WASTE, WI
2100182 E&K HAZARDOUS WASTE, HI
2100125 ENPRO SERVICES, INC., MA
2300015 ENVIRONMENTAL HEALTH, RES. & TESTING, KY
2100074 ENVIRONMENTAL MANAGEMENT, MD
2300010 ENVIRONMENTAL OPTIONS, INC., VA
2300019 ENVIRONMENTAL PRODUCTS, INC., NY
2100496 ENVIRONMENTAL QUALITY SPECIALIST, INC., VA
2400001 ENVIRONMENTAL QUALITY MGMT, INC., OH-ERCS
2100572 EXECUTIVE RESOURCE ASSOCIATES, VA
2100061 FRANKLIN ENVIRONMENTAL SERVICES, INC., MA
2100454 F.H. ENVIRESPONSE, NJ
2100130 GANNETT FLEMING, INC., PA
2100089 GOODE ENVIRONMENTAL SERVICES, INC., VA
2100573 HORSLEY WITTEN HEGEMAN, MD
2100011 ICF CORP., VA
2300092 ICF CORP., VA
2300003 ICF TECHNOLOGY, INC., VA
2100407 INDUSTRIAL ECONOMICS, INC., MA
2100040 INFOPRO, INC., MD
2100039 INFORMATION SYSTEMS AND SERVICES, MD
2100120 INFORMATION SYSTEMS SOLUTIONS, MD
Audit
Control Number
D9AKL2-03-0120
D9AFL2-03-0346
D9AKL2-03-0118
D9AFL2-03-0341
D9AKN2-03-0488
D9AKL2-03-0106
D9AFL2-03-0188
P9AXL2-10-0006
D9AGL2-05-0058
D9AGL2 -05-0060
D9AKL2-03-0107
D9AFL2-03-0189
D9AKL2-03-0081
D9AKL2-03-0016
D9AKL2-03-0115
D9AGL2-05-0055
D9AGL2-05-0059
D9AHL2-01-0072
P9AXN2-04-0027
D9AKL2-03-0031
D9AKN2-03-0063
D9AHN2-02-0030
D9AFL2-03-0343
E9AHP2-05-0036
D9AFL2-03-0393
D9AHL2-01-0051
D9AFL2-02-0251
D9AKL2-03-0015
D9AHL2-03-0108
D9AFL2-03-0344
P9AHL2-03-0019
P9AKN2-03-0547
P9AHN1-03-0232
D9AKL2-01-0228
D9AKL2-03-0065
D9AKL2-03-0061
D9AFL2-03-0103
Date
Report
Issued
I/ 6/92
7/23/92
I/ 6/92
7/23/92
9/29/92
12/12/91
2/25/92
11/19/91
2/25/92
I/ 6/92
12/ 4/91
2/10/92
12/ 4/91
ll/ 8/91
I/ 6/92
I/ 6/92
I/ 6/92
12/13/91
11/15/91
11/22/91
10/29/91
12/ 6/91
7/23/92
11/27/91
9/ 4/92
11/18/91
7/ 6/92
12/17/91
12/ 4/91
9/ 4/92
10/18/91
9/30/92
10/17/91
6/10/92
10/29/91
10/29/91
12/12/91
-------
EPA Offirce of the Inspector General Annual Suoerfund Report to the Congress for Rscal 1992 115
SUPERFUND AUDIT REPORTS
ISSUED DURING FISCAL 1992
EXHIBIT I
4 OF 7
CONTRACT AUDITS (continued)
Final
Report
Number Auditc
Initial Pricing Reviews (continued)
2400063 MAECORP, INC., IL-ERCS 3, REGION 5
MARASCO NEWTON GROUP LIMITED, VA
MARASCO NEWTON GROUP LIMITED, VA
MARS ENVIRONMENTAL SERVICES, IL-ERCS3 REG
MIDWEST RESEARCH INSTITUTE, MO
NATIONAL BIOSYSTEMS, INC., MD
NCI INFORMATION SYSTEMS, INC., VA
NORTHERN A-l SERVICES, INC., MI
NUS CORP. - HALLIBURTON, MD
NUS CORP. - HALLIBURTON, PA
NUS CORP. - HALLIBURTON
OHM REMEDIATION, OH-ERCS2 ZONE 1-FY89
OHM REMEDIATION, OH-ERCS2 ZONE 2-FY89
OHM REMEDIATION, OH-ERCS3-REGION 2
PRC EMI, IL-DEPARTMENT OF ENERGY
PRC EMI, IL-TRAINING
PSARA TECHNOLOGIES, OH
REIDEL ENVIRONMENTAL SERVICES, OR
ROY F. WESTON, PA
ROY F. WESTON, PA
ROY F. WESTON, PA
S. COHEN & ASSOCIATES, INC., VA
SAMSEL SERVICES, OH-ERCS3 REGION 5
SCIENTIFIC CONSULTING GROUP, MD
SYCOM, INC., VA
TECHNOLOGY S MANAGEMENT SERVICES, MD
UNISYS, VA
VIAR, VA
WESTINGHOUSE ELECTRIC CORP., PA
2100041
2300020
2400007
2100439
2100112
2100168
2100255
2100488
2100490
2100551
2300024
2300023
2400058
2400061
2400050
2100453
2100607
2100171
2100273
2100576
2100371
2400010
2100100
2100118
2100042
2100557
2100484
2100550
Audit
Control Number
P9AHP2-05-0350
D9AKL2-03-0060
D9AKN2-03-0080
5 P9AHP2-05-0054
D9AKL2-07-0189
D9AKL2-03-0105
D9AHL2-03-0117
D9AGL2-05-0057
D9AGL2-03-0304
D9AGL2-03-0305
D9AFL2-03-0390
P9AHN1-05-0143
P9AHN1-05-0144
P9AHP2-05-0306
E9AXP2-05-0354
E9AKP2-05-0303
D9AKL2-05-0296
P9AGL2-10-0079
D9AKL2-03-0119
D9AFL2-03-0277
D9AFL2-03-0392
D9AFL2-03-0307
P9AHP2-05-0052
D9AKL2-03-0073
D9AKL2-03-0102
D9AKL2-03-0071
D9AFL2-03-0240
D9AFL2-03-0345
D9AFL2-03-0394
Date
Report
Issued
8/11/92
10/29/91
12/10/91
12/18/91
6/25/92
12/10/91
I/ 6/92
3/ 2/92
7/23/92
7/23/92
9/ 3/92
12/27/91
12/26/91
7/23/92
8/ 6/92
6/26/92
7/ 6/92
9/11/92
I/ 6/92
3/18/92
9/ 4/92
5/19/92
12/26/91
12/ 5/91
12/12/91
10/29/91
9/ 4/92
7/23/92
9/ 3/92
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EPA Offirce of the Inspector General Annual Sunerfund Reonrt ^o the Con
for Fiscal 1992 116
SUPERFUND AUDIT REPORTS
ISSUED DURING FISCAL 1992
EXHIBIT I
5 OF 7
CONTRACT AUDITS (continued)
Final
Report
Number Auditee
Interim
2100339
2100618
2100622
2100652
2300042
2100010
2100374
2100388
2100600
2300037
2400075
2400080
2400025
2100586
2100366
2100012
2100398
2100276
2100361
2100587
2100609
2100007
2100636
2100637
2100638
2100347
2100362
2400040
2400083
Audits
BECHTEL NATIONAL, INC., CA-VOUCHER AUDIT
COMPUTER SCIENCE CORP., VA
COMPUTER SCIENCE CORP., VA
COMPUTER SCIENCE CORP., VA
ECOLOGY AND ENVIRONMENT, NY
ENSITE, INC., GA
FLOUR DANIELS; INC., TX
ICF CORP., VA
LAWRENCE JOHNSON & ASSOCIATES, MD
NUS CORP., MD
OHM REMEDIATION, OH-ERCS2 ZONE 1-FY90
OHM REMEDIATION, OH-ERCS2 ZONE 2-FY90
ROY F. WESTON, PA
SfiD ENVIRONMENTAL SERVICES, NJ-ERCS
S-CUBED, CA - FISCAL 1987
SUFFOLK COUNTY WATER AUTHORITY, NY
SVERDRUP ENVIRONMENTAL CORP., MO
UNISYS, VA
URS CONSULTANTS, CA - VOUCHER AUDIT
VESTA TECHNOLOGY, LTD., FL
WARZYN ENGINEERING, WI
WESTINGHOUSE-HAZTECH, GA
WILLIAMS, RUSSELL & JOHNSON, GA
WILLIAMS, RUSSELL & JOHNSON, GA
WILLIAMS, RUSSELL & JOHNSON, GA
WOODSIDE SUMMIT, CA-OH & DIRECT, FY 85-87
WOODSIDE SUMMIT, CA-OH & DIRECT, FY 88-89
WW ENGINEERING CO., MI-FISCAL 1990
WW ENGINEERING CO., MI-FISCAL 1991
Final Audits
2100416 ALLIANCE TECHNOLOGIES CORP., MA
2100418 ALLIANCE TECHNOLOGIES CORP., MA
2100460 ARTHUR D. LITTLE, INC., MA
2100131 BOOZ-ALLEN-HAMILTON, MD
2400002 OHM REMEDIATION, OH-BRODERICK
2100229 VERSAR, INC., VA
2100653 VERSAR, INC., VA
Audit
Control Number
D9BGL2-09-0152
D9BFL2-03-0400
D9BFL2-03-0367
D9BFL2-03-0594
P9BGNO-02-0320
P9BGLO-04-0385
D9BGL2 -06-0121
P9BXF2-03-0264
D9BFL2-03-0459
D9BFN2-03-0204
P9BHP1-05-0283
P9BHP1-05-0284
D9BJP2-03-0196
E9BHL1-02-0114
D9BFL2-09-0208
P9BGLO-02-0317
D9BGL2-07-0133
D9BFL2-03-0281
D9BGL2-09-0153
D9BGL2-04-0368
D9BGL2-05-0342
P9BGLO-04-0384
D9BKL2-04-0270
D9BKL2-04-0269
D9BKL2 -04-02 68
D9BFL2-09-0170
D9BFL2-09-0192
P9BGP1-05-0158
P9BGP2-05-0127
D9CGL2-01-0143
D9CGL2-01-0290
D9CFL2-01-0296
D9CKL2-03-0147
P9CHP1-05-0355
D9CFL1-03-0379
D9CFL2-03-0593
Date
Report
Issued
4/28/92
9/16/92
9/17/92
9/29/92
3/13/92
10/18/91
5/19/92
5/27/92
9/10/92
2/21/92
9/16/92
9/29/92
3/19/92
9/ 9/92
5/18/92
10/18/91
6/ 8/92
3/19/92
5/ 7/92
9/ 9/92
9/14/92
10/ 9/91
9/25/92
9/25/92
9/25/92
4/30/92
5/ 7/92
4/28/92
9/30/92
6/12/92
6/15/92
7/ 9/92
12/17/91
12/ 9/91
2/11/92
9/29/92
-------
PPA Qffirce of the inspector General Annual Sunerfund Report to the Congress for Fiscal 1992 117
SUPERFUND AUDIT REPORTS
ISSUED DURING FISCAL 1992
EXHIBIT I
6 OF 7
CONTRACT AUDITS (continued)
Final
Report
Number Auditee
Indirect Costs
2100442 AEROCOMP, CA-OVERHEAD fi DIRECT, FY 86-89
2100389 AQUA TERRA, CA-OVERHEAD & DIRECT, FY 86-88
2100643 BOOZ-ALLEN-HAMILTON, MD
2100503 CH2M HILL, INC., OR-FISCAL 1987
2100504 CH2M HILL, INC., OR-FISCAL 1988
2100505 CH2M HILL, INC., OR-FISCAL 1989
2100430 CONTINENTAL SHELF ASSOCIATES, FL
2100532 DONOHOE, WI-ARCS REGION 5, FISCAL 1990
2100350 EBASCO SERVICES, INC., NY
2100351 EBASCO SERVICES, INC., NY
2100393 EBASCO SERVICES, INC., NY
2100412 EBASCO SERVICES, INC., NY
2100375 ENERGY ENVIRONMENTAL RESEARCH, CA-FY 87
2100377 ENERGY ENVIRONMENTAL RESEARCH, CA-FY 88
2100441 ENERGY ENVIRONMENTAL RESEARCH, CA-FY 89
2100197 ENSITE, INC., GA
2300057 ICF CORP., VA
2100527 ICF INC./KAISER, VA
2100368 INTERNATIONAL TECHNOLOGY CORP., CA-OH FY88
2100472 JAMES MONTGOMERY, CA-OVERHEADS, FY 88-90
2100202 PRC ENVIRONMENTAL MGMT., IL-FISCAL 1989
2100304 REIDEL ENV. SERVICES, OR-FY87 OVERHEADS
2100642 REIDEL ENV. SERVICES, OR-FY88 OVERHEADS
2100152 ROY F. WESTON, PA
2100243 ROY F. WESTON, PA
2100629 SCIENCE APPLICATIONS INT'L CORP., CA-FY87
2100567 VERSAR, VA
2100166 HESTINGHOUSE-HAZTECH, GA
2400082 WW ENGINEERING CO., MI-ARCS-FISCAL 1991
2100340 WW ENGINEERING CO., MI-FISCAL 1990
Audit
Control Number
D9DGL2-09-0260
D9DGL2-09-0220
D9DFL2-03-0592
P9DH*8-10-0080
P9DHL9-10-0174
P9DHLO-10-0085
D9DKL2-04-0377
P9DGL1-05-0277
D9DFL2-02-0091
D9DFL2-02-0090
D9DFL2-02-0110
D9DFL2-02-0091
D9DGL2-09-0212
D9DGL2-09-0213
D9DGL2-09-0259
P9DHL1-04-0436
P9DGN2-03-0241
P9DGL2-03-0193
D9DGL2-09-0209
D9DGL2-09-0075
E9DKL1-05-0159
P9DHLO-10-0096
P9DHL9-10-0148
D9DFL2-03-0123
D9DFL2-03-0226
D9DGL2-09-0348
D9DFL2-03-0553
P9DGLO-04-0383
P9DGP2-05-0465
P9DGL1-05-0157
Date
Report
Issued
6/26/92
5/27/92
9/29/92
7/30/92
7/30/92
7/30/92
6/18/92
8/27/92
5/ 1/92
5/ 1/92
6/ 3/92
6/11/92
5/19/92
5/20/92
6/26/92
1/21/92
7/10/92
8/19/92
5/18/92
7/15/92
1/29/92
3/31/92
9/28/92
12/31/91
2/21/92
9/22/92
9/ 4/92
I/ 3/92
9/30/92
4/28/92
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ERA Offirre of the Inspector General Annual Suoerfund Report to the Congress for Fiscal 1992 118
SUPERFUND AUDIT REPORTS
ISSUED DURING FISCAL 1992
EXHIBIT I
7 OF 7
CONTRACT AUDITS (continued)
Final
Report
Number Auditee
System Surveys
2100192 CH2M HILL, INC., OR-CAS STATEMENT ADEQUACY
2100309 COMPUTER SCIENCE CORP., VA
2100310 COMPUTER SCIENCE CORP., VA
2400072 COMPUTER SCIENCE CORP., VA
2100654 COMPUTER SCIENCE CORP., VA
2100651 DYNAMAC, INC., MD
'2100080 ENVIRONMENTAL PRODUCTS, INC., NY
2100081 ENVIRONMENTAL PRODUCTS, INC., NY
2100091 GOODE ENVIRONMENTAL SERVICES, VA
2100043 INFOPRO, INC., MD
2100038 INFORMATION SYSTEMS AND SERVICES, MD
2100372 ROY F. HESTON, PA
2100558 ROY F. WESTON, PA
2100623 ROY F. HESTON, PA
Financial Management Reviews
2400078 REIDEL ENV. SERVICES, OR-ADVANCE AGREEMENT
2400036 REIDEL ENV. SERVICES, OR-CONTINGENCY FEES
Bankruptcy Disclosure Review
2400018 MOBILE COMPANIES & ROGER F. WILLIAMS,
Audit
Control Number
P9EGL2-10-0008
D9EFL2-03-0299
D9EFL2-03-0300
D9EFP2-03-0308
D9EFL2-03-0591
D9EFL2-03-0595
D9EHL2-02-0031
D9EHL2-02-0032
D9EFL2-03-0139
D9EKL2-03-0066
D9EKL2-03-0062
D9EFL2-03-0387
D9EFL2-03-0552
D9EFL2-03-0101
P9FHP1-10-0076
P9FHP1-10-0075
Date
Report
Issued
1/14/92
4/ 6/92
4/ 6/92
9/ 9/92
9/29/92
9/29/92
12/ 2/91
12/ 2/91
12/ 4/91
10/29/91
10/29/91
5/19/92
9/ 4/92
9/17/92
9/28/92
3/31/92
KY P6FJP1-05-0222 2/18/92
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EPA Qffirce pf the Inspector General Annual Sunarhind Report to the Congress for Fiscal 1992 119
APPENDIX: ACRONYMS AND ABBREVIATIONS
ADEQ
AICR
ARCS
ATSDR
AZ
CA
CAS
CCS
CERCLA
CERCLIS
CFO
CFR
CLP
DC
DCAA
DEHNR
DHS
DOE
DOI
DOJ
EIRA
Arizona Department of Environmental Quality
Alternate internal control review
Alternative Remedial Contracting Strategy
Agency for Toxic Substances and Disease Registry
Arizona
California
Cost Accounting Standards
Contract Compliance Screening
Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended
Comprehensive Environmental Response, Compensation, and
Liability Information System, the Superfund management
information system
Chief Financial Officer(s)
Code of Federal Regulations
Contract Laboratory Program
District of Columbia
Defense Contract Audit Agency
Department of Environment, Health and Natural Resources (North
Carolina)
Department of Health Services (California)
Department of Energy
Department of the Interior
Department of Justice
Environmental Industrial Research Associates, Inc.
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EPA Offirce of the Inspector General Annual Suoerfund Report to the Congress for Fiscal 1992 120
EMSL Environmental Monitoring Systems Laboratory
ENRD Environment and Natural Resources Division (DOJ)
EPA Environmental Protection Agency
EQB Environmental Quality Board (Puerto Rico)
ERB Emergency Response Branch (EPA Procurement and Contracts
Management Division)
ERCS Emergency Response Cleanup Services
E-TEC Environmental Technology and Engineering facility
FAR Federal Acquisition Regulations
FEMA Federal Emergency Management Agency
FL Florida
FMFIA Federal Managers' Financial Integrity Act
FMS Financial Management System (EPA)
FS Feasibility Study
FSR Financial Status Report
FY Fiscal year
GA Georgia
GC/MS Gas chromatograph/mass spectrometer or gas
chromatography/mass spectrometry
HHS Department of Health and Human Services
IAG Interagency agreement
ICR Internal control review
ID Idaho
IDHW Idaho Department of Health and Welfare
IFMS Integrated Financial Management System (EPA)
IL Illinois
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EPA Offirpe pf fro Inspector General Annual Sunarfund Report to the Congress for Fiscal 1992 121
IPA
KY
LADWP
LARS
LOG
LOE
LPD
MA
MAP
MD
Ml
MO
MOA
NC
NCP
NCSU
NEIC
NJ
NJDEP
NPL
NPO
NY
OH
OIG
OMB
Independent public accounting (firm)
Kentucky
Los Angeles Department of Water and Power
Labor Activity Reporting System (ADEQ)
Letter-of-Credit
Level of effort
Laboratory Performance Database
Massachusetts
Management Assistance Program
Maryland
Michigan
Missouri
Memorandum of Agreement
North Carolina
« 9!' and Ha2ardous Substances Contingency Plan, 40
CFR Part 300
North Carolina State University
National Enforcement Investigations Center (EPA)
New Jersey
New Jersey Department of Environmental Protection
National Priorities List
National Program Office
New York
Ohio
Office of the Inspector General
Office of Management and Budget
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EPA Offirce of the Inspector General Annual Superfund Report to the Congress for Fiscal 1992 122
OR Oregon
OSC On-Scene Coordinator
OSWER Office of Solid Waste and Emergency Response (EPA)
PA Preliminary Assessment or Pennsylvania
PE • Performance evaluation
PA/SI Preliminary Assessment/Site Inspection
PPAS Personal Property Accounting System (EPA)
PR Puerto Rico
PRP Potentially Responsible Party
QAPjP Quality Assurance Project Plan
QAPP Quality Assurance Program Plan
QA/QC Quality Assurance/Quality Control
RA Remedial Action
RAS Routine Analytical Services
RCMS Removal Cost Management System
RD Remedial Design
Rl Remedial Investigation or Rhode Island
RI/FS Remedial Investigation/Feasibility Study
RPM Remedial Project Manager
SARA Superfund Amendments and Reauthorization Act of 1986
SAS Special Analytical Services
SAWPA Santa Ana Water Project Authority
SI Site Inspection
SMO Sample Management Office
SPUR Software Package for Unique Reports
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P»A PffirCT Pf the Ingpgctor General Annual Sunerfund Report to th
for Fiscal 1992 123
SWRCB State Water Resources Control Board (California)
TAT Technical Assistance Team (EPA contractor)
TES Technical Enforcement Support (EPA contracts)
TPO Technical Project Officer
Trust Fund Hazardous Substance Superfund
TX Texas
VA Virginia
WA Washington
WDOE Washington Department of Ecology
Wl Wisconsin
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