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Environmental PfoMetion
Agency
\>EPA Report of Audit
REPORT ON AUDIT OF THE
MANAGEMENT OF THE CHESAPEAKE BAY PROGRAM
GRANTS AND CONTRACTS AWARDED
BY THE ENVIRONMENTAL PROTECTION AGENCY
%
FISCAL YEARS 1978 THROUGH' 1984-
AUDIT REPORT NUMBER E1 hW5-03-0240-6
SEPTEMBER 24, 1986
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TABLE OF CONTENTS
Page
SCOPE AND OBJECTIVES 1
OVERVIEW 2
SUMMARY OF FINDINGS 6
ACTION REQUIRED. * 8
BACKGROUND. 8
FINDINGS AND RECOMMENDATIONS
1 - IMPROVED MONITORING PROCEDURES NEEDED 10
2 - GRANTS AND CONTRACTS TOTALING $2 5 MILLION
WERE INADEQUATELY ADMINISTERED L8
EXHIBIT I - SCHEDULE OF WORK PRODUCTS REQUIRED, RECEIVED AND ACCEPTED
FOR THE GRANTS AND CONTRACTS REVIEWED 26
EXHIBIT II - REGION III RESPONSE WITH AUDITOR REBUTTAL TO AUDIT
ISSUES IN EXHIBIT I 33
APPENDIX A - REGION III RESPONSE TO DRAFT AUDIT REPORT 39
APPENDIX B - DISTRIBUTION AO
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2 UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
OFFICE OF THE INSPECTOR GENERAL
MIO-ATLANTIC DIVISION
841 CHESTNUT BUILDINC
PHILADELPHIA, PENNSYLVANIA 191C7
(215) 597-0497
September 24, 1986
MEMORANDUM
SUBJECT: Audit Report Number ElhM5-03-0240-61506
Report of Audit on the Management of the
Chesapeake Bay Program Grants and Contracts Awarded
by the Environmental'. Protection Agency
(¦> ..
/. L. <- - V . >- ' *-• - '
FROM: P. Ronald Gandolfo
Divisional Inspector General/^or Audit
/
TO: James M. Seif
Regional Administrator
SCOPE AND OBJECTIVES
We performed an audit of the Chesapeake Bay Program (CBP) administered by the
Environmental Protection Agency (EPA). The purpose of this audit was to review
procedures for managing grants and contracts awarded in conjunction with the
CBP. We performed the audit in accordance with the Standards for Audit of
Governmental Organizations, Programs, Activities and Functions issued by the
Comptroller General of the United States as they apply to economy and effi-
ciency and program results audits. Our review Included tests of the project
files and other auditing procedures we considered necessary at Region III,
the Chesapeake Bay Liaison Office (CBLO) in Annapolis, Maryland and selected
grantees and contractors.
We did not perform a detailed financial and compliance audit of the grants and
contracts awarded. Our review evaluated the economy, efficiency and program
results expected only in relation to the administration of assistance agree-
ments. This review disclosed several areas needing improvement which are
discussed in this report. Because of the limited scope of our audit we did
not perform a study and evaluation of internal accounting controls and accord-
ingly did not include a report thereon.
The fieldwjrk began on July 8, 198 5 and was completed on February 28, 1986.
We reviewed grants and contracts awarded by EPA during fiscal years 1978
through 1984. Based on Region III records, 90 grants and 12 contracts valued
at about $21.5 million and $3.7 million respectively were awarded during the
fiscal years included in our review. From these, we selected 20 grants and
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3 contracts for a detailed review during this audit. Five of the grants-
selected pertained to the Implementation phase of the CBP while the rsrnaining
15 grants and the 3 contracts applied to the Research and Planning phase of
the program.
Our sample represented $8.7 million or 41 percent of the grant funds awarded
and $2.1 million or 56 percent of ,the contract dollars awarded. We examined
project files, including correspondence, EPA regulations and procedures per-
taining to the award and management of these 20 grants and 3 contracts.
During this audit we also:
1. Reviewed legislation authorizing the cleanup of the
Chesapeake Bay and CBP agreements entered into with
several States and Memoranda of Understanding made
with other Federal agencies.
2. Conducted interviews with officials and staff from the
Region III Water Division, Grants Management Section
and CBLO.
3. Discussed the preliminary results of our review with
senior CBLO staff and requested documentation per-
taining to the grants and contracts reviewed which
were not readily available at the time of our field-?
work. These CBLO officials contacted other EPA com-
ponents such as the Office of Marine and Estuarine
Protection, Office of Research and Development, former
EPA project officers, grantees and contractors in an
attempt to provide the required data.
OVERVIEW
Several events which occurred since our draft report was issued on June 24,
1986 had a significant impact upon our findings. Because of these events we
are prefacing our findings with observations and additional facts that were
not included in our draft report.
It now appears that the management of the CBP was seriously flawed. It does
not seem reasonable to expend $25»2 million for research efforts and not
obtain and preserve the results of these studies. In our opinion, these
studies are needed for their scientific value and also to serve as an inte-
gral part of the Implementation phase of the Chesapeake Bay Program. Finally,
copies serve as the evidence needed to close grants and to substantiate final
payments. Similarly, it is illogical that CBP personnel were unable to
demonstrate how various research efforts benefited or contributed to the Bay
cleanup. I results of our review indicate that cleanup efforts under the
direction c; "jion III were conducted in a haphazard manner.
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The draft report contained two basic findings, namely that the CBP needed to
improve monitoring and administrative procedures. We found during our initial
fieldwork that EPA could substantiate that it fully received what it paid for
from only 5 of the 23 grants/contracts reviewed. Specifically, only 33 of
the required 90 work, products were received. In addition, EPA personnel
could not demonstrate how the grants/contracts valued at $10.8 million were
an effective part of the CBP.
As a result of our audit and after the fieldwork was completed, EPA obtained
9 additional work products, two of which were recently prepared by the
grantees. The auditors found two additional work products by visiting and
contacting grantees. In sunmary these actions increased the work products
located from 33 to 44. Since 90 were required, the Region possesses less
than 50 percent of the total.
We originally believed the situations discussed above occurred because proper
administration was not a priority of the CBLO personnel. These beliefs
were based on the contentions of the CBLO personnel that lax administration
procedures were the reason why work products were not safeguarded when
received and now unavailable for our review. EPA personnel stated verbally
and in the response to the draft report that the required work products
would be located and that all work products were completed by the grantees.
We accepted this premise initially, but later found that the premise was
incorrect. During our visits to the grantees and contractors after the
draft report was issued, we found that some work products were never produced
and others were just being finalized. One contractor believed that EPA
"abandoned" his project after three years and a cost of almost $580,000,
rather than fund an additional $35,200 requested by the contractor to com-
plete the contract scope of work. As a result, EPA never received an accept-
able draft or final report for the $580,000.
Based upon the Region's lack of success in obtaining all of the required work
products, we now believe that inadequate monitoring and administration
procedures are only part of a more significant problem. In our opinion,
EPA's planning process for cleaning up the Chesapeake Bay appears deficient.
Grants were awarded to conduct studies that were not needed to move from the
Research phase to the Implementation phase. Also, the work products received
months or years after the original completion dates would appear to be of
dubious value. The results of our visits to grantees/contractors, which con-
firm our opinion, follow. The grant numbers refer to the projects listed in
Exhibit I.
Grant Numbers 4, 5 and 6
Our report originally indicated that three final reports were required by
these grants and that EPA received and accepted none. (See Exhibit I, page
2 of 7.) After our draft report was issued, EPA personnel located one final
report and contended it was peer reviewed and accepted. Subsequently, we
visited th g --.ee to verify this information and to determine the exact
status of the r^.aining work products. During this visit we found the
grantee had a copy of the one work product originally located by EPA. How-
ever, documentation reviewed previously by us Indicated that the report was
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peer reviewed but not accepted. A second final report was also available-
and a third preliminary handwritten draft report was received from the U.S.
Department of Interior by the grantee on the day of our visit. The grantee
indicated that this draft would be finalized in early 1987. Ic was due to
EPA in March 1982.
Based upon this information it appears that EPA was not in urgent need of the
final reports required by these grants. EPA paid the grantee S320.014 under
these three grants. This amount represents full payments for work products
that are still not completed. We also found that the grantee visited did
not research and prepare the final reports. This work was done by the U.S.
Department of Interior under a cooperative agreement with the grantee. The
Interior Department received S257,492 for its efforts. At this time we
could not determine why EPA did not work directly with the Department of
Interior thereby eliminating the $62,522 charged by the grantee. We will
address this issue as a separate review.
Grant Number 3
Our report indicated that four work products were required by the grant and
EPA received and accepted only one. (See Exhibit I, page 1 of 7.) Again we
contacted the grantee to determine the status of the work products because
EPA personnel could not locate the missing work products. The grantee indi-
cated a settlement agreement was reached with EPA whereby the grant was
terminated. We were told this settlement required that only one of the four
required work products had to be completed. However, no documentation was
found supporting the grantee's claim that only one of four work products was
required.
To the contrary, other correspondence and a grant amendment in our possession
refers to delivery of the remaining work products^ (emphasis added). Based
upon the documentation examined by us, EPA originally awarded a $150,802
grant for four work products. This grant was subsequently terminated and an
additional $42,000 paid to the grantee on the basis that the required work
products could be delivered. In reality, only one work product was received
at a cost of $192,802. It appears this project was not vital to the CBP
cleanup since three work products required under the original grant were
never produced and apparently not missed.
Grant Numbers 12 and 13
Our report originally indicated that one final report was required by each
of these grants, awarded for $733,393 and $742,434 respectively, and that
EPA had not received and accepted either one. (See Exhibit I, page 3 of 7.)
EPA personnel could not provide or locate the reports during the course of
the audit, or thereafter. Consequently, we visited each.grantee to determine
if the final reports could be located.
Officials for each grant were unaware that a final report was required. They
stated that the grants were administrative grants awarded for the purpose of
staffing their departments to assist the EPA in the research of the Bay.
They believed that the only reports required were semi-annual progress
repo.rts. Subsequently, they did agree that a final report was apparently
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required when shown a special condition in an amendment to each grant
necessitating a final report. These amendments stipulated that each grantee
provide the EPA project officer with an "approved, camera-ready final project
report by September 30, 1983." Correspondence from the Director of che EPA
Grants Administration Division also indicated a final project report was
required. We also found thac only five of the required 24 semi-annual progress
reports, were available at the grantees' offices. Officials interviewed
indicated they would initiate a sfearch for the final, camera-ready reports.
Contract Number 17
During our fieldwork we determined that 16 work products were required by
this contract and that EPA had received only one draft report. (See Exhibit
I, page 6 of 7.) The 16 products include 11 task reports, draft and final
reports on the Bay Circulation Model, training workshop and seminar agenda
and a computer program users manual. Since EPA personnel could only locate
a draft report during the audit, we visited the contractor to determine if
the other required products were provided to EPA.
The contractor confirmed thac Che draft report was submitted to EPA but also
stated that it had been rejected. We were further Cold that some of the
other work products were produced but the contractor could not provide us
with satisfactory documentation to this effect. Based on the above, it
appears thac EPA expended S580,000 on, a four year contract which produced
one draft report which was rejected by EPA.
Conclusion
The preceding paragraphs illustrate that the CBP has more than an adminis-
tration and monitoring problem. The issues now appear more severe in that
the third essential element of good management, namely planning, was inade-
quate. It appears there was no real need for certain work products since
some, such as the third work product of projects 4, 5 and 6 is just now
being finalized. This work product will be five years late. Another grant
which was considered an aid to an ongoing educational program and not within
the framework of the CBP by the proposal reviewer would not have been awarded
if there had been proper overall direction of the CBP. Additionally, if
some of the missing work products under the Research and Development phase
were needed and were in fact to be an integral part of the decision making
process to be used in the Implementation phase, then the technical aspects
of the Implementation phase are also in question. These missing studies,
surveys, investigations, and so forth would, by their absence, have a nega-
tive effect upon the overall Chesapeake Bay Cleanup effort. The environment
which led. to our conclusion is discussed in the summary of our findings
shown below. These findings are also presented in detail, along with related
recommendations, in the FINDINGS AND RECOMMENDATIONS SECTION of this report.
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SUMMARY OF FINDINGS
1. IMPROVED MONITORING PROCEDURES NEEDED
Procedures need to be improved to ensure that the work products required by
CBP grants and contracts are completed, received on a timely basis and retained
in files. EPA regulations and procedures for monitoring recipient performance
and progress toward completing gtant and contract work products were not
followed. During our review of 23 grants and contracts totaling $10.8
million, we found that:
o All of the required work products were located for only
5 grants/contracts.
o Only a portion of the work products were received and
accepted for each of 11 grants/contracts.
o None of the required work products could be located for 7
grant s/contract s.
To preclude this situation from occurring in the future, we believe that the
Regional Administrator must ensure that effective monitoring procedures are
used to measure grantee and contractor performance. Additionally, action
must be initiated to determine the status of all work products associated
with all grants and contracts awarded under the CBP as well as the status of
the missing work products identified during our review. Funds should be
recovered from grantees and contractors for work products not produced, if
appropriat e.
2. GRANTS AND CONTRACTS TOTALING $25 MILLION WERE INADEQUATELY ADMINISTERED
Administration procedures need to be strengthened to ensure that grants and
contracts are awarded and administered in an efficient and effective manner.
Our review of 20 grants and 3 contracts disclosed several deficiencies re-
quiring action by Region III. Namely, we found that project files were
incomplete and maintained in a haphazard manner. Completed grants and con-
tracts were not eloped. Adequate work programs were not available for our
review nor was there evidence that numerous grant conditions were satisfied.
Further, project files were destroyed without proper authority.
We believe these conditions occurred because grants and contracts were not
administered and managed adequately. We also believe that more strenuous
action should be Initiated to ensure that these deficiencies are eliminated
for future grants and contracts. The specific actions we recommended to the
Regional Administrator were to:
1) Safeguard grant and contract files;
2) Take immediate action to close completed grants and
contracts;
3) Ensure that the required work program is included in
each grant application; and
4) Assure grantee compliance with all grant conditions.
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We provided preliminary copies of our findings co the CBLO officials on May 5,
1986 and May 7, 1986. CBLO officials sent a partial response on May 22, 1986. -
They also indicated chat the Office of Marine and Estuarine Protection was
formulating a separate response to our preliminary findings; however, their
response was not completed prior to issuing our draft report. Since the par-
tial response provided by the CBLO did not significantly alter our findings,
we did not revise our preliminary findings.
On June 24, 1986, a draft report was transmitted to the Regional Administrator
for comment. He provided written comments to our draft report on August 1,
1986. The response provided agreed with our recommendations but indicated
chat the report contained factual inaccuracies because most of the work
products reported as missing in the draft report were available.
We performed additional field work, to verify the response provided by Region
III. We also conducted several meetings with CBLO officials and visited
grantee and contractor personnel ' to effectively and carefully evaluate the
response provided. These meetings and visits were also intended to resolve
any factual inaccuracies in our draft report. We determined that our draft
report did not contain inaccuracies and did not require revisions. Addition-
ally, Region III personnel could only provide a few of the 57 missing work
products. These were not available during our audit but obtained later.
Others that they reported as available in their response were already re-
viewed by us and determined inadequate because they were not finalized.
Additionally, much of Region Ill's information concerning work products
received was based on the recollection of former project officers and not
actual documentation such as a copy of the report itself.
Subsequently an exit conference was held with Region III and the Office of
Marine and Estuarine Protection officials on August 21, 1986. At this con-
ference we discussed the Regional Administrator's comments to our findings
and recommendations. The Regional Administrator and his staff stated that
they realized three days after their response was mailed that it was inaccu-
rate. The Regional Administrator also indicated that he agreed with our
recommendations but disputed various facts. He indicated the numbers of
work products reported as missing would be misleading and would also be
misinterpreted by the readers. He believed that the work was substantially
completed and only the evidentiary paperwork was missing. He also indicated
that the report erroneously implied that $10.8 million was wasted. The CBLO
Director indicated that 13 of the missing work products represented draft
reports which are of lesser significance because final reports were received.
To provide a balanced understanding of the issues, we have summarized the
Region's written comments throughout the report and included the majority of
the Region's comments in Appendix A. Exhibit II includes our rebuttal to the
Region III comments. We did noc attach all of the documents received with
the response because these were not relevant to the issues addressed in this
report. The comments deleted are available upon request.
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ACTION REQUIRED
In accordance with EPA Order 2750, the Region III Administrator is required
to provide this office with a written response to the audit report within 90
days of the audit report. If you have any questions, please contact me or
Carl Jannetti at 597-0497.
The courtesies and cooperation extended by your staff during this audit are
appreciated.
BACKGROUND
Under Public Law 94-116, Congress directed the EPA to conduct a five year
study of the Bay's water quality* and resources and to develop management
strategies to preserve the Bay's quality. As a result, EPA established a
research program in 197 6 to identify and study the major environmental prob-
lems in the Chesapeake Bay. This research program was conducted in cooper-
ation with other Federal, state and private entities at a cost of approxi-
mately $27 million. The research program ended in 1981 and indicated that
there existed a historical decline in water quality and living resources due
primarily to nutrient enrichment, toxic chemicals and the loss of Submerged
Aquatic Vegetation (SAV). During 1982 and 1983, EPA analyzed the research
findings, conclusions and recommended actions needed to restore and preserve
the environmental quality of the Bay. EPA committed to implementing the
recommended actions on December 9, 1983 when it entered into the Chesapeake
Bay Agreement with the States of Maryland, Pennsylvania, Virginia and the
District of Columbia. It pledges the responsible state agencies to prepare
and implement a coordinated plan to restore and protect the waters and the
living resources of the Bay.
The Chesapeake Bay Agreement established a CBP management structure of an
Executive Council, an Implementation Committee and the CBLO. The Executive
Council is composed of state cabinet members and the Region III Administrator.
The Regional Administrator is Council Chairman. The Council's role is to
oversee the implementation of coordinated plans to restore the Bay. The
Implementation Committee is supported by five subcommittees and two advisory
committees. The subcommittees (Planning, Modeling and Research, Monitoring,
Data Management and Non-point Source) are made up of officials from Region
III, other state and Federal agencies and representatives from academic
institutions. The advisory committees (Citizens Advisory Committee and
Scientific and Technical Advisory Committee) are composed of private sector
personnel.
The Executive Council and its committees are supported and advised by the
CBLO, located in Annapolis, Maryland. The CBLO is headed' by the CBP Director
under the overall direction of the Region III Water Division Director. The
CBLO is staffed by Region III and data management contractor personnel. The
primary goal of the CBLO is to help develop and implement an effective water
quality management plan for the Bay. The CBLO serves as the hub for all CBP
activities. Bay related grants and contracts management is performed there,
along with program planning, budgeting and public participation. It is also
the data center for CBP information.
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The EPA headquarters Office of Marine and Estuarine Protection provides
national direction for the Chesapeake Bay and other estuarine programs.
This office also provides technical support to Regional offices and acts as
the Agency's Washington spokesman for these programs. Using the Chesapeake
Bay as a pilot program, it develops a basinwide perspective for resource
management and protection of receiving waters. They develop generic policy
and guidance for estuaries, bays, and coastal waters. Responsibilities also
include evaluating monitoring data available for the Chesapeake Bay and
other coastal programs and relating the data to point and non-point source
controls to measure the effectiveness of pollution-abatement efforts.
Other Federal agencies are also involved in the Chesapeake Bay cleanup.
Their commitments to the project were formalized through the signing of
Memoranda of Understanding with EPA in 1984. These Federal agencies are the
Department of Defense, the U.S. Army Corps of Engineers, the U.S. Geological
Survey, the U.S. Fish and Wildlife Service, the Soil Conservation Service
and the National Oceanic and Atmosp'heric Administration.
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FINDINGS AND RECOMMENDATIONS
1. IMPROVED MONITORING PROCEDURES NEEDED
Procedures need to be improved co ensure that the work products required by
CBP grants and contracts are completed, received on a timely basis and
retained in files. EPA regulations and procedures for monitoring recipient
performance and progress toward completing grant and contract work products
were not followed. During our review of 23 grants and contracts totaling
$10.8 million, we found that:
o All of the required work products were located for only
5 grants/contracts.
o Only a portion of the work products were received and
accepted for each of 11 grants/contracts.
o None of the required work products could be located in
files for 7 grants/contracts.
In summary, EPA could substantiate that it received what is paid for in only
5 of 23 instances. Region III could not provide documentation to assure
that the Agency received all of the services and products required by 18
grants/contracts valued at $8.5 million. Without this assurance, EPA person-
nel cannot demonstrate how the studies and services funded were an effective
part of the CBP cleanup. To preclude this situation from occurring in the
future, we believe that the Regional Administrator must ensure that effective
monitoring procedures are used to measure grantee and contractor performance.
Additionally, action must be initiated to determine the status of the missing
work products and to recoup the funds applicable to any that may not have
been produced, if such is, in fact, the case.
Work Products Could Not Be Located
Work products are the tangible results of a grant or contract and represent
physical evidence that the recipient accomplished the objectives of the
award. They are, in effect, the goods or services purchased with the grant
or contract. In general, work products Include reports, studies, and manuals
which may be due periodically throughout the grant or contract duration or
at the conclusion of the project period. These could also include technical
data, other information and program-participation on the part of the grantee
and/or contractor. Time frames or delivery schedules are normally specified
in the agreement. It i3 imperative that these work products are received
and accepted on a timely basis and that evidence of such is maintained in
grant files. Without such documentation the benefit obtained from the grant
or contract is not measurable.
Acceptance of the work product indicates that the intended purpose of the
award was accomplished by the grantee and that the product is of use to EPA.
A work product would normally be accepted after a satisfactory peer or in-
house scientific review. We determined work product acceptance if there was
either evidence of a satisfactory scientific review and the product was
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included in the CBP data base or if the work product was used in any of the
five Summmary Reports on the CBP. These Summary Reports were published by
EPA and are now available through the National Technical Information Service -
U.S. Department of Commerce.
For the 23 grants and contracts reviewed, 90 work products were required. At
the time of our field work CBLO officials could only provide evidence that 33
of the 90 or 37 percent of the required grant and contract work products
were received. Of the 33 received, only 27 were accepted by the CBLO. We
also noted that 28 of 33 were received after their original due date without
evidence of proper justification for lateness. The receipt or timeliness of
the remaining 5 7 work products was not determinable since the work products
could not be located by CBLO officials. Summary statistics are as follows
and more complete details are provided in Exhibit I.
Work Products
Required Received Accepted
Grants 46 21 17
Contracts _44_ _12 _10
Total 90 33 27
It should be noted that included in the missing 57 work products are 13 draft
reports for which the final reports were received and accepted. Region III
personnel believe that these drafts are unimportant since final reports were
received. We disagree. Specifically, the contract required the contractor
to submit draft reports on specific dates to the project officer for technical
and editorial review (emphasis added). In addition, the project officer must
notify the contractor of approval or rejection, citing any additions or
necessary corrections. Draft and final reports are specified work products
for which the contractors and grantees are paid. Not producing these drafts
results in a saving to the contractors and hinders EPA technical and editorial
input. For example, two of these 13 final reports were prepared and submitted
as a result of our audit. EPA did not require or obtain draft reports because
the finals were already late. Once these finals were prepared, CBLO officials
could see no benefit to obtaining drafts so they waived the requirement. Not
obtaining these draft reports also illustrates inadequate monitoring of
recipient performance which is discussed elsewhere in this report.
One example of the lack of performance by a grantee is illustrated by Project
Number 1, awarded May 17, 1984. The grant required water quality and sedi-
ment biological sampling at various stations in the Bay during the period,
May 1, 1984 to October 1, 1984. Water quality data sets (sampling informa-
tion) were to be submitted to the CBLO within 60 days of chemical analysis
(90 days of collection) while sediment data was due within 150 days of
collection. Required v»rk products included the data sets, as well as draft
and final reports, which were due during February and March 1985 respectively.
As of the last day of our field work, February 28, 1986, the following
conditions existed:
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o No draft or final reports were submitted to the CBLO.
o Water quality and sediment data sets were submitted
up to six months late and were not signed off as being
acceptable by the grantee or EPA.
o The data did not pass CBLd's verification check, based on
established parameters.
o Sediment samples were of questionable use because of
improper grain size specifications transmitted by the
CBLO to the grantee.
o The data was not input to the CBP data base but was
returned to the grantee for correction and sign off.
In summary, this grant required three work products, two of which (draft and
final reports) were not received. The data sets, being the third work,
product, were received up to six months late and were not yet accepted by
the CBLO.
Another example, Project Number 14 provided for the Investigation, Survey
and Study of Water Pollution Control and' Statistical Research and Development
for the CBP. The CBLO could only provide us with tangible evidence that 3
of the 8 required work products were received. We did review documentation
showing acceptance by CBLO of three work products received. However, we
are still awaiting evidence of receipt and acceptance of the five other work
products which include a CBP Systems User Manual, Water Quality Model Infor-
mation and a report of site reviews.
Project Number 17 required 16 work products associated with the development
of a Chesapeake Bay Circulation Model. According to the contract delivery
schedule, the work products included task reports which were due periodically
during the contract period, a computer program users manual, training work-
shop and seminar agenda, draft report and a final project completion report.
Only the draft report was available for our review. The contract also had
five amendments, two of which were for time extensions, which, in the aggre-
gate, extended the completion date 22 months from May 31, 1981 to March 31,
1983. We requested justification for these time extensions but have not yet
received them.
We believe, that the conditions cited in the above three examples, and also
in other grants and contracts reviewed by us, occurred because Region III did
not adequately monitor recipient performance and progress toward completing
the grant and contract work products. Each CBP grant awarded by Region III
contains a general grant condition which states in part that, "The recipient
covenants and agrees that it will expeditiously initiate and timely complete
the project work for which assistance has been awarded under this agreement,
in accordance with all applicable provisions of 40 CFR Chapter 1, Subpart
B." 40 CFR 30.210 in defining the role of the grantee, stipulates that "an
award of a grant shall be deemed to constitute a public trust," and requires
"the grantee to comply with all terms and conditions of the grant
agreement complete the undertaking in a diligent and professional
manner, and monitor and report performance".
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Additionally, the EPA Administrator's Policy on Performance-Based Assistance,
issued May 31, 1985 establishes a consistent, agency-wide policy toward EPA
management of State assistance agreements. The policy requires, among other
things, that EPA continually oversee the grantee progress in attaining its
work commitments, reward strong grantee's performance and take corrective
action to resolve problems when work commitments are not met. Although this
policy was issued after all grants included in this review were awarded, it
summarizes the Agency's expectations concerning the proper administration
of grants and contracts in the past and in the future. This policy elabo-
rated on, complements, and is in complete accord with EPA's previous policies
and regulations such as 40 CFR Part 35, Subpart A and Part 30.
Also incorporated in each contract are Articles entitled "Report of Work"
and "Deliverable Items and Schedule" stipulating work products due and the
required time frame for completion. For such contracts, Chapter 6 of the
Project Officers' Handbook stipulates the project officer's duties for moni-
toring the contract work. Section tt-6.207 is particularly relevant in that
it requires the project officer to assure timely performance of the contract
work effort and institute remedial action for delinquent performance.
Inadequate Monitoring of Recipient Performance
Monitoring recipient performance and progress is essential to ensure the
timely completion and receipt of acceptable work products. TTie process
begins with an approved work program which is usually part of the application
for financial assistance and becomes the basis for the management and evalua-
tion of performance. The work program details the various tasks to be com-
pleted and the applicable time schedule. From this, the program manager
should prepare a tracking schedule detailing the task or product and appli-
cable due dates. As milestones are met and documentation received, the
data should be recorded. It is essential that the tracking system be for-
malized and kept current.
Our review disclosed that for only two of the 23 grants and contracts reviewed
was there some evidence of monitoring recipient performance by EPA personnel.
CBLO officials did not have written tracking schedules detailing due dates
of grant and contract work programs, progress reports and work products.
Further, in many instances, officials did not know if these documents were
received. In addition, there were 80 amendments to the 23 grants and con-
tracts reviewed, which included 45 time extensions. More effective monitoring
should have reduced the number of time extensions and assured more timely
receipt of work products. In addition, justification for the time extensions
would have been available for our review. An example is Project Number 13
which had eight amendments, three of which were time extensions. Another,
Project Number 19, was amended five times extending the project ending period
from April 21, 1981 to January 30, 1983. We requested, but received no
justifications for 24 of the 4 5 time extensions. We believe that the lack of
formal monitoring procedures resulted in the previously discussed poor
performance regarding receipt, acceptance and timeliness of work products.
13
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40 CFR 35.410, revised as 40 CFR 35.150 on July 1, 1983, requires the Regional
Administrator to oversee each recipient's performance under an assistance
agreement and to evaluate recipient performance and progress toward completing
the outputs in the approved work program according to the schedule. EPA's
Project Officers' Handbook, Chapter 6, in part addresses the raonicoring of
contract work and establishes the role of the project officer in assuring
performance of required work. Paragraph M-6.204(c) states that "Government
personnel must actively oversee the work effort and monitor the contractor's
performance with the objective of assuring that such performance meets the
requirements of the contract." Paragraph M-6.204 further details the role of
the project officer in assuring the timeliness of contractor performance.
Conclusion
CBLO officials concur that the work products required by the grants and con-
tracts should be readily available and that documentation should exist veri-
fying that the objectives of the grants and contracts were accomplished. In
a March 6, 1986 memorandum, the Deputy Director of the CBLO recommended that
a task force be assembled to address our questions and obtain the work
products not available during this review. On March 28th the Chesapeake Bay
Program Director sent a letter to the Director of EPA's Office of Marine and
Estuarine Protection confirming the latter Director's "willingness to assist
the CBP in resolving the Program's initial audit." Recently, CBLO officials
have stated that a formal monitoring and tracking system of recipient per-
formance has been implemented.
We commend CBLO officials for their intentions to implement corrective actions.
The actions should help ensure that the problems presently existing will not
occur in the future. This is essential for the continued restoration and
protection of the Bay and its resources as established in the Chesapeake Bay
Agreement of 1983. However, aggressive action is mandatory to determine the
status of the missing work products. CBLO officials should exercise all
possible options to locate the missing documents and reports, contacting
grantees and contractors if necessary. If such efforts prove fruitless, the
Agency should document these omissions and recover funds expended, if approp-
riate. At a minimum, CBLO should document how the grants and contracts
benefited the Chesapeake Bay Program.
Recommendations
Ue recommend that the Regional Administrator of EPA Region III:
1. Assure that the positive steps recently initiated
as a result of our audit are completed and officials
accomplish the intended results. Specifically, CBLO
officials must ensure that the task force organized
to close grants and contracts takes timely and
effective action.
14
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2. Assure that the procedures' for monitoring grants and
contracts are fully implemented. These procedures
should adhere to the EPA Administrator's Policy on
Performance-Based Assistance dated May 31, 1985.
3. Take aggressive action to determine the status of all
work products associated with all grants and contracts
awarded under the CBP. If the status and benefits
derived from these work, products cannot be determined,
the Agency should recover funds from grantees and
contractors, if appropriate.
Region III Comments
(1) In regards to recommendation 1 Region III provided the following specific
comment s.
As stated, the Deputy Director, CBP recommended that a task
force be assembled to address the OIG's questions and obtain
the work products not available during the review. Based
on that recommendation and as a result of your preliminary
draft findings of May 5 and 7 and your Draft Report of June
24, 1986, the CBP will continue to take all actions
necessary to close out the cited 23 grants and contracts
in accordance with Chapter 40, Par. 5 of the Assistance
Administration Manual 5700 dated 12/3/85. The recommended
task force has been modified to insure a more timely and
streamlined approach to the issues and recommendations
you raised.
The Internal Control Review did identify the area of "Project
Closeouts" as a weakness and developed a program to respond
to that weakness as well as other internal and external
areas of vulnerability.
(2) Regarding recommendation 2 concerning the need to improve the monitoring
of grants and contracts, Region III provided tjie following comments.
The Chesapeake- Bay Program's Management Tracking System for
Grants and Contracts, as described in Exhibit 2, has been
fully implemented. One cycle of grant and contract review
has been completed and, another cycle has been scheduled
(Exhibit 3). The current systems foundation was initiated
in aarly 1985 when a manual Grants Tracking System was
developed and has since been augmented by a comprehensive
grants/contracts management system.
(3) The following comments were provided to recommendation 3.
In addition to the overall objective as stated in Recommenda-
tion 1 above, specific tasks have been identified and assigned
to first verify the status of work products (your Exhibit I of
15
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the audit) and then, based on chat verification, formulate
and implement specific follow up actions which will result
in contract/ grant closeout or a determination that documen-
tation is no longer avaiiaule to effect close out in accord-
ance with the Assistance Aaair.istration Mar.uai.
(4) The following overall comments were provided concerning the missing wotk
products.
The draft audit report indicates that only 33 of 90 work
products were completed for the 23 grants and contracts
reviewed by Che OIG (see Exhibit I of the draft audit
report). On che basis of our preliminary follow-up, this
is not an accurate assessment.
Final reports were received and accepted for all but four
of the 18 grants/contracts reviewed by the OIG from the
Research Phase. (Discussions with the EPA project officer
for project it10 in Exhibit I clarified that a final report
was received and accepted; documentation to that effect and
a cony of the final report are being acquired for the
Chesapeake Bay Program files.) Tw of these grants (#12 and
#13) were state participation agreements which did not
require final reports; resources from these agreements,
which were active beyond September 1983, were used in part
to complete the Chesapeake Bay Program management reports.
Final reports accounting for two of the four deliverables
for project It 3 are in Chesapeake Bay office files. Finally,
a draft final report submitted for project itll was never
revised, due to the death of the principal investigator.
Final reports were submitted for all grants/contracts re-
viewed by the OIG from the Implementation Phase, with the
exception of one data set.
Auditor Comments
The actions planned by Region III personnel as a result of the recommenda-
tions contained in our draft report should alleviate the conditions discussed
in our report. However, Region III personnel oust realize that to be effec-
tive their efforts must be on-going. Their efforts should not only be appli-
cable to the 23 grants/contracts' reviewed but to all 90 awarded to date.
These efforts also oust be carried forth to contracts and grants awarded in
the future.
•idicionally, as discussed in che overview before our summary of .findings, we
now feel that the CBP has more than an administration and monitoring problea.
It now appears that there was no overall direction or planning for the program
since we found that grants were awarded which did tiot benefit the CBP and
required work products for other grants were never missed. In addition, the
technical aspects of the Implementation phase are now in -question siace some
of the missing work products under the Research and Development phase would,
by their absence, have a negative impact upon the overall Qiesapeake Bay
claanup effort.
16
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We do not agree with the overall comments provided by Region III concerning
the missing work products. As a result of our audit and after the fieldwork
was completed, EPA obtained nine additional work products, two of which were
recently prepared by the grantees. We also found two additional work products
by visiting and contacting grantees. In summary, actions after issuance of
our draft report, increased the work products located from 33 to 44. Conse-
quently, Region Ill's comments that our report was not an accurate assessment
were in error. At the exit conference Region III officials confirmed that
they realized the response contained inaccuracies three days after it was
mailed to us. Specifically, we found that for project 10 the final report
was not accepted. For grants 12 and 13 the participation agreement required
camera-ready final reports. For project 3, one of the two deliverables
received was only a draft which we reviewed and determined to be unacceptable
during our audit. When we visited the contractor for project 17, it was
determined that other investigators were available to complete this project.
For the grants under the Implementation phase, final reports were obtained
and accepted after our fieldwork and after we informed CBLO officials that
the required products were not received.
17
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2. GRANTS AND CONTRACTS TOTALING $25 MILLION WERE INADEQUATELY ADMINISTERED
Administration procedures need to be strengthened to ensure that grants and
contracts are awarded and administered in an efficient and effective manner.
Our review of 20 grants and 3 contracts di"closed numerous deficiencies
requiring action by Region III. Namely, w* ->d that project files were
incomplete and maintained in a haphazard marv.._ Completed grants and
contracts were not closed. Adequate work programs were not available for
our review nor was there evidence that numerous grant conditions were sat;..
fied. In general, grants and contracts were not administered and managed
adequately. We believe this occurred because proper administration of grants
and contracts was not a priority of the CBLO personnel. This is evident
since many of these deficiencies were already identified by Region III
personnel but corrective action was not taken. It appears that management
was lax in these areas with their primary focus being applied to the technical
aspects of the program. We also are of the opinion that strenuous action
should be initiated promptly to ensure that these deficiencies are eliminated
for future grants and contracts.
Incomplete Project Files
Project files were poorly maintained and lacked significant information.
Several of the project files selected for review initially could not even be
located. Once found, these files were' generally missing an assortment of
important documents such as grant applications, work programs, amendments
including justifications, and final reports. CBLO officials were unaware if
these documents were received and misplaced, or never received. This infor-
mation is needed to effectively administer grants and contracts. For example,
we noted that the performance periods of 14 grants and contracts were extended
up to 40 months and the justification for these extensions was not available.
As a result, when these projects are closed the CBLO personnel will not be
able to effectively determine if the grantee/contractor should be penalized
for overrunning the performance period.
We also noted that the project files did not contain justifications for
funding increases totaling $2.8 million applicable to the grants and contracts
included in our review. As a result, EPA cannot currently document that
these funds were expended for valid reasons. This issue of improper record-
keeping was further evidenced when several files for open projects were
destroyed during December 1983 because the CBLO lacked sufficient storage.
These files were the only EPA record of the transactions funded under the
grant or contract. Official EPA records are not to be destroyed but safe-
guarded and then sent to the Federal Records Center for proper safekeeping
when the grant is closed.
CBLO officials agreed that file maintenance is inadequate and not in accord-
ance with EPA regulations. As specified in 40 CFR 30.215 and Chapter 5 of
the EPA Assistance Administration Manual, an official EPA file must be
established, maintained and retired for each grant. A full record of each
grant must be maintained to assure that the official file contains documents
relating to, among other things, the application, pre-award review, award
decision, funding, disputes, audit and close out. Additionally, the official
grant file should be complete and orderly so as to allow immediate access to
18
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records of all significant grant actions. It should be noted that the grant
file serves as the official reference source for all inquiries, including
Freedom of Information requests, judicial queries, recipient appeals and
equipment disposition actions. For all these reasons, we believe that the
CBLO must develop and maintain a complete project file on each grant and
contract. CBLO personnel must also take prompt corrective action to eliminate
the deficiencies discussed above so that future grants and contract files
i
are adequately safeguarded.
The EPA's Records Management Manual prescribes the objectives and respon-
sibilities relating to the retention, filing, disposition and transfer of
records to the Federal Records Center. Chapter 41 of EPA's Assistance
Administration Manual stipulates a four year retention period for grants
involving studies or research which would pertain to the CBP.
Projects Not Closed
Only one of the 23 grants and contracts reviewed was closed. The remaining
22 are still open even though the projects were listed as complete for as
many as six years. Examples are shown below:
Dates
Project Number Closeout Required Closed
5
October, 1980
Open
3
May, 1981
Open
7
May, 1981
Open
10
June, 1981
Open
16
July, 1983
March, 1986
The closeout of a grant or contract is important since it is the process by
which EPA determines that all applicable administrative actions and all
required work was completed. Closeouts should be completed promptly so that
unexpended funds can be deobligated and the administrative aspects of managing
a project can be finalized. Completed files should be transferred to the
Federal Records Center for storage and safekeeping, thereby further reducing
the administrative workload of project officers and administrative personnel.
Project closeout becomes increasingly difficult with the passage of time as
project officers and storage locations change. The likelihood that files
and documents will be misplaced, lost or destroyed increases. This scenario
currently exists at the CBLO as evidenced in our findings.
CBLO officials must take immediate action to obtain the missing documentation
discussed previously so that current and completed grants and contracts can
be closed. In the future, action should also be initiated to ensure that
grants are closed in a more time" -anner. Responsible CBLO personnel should
be instructed in the areas ot ^..rds maintenance, storage, retention and
procedures for transfer to the Federal Records Center. EPA's Records Manage-
ment Manual and Chapter 41 of EPA's Assistance Administration Manual address
these areas.
19
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Paragraph 2a of Chapter 40 of Che EPA Assistance Administration Manual states
that "EPA should close out projects promptly." Paragraph 2b stipulates that
the project officer begin the actual closeout process three or four months
before the project period end-date. Paragraph 4b further details the project
officer's closeout responsibilities. These responsibilities include assuring
that the grant recipient delivers a satisfactory final product; completes the
output commitments required by the grant; submits a final Financial Status
Report; and settles any claims or legal suits. Paragraph M-7.404 of the
Project Officers' Handbook also stipulates that the contracting officer must
administratively close contracts when all required services were performed
and all outstanding contractual issues are settled.
Inadequate Work Programs
For 16 of the 20 grants, we found that documents such as the grantees' pro-
posal, memorandum of understanding or quality assurance plan, were used as a
substitute for the required work program. CBLO officials believe that these
documents can serve as adequate substitutes for work programs. Ue disagree.
Our examination disclosed that individually or collectively these documents
did not contain the data required to be an adequate work program.
40 CFR 35.130 stipulates, in part, that, "The work program must specify the
work years and amount and source of funding estimated to be needed for each
program element, the outputs committed to under each program element, includ-
ing any outputs required under an authorization or delegation agreement, a
schedule for accomplistments of outputs, and an identification of the agency
responsible for each of the elements and outputs."
We found that the documents substituted for work programs did not always
specify the work years, and amounts and source of funding needed for each
program element. Additionally, the documents did not always contain outputs
required and/or a schedule for the accomplishment of outputs. Quality assur-
ance plans were generally approved after the grant award and not before, as
required. We could not determine in two instances if the quality assurance
plans were ever approved.
Work programs are Important for evaluating grantee performance. These pro-
grams are an integral part of an effective monitoring system, and we believe
their absence contributed to the monitoring deficiency discussed elsewhere
in this report. CBLO should ensure that required work programs are incor-
porated into the grant application package and become the document on which
to base and justify the grant prior to its award. We believe that no" other
document can suitably substitute as a bonafide work program. Memoranda of
understanding, work proposals, quality assurance plans and other documents
may serve, in some instances, as a supplement to a work program, but we
question that these substitutes can always provide the specific data required
by 40 CFR 35.130.
If work programs were obtained, the CBLO project officer could have prepared
a tracking schedule detailing the documents and products required of the
grantee. For example, due dates for the receipt of quality assurance plans,
progress reports and work products should have been scheduled from the work
20
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program. We believe this omission contributed to the inability of the CBLO.
to determine if many of the grant requirements were accomplished. Conse-
quently, in the future we believe the CBLO should discontinue using these
substitute documents as the required work program.
Grant Conditions Not Satisfied
In our review of the 20 grants, 'we determined that there were 59 special
conditions which required the grantee to perform a specific action and submit
evidentiary documentation. From these 59 conditions, CBLO officials could
only locate documentation (such as technical plans, progress reports and
financial status reports) for 15 or 25 percent of the conditions. In our
opinion, the project files should have contained some evidence that these
particular conditions were satisfied. The grants also contained many condi-
tions which were not necessarily measurable by us because the grantees were
not required to submit documentation. Examples of such special conditions
included grantee participation in programs, attendance at meetings and
compliance with 0MB Circular A-102, Attachments N, 0 and P. Generally, CBLO
officials did not know if grantees complied with these conditions nor was
there any evidence of such compliance available for our review.
Although evidence does not exist that these special conditions were satisfied,
payments were nevertheless made to grantees. 40 CFR 30.210 requires the
grantee to comply with all terms and conditions of the grant agreement. This
regulation not only applies to work products but to all special conditions
included in the grant agreement. Assuring grantee compliance with such
conditions is an essential element of the monitoring process. Therefore, we
believe that the CBLO should ensure compliance with all grant conditions and
take corrective actions when significant grant conditions are not satisfied.
Internal Control Review Recommendations Not Fully Implemented
A review conducted by Region III during December 1984, as part of the Federal
Manager's Integrity Act (FMFIA), identified several weaknesses which were
either similar or identical to the deficiencies disclosed in this report.
These were shown in the Region III report as follows:
1. Quality Assurance
o Lack of trained personnel, lack of performance
audits and monitoring standards that should be
used in processing grants' and contracts.
2. Monitoring
o No specific monitoring or followup procedures
which could measure job progress, quality
assurance, job completion and proper grant
funds draw down with percent of job completion.
21
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3. Oversight of all State Grantees and Contractors
o No close monitoring of work done by States and con-
tractors for compliance to job specifications, no
review to determine proper expenditure of funds versus
task. coraDletion or accomplishment of deliverables, or
to determine'if the funds are being used wisely and
for the CBP only.
4. Files
o Existing filing system needs more attention and
revisions. No procedures exist to properly maintain
the files and get them ready for closeout when projects
are complete.
5. Project Closeout
o Several grants and one contract have been completed for
some time but no steps have been taken to closeout;
Files are in questionable order. No closeout procedures
in existence at the present time; most administrative
and technical files need to-be merged and organized;
and unobligated grant funds are tied up when they
could be used for other projects.
CBLO officials indicated some of Region Ill's report recommendations were
implemented. They stated that personnel have attended training seminars,
attempts were made to contact project officers, locate files, prepare grant
listings and begin the closeout process. CBLO officials believe that the
monitoring of grants and contracts has improved. We are of the opinion,
however, that more timely and effective actions are warranted. Over one year
has elapsed since the internal control review and many of the same problem
areas still exist. This is evidenced by the fact that the grant files and
assorted applicable documents requested by us during our audit were still
not available. Corrective actions by CBLO officials have not been sufficient
causing deficiencies to continue that have a detrimental Impact upon the CBP.
Summary
The preceding paragraphs discuss deficient areas in the administration of
CBP grants and contracts. Project Number 10 which was awarded for $315,521,
is an illustration of the culmination of these deficiencies showing what can
happen when management does not exercise adequate controls and procedures.
We found for this grant that CBLO officials did not know whether the final
report was received; if this grant was of any benefit to the Bay cleanup; if
work programs were provided; whether grant conditions were satisfied; and if
quality assurance plans were approved by EPA. We also found the project was
not closed, and we now believe that closeout cannot be readily accomplished
because of the poor condition of the grant file and the lack of required
documentation.
22
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The purpose of this award was to develop a water quality laboratory nud
conduct a study evaluating helicopter sampling. The study was also to deter-
mine the economics of helicopter sampling versus boat sampling. An EPA
Annapolis Field Office geochemist who reviewed the grantee proposal had the
following comments in his July 17, 1978 memorandum to the Director of the
CBP.
From the standpoint of a sophisticated monitoring program,
the proposal is relatively naive and has much to be desired.
However, if you wish to designate $700K over a 2 year period
to a school to aid an ongoing educational program, you could
consider this proposal. As far as this proposal offering
anything new to the present array of monitoring labs and
programs on the Bay, it does not. I am not sure that its
strongest point, educational development, fits within the
framework of the CBP. I think you need to decide what you
want from this type of proposal. If you want a strong, well
designed sophisticated monitoring program, you don't have
it here. For instance this proposal cannot compare to the
monitoring programs proposed to the toxic work group. How-
ever, if the CBP is tasked with aiding education in estu-
arine science, this proposal has some special merit.
The Director of the Annapolis field office in his July 17, 1978 memorandum
co the CBP Director summarized the proposal review comments as follows:
After reviewing the comments made, I would have to conclude
that the only positive way you could consider this proposal
would be as an aid to education. If that is to be the basis
for funding (and I am not sure that is the intent of the CBP
considering the existence and mission of the NSF and other
granting institutions), I suggest a more modest sura be
considered. The amount to be expended for the helicopter
funding also seems excessive when one looks at the expected
results. Some cutting back would seem to be appropriate
here also.
Despite serious questions concerning the benefit and relevance of the project
to the CBP, the grant was awarded on August 16, 1978. As previously discussed,
CBLO officials could not locate the final work product and this condition is
included as a statistic in the section of our report addressing receipt- of
work products. There was no documentation in the project file refuting the
problems which surfaced during the technical review of the proposal by the
geochemist and supported by the Director of the Annapolis field office.
Current CBLO officials could not provide an explanation or justification for
the award of the grant based on project file correspondence stating the
proposal was naive and did not fit within the framework of the CBP. As a
result, EPA expended over $300,000 for which no final report could be found
and if located, it is not known if the report would be of any benefit or use
to the CBP.
23
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Representatives from the Region III Water Management Division stated that-
current CBP officials inherited the problems noted in this audit report.
They stated that conditions as they now exist developed over the years under
the administration of previous CBP officials. They further indicated chat
they made attempts to implement corrective actiorr. ,u" rhese efforts were
not fully effective due to the lack of staff. 1 :nt gran^ ->nd contracts
were a priority leaving insufficient time to L^-.iry pre-1934 grau: =nd
contract deficiencies. The scope of our audit did not encompass a review of
the adequacy of CBLO staff resources. However, if Region III officials feel
more staff is needed, such resources should be requested.
Recommendations
We recommend that the Regional Administrator initiate the following actions
in order to strengthen administrative procedures:
1. Safeguard grant and contract files as they represent
the official record of actions relating to the projects.
Files should contain all significant information and
documents and be a complete record of each grant and
contract as required by 40 CFR 30.210 and Chapter 5
of the EPA Assistance Administration Manual. Main-
tenance and transfer of files to the Federal Records
Center should be in accordance with EPA's Records
Management Manual and Chapter 41 of the Assistance
Administration Manual.
2. Take immediate action and obtain the necessary documen-
tation to close completed grants and contracts in
accordance with Chapter 40 of EPA's Assistance Adminis-
tration Manual. Current and future projects must be
closed In a timely manner and CBLO personnel should
be instructed in the areas of records maintenance,
storage, retention and transfer.
3. Ascertain .that a work program, as required by
40 CFR 35.130, is included in each grant application
and effectively used as a basis for tracking grantee
performance. Proposals, memoranda of understanding,
and quality assurance plans, although necessary, should
not be used as substitutes for a work program.
4. Assure grantee compliance with all grant conditions
and take corrective action when significant grant
actions are not satisfied.
24
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Region III Comments
Region III agreed with our four recommendations and provided the following
specific comments.
(1) Agree. Action that support this recommendation are
underway and are presented in Attachment 4, regarding
our Internal Control Review and its update.
(2) Agree. Actions that support this recommendation are
underway as previously described. It has been noted
in the ICR that the performance of these tasks is
resource intensive. The audit report should recognize
this fact.
(3) Agree. The attached Grant Application Checklist will,
insure the inclusion of an adequate work plan. (Exhibit
7)
(4) Agree. The Chesapeake Bay Program Project Officers
through the Grants and Contracts Management Tracking
System review and report on a monthly basis on special
grant conditions and CBLO officials review and discuss
all grant/contract requirements' on a quarterly basis.
Auditor Comments
We concur with the corrective actions initiated by Region III as a result of
our audit. However, we wish to again emphasize that these efforts must be on-
going and apply to contracts and grants awarded in the future.
25
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EXHIBIT I
SCHEDULE OF WOFK PRODUCTS REQUIRED, RECEIVED AND ACCEPTED
FOR THE GRANTS AND CONTRACTS REVIEWED
-------
EXHIBIT 1
SCHEDULE OF WORK PRODUCTS REQUIRED, RECEIVED AND ACCEPTED
FOR THE CRANTS AND CONTRACTS REVIEWED
Grant/
Contract
1
Awa rd
Date
5/84
Amount
$514,628 9/85
Work Products
Due Date
Required
o Final report contain-
ing tasks completed
and summarizing data
collected.
o Draft report
o Data Sets
Per Draft Report
Received Accepted
No
No
Yes
No
No
No
Per Followup Action
After Draft Issued
Received Accepted
Yes
No
Yes
Yea
No
Yes
N>
cr\
5/84
432,726 12/85
o Final report contain-
ing tasks completed
and summarizing data
collected.
o Draft report
o Da t a Se t s
No
No
Yes
No
No
No
Yes
No
Yes
Yes
No
Yes
3 7/79 192,802 12/80
o Report on Bay Manage- Yes
ment Agencies.
o Report'on Regional No
Institutional Arrange-
ments.
o Report on Criteria and No
Candidates for case
studies.
o Research documents No
Yes Yes Yes
No No No
No No No
No No No
Exhi bit I Page 1 of 7
-------
Grant/ Award
Contract Date Amount Due Date
A 6/78 $ 35,000 9/78
5 5/79
6 3/80
7 7/78
156,002 A/80
129,012 3/82
A2 3 ,000 1 1/81
8 9/78
306,088 3/82
Work Products
Per Followup Action
Per Draft Report After Draft Issued
Regulred Received Accepted Received Accepted
o Final report document- No No Yes No
ing activities and
describing grantee's
achievements.
o Final report No No Yes No
o Final report No No No No
o Final report on No No No No
engineering and
design study.
o Final report on Yes Yes Yes Yes
data collection.
o Final report Yes
o Synthesis paper on No
factors affecting SAV
inacrophyte communities.
o Paper on Annotated No
Bibliography of SAV.
o Paper on Chesapeake No
Bay International SAV
D & A comparison.
No
No
No
No
Yes
No
No
Yes
Yes
No
No
Yes
fclxhlhit 1 Page 2 of 7
-------
Grant/ Award
Contract Date Amount Due Date
$360,41 1 1/81
9/78
9
10 8/78
11 3/81
12 5/78
13 5/78
315,521 12/80
232,052 9/82
733,393 9/84
742,434 4/84
Work Products
Per Followup Action
Per Draft Report After Draft Issued
Requlred Received Accepted Received Accepted
o Report on diagrams No No No No
of Interactions and
conceptual models of
system functions.
o Report on Indices Yes Yes Yes Yes
and their pertinence
to the Bay.
o Report on Workshop Yes Yes Yes Yes
o Report on Proceedings No No Yes Yes
of the Symposium.
o Final report Yes Yes Yes Yes
o Final report No No Yes No
o Final report No No No No
o Final report
No
No
No
No
o Final report
No
No
No
No
KxhIb1t 1 Page 3 of 7
-------
Grant/ Award
Contract Date Amount Due Date
14 5/82 $1 ,226,272 9/83
15 6/80 602,745 1/83
Work Products
Required
Systems Users Manual.
Bay Characterization
Repor t.
Bay Management Study
Maintain the computer
network and database.
Conversion of water
quality models to the
Bay's computer system.
Perform site-specific
reviews.
Coordinate and review
all flies and reports.
Perform water quality
model runs.
Final report
Per Followup Action
Per Draft Report After Draft Issued
Received Accepted Received Accepted
No No No No
Yes Yes Yes Yes
Yes Yes Yes Yes
No No No No
No No No No
No No No No
Yes Yes Yes Yes
No No No No
Yes No Yes No
xliihi C 1 Page 4 of 7
-------
Work Products
Grant/
Contract
16
Award
Pier Draft Reoort
Per Followup Action
After Draft Issued
Date
4/82
Amount
Due Date
$380,577 1/83
OJ
O
Regut red
o Final reports on:
Data Acquis LL inn
Toxic Chemical Data
Analysis
Resource Trends Ev.il-
uat ion
Nutrient Trends Eval-
uation
Water Quality
Bay Segment Ranking
Point Source Pollutant
Nonpoint Source Pollut-
ant Loadings.
Water Uses Continum
Technical Writing
Technical Synthesis
Modeling Synthesis
o Draft Reports on above
Received Accepted Received Accepted
Ye s
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
No
No
Yes
No( 1 2)
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
No
No
Yes
No(I 2)
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
No
Yes
No( I I)
Ye s( I)
Yes
Ye s
Yes
Ye s
Yes
Yes
Yes
Yes
Yes
Yes
No
Yes
No( 1 I)
Yes(1)
Exh i 1) i t 1 Page 5 of 7
-------
Work Products
Grant/
Contract
17
Award
Date
Amount
Due Date
4/79 $ 580,668 3/83
Requi red
o Task Reports (11)
o Draft report
o Final report
o Training Workshop
Agenda
o Computer Program
Users Manua1.
o Seminar Agenda
Per Draft Report
Received Accepted
No
Yes
No
No
No
No
No
No
No
No
No
No
Per Followup Action
After Draft Issued
Received Accepted
No
Yes
No
No
No
No
No
No
No
No
No
No
18
9/79 1,104,288 7/82
o Phase I draft report No
o Phase II draft report No
o Phase II final report No
o Phase III final report Yes
No
No
No
No
Yes
Yes
No
Yes
No
No
No
No
SUBTOTALS FOR
GRANTS/CONTRACTS
WITH MISSING
WORK PRODUCTS
$8,467,619
81
24
18
35
27
Exhibit I Page 6 of 7
-------
Grant/
Contract
Award
Date Amount Due Date
Hequ1 rod
19 A/80
20 6/78
21 8/84
22 3/84
23 9/84
SUBTOTALS FOR 5
GRANTS WITH ALL
WORK PRODUCTS
£ RECEIVED AND
ACCEPTED
GRAND TOTALS
FOR 23 GRANTS/
CONTRACTS
$ 569,878 1/83 ( 1)
975,781 6/82 (2)
287,678 12/85 (2)
370,933 1/86 (3)
150,044 9/85 (1)
$ 2,354,314 9
$10,821,933 90
rk Products
Per FoILowup Action
Per Draft Report After Draft Issued
Received Accepted Received Accepted
Yes Yes Yes Yes
Yes Yes Yes Yes
Yes Yes Yes Yes
Yes Yes Yes Yes
Yes Yes Yes Yes
9 9 9 9
33 27 44 36
Exhibit I Page 7 of 7
-------
EXHIBIT II
REGION III RESPONSE WITH AUDITOR REBUTTAL
TO AUDIT ISSUES IN EXHIBIT I
-------
rjcniDic ii
Page 1 of 6
REGION III RESPONSE WITH AUDITOR REBUTTAL
TO AUDIT ISSUES IN EXHIBIT I
Project Number 1
Issue: No draft and final report's and data sets were received and accepted.
Response; Draft progress reports and the final report have been received and
accepted by EPA. Data sets have also been received and accepted by EPA.
Auditor Rebuttal: The final report was obtained and accepted by EPA after
our fieldwork and as a result of our audit. The data sets were also accepted
after our fieldwork. The CBLO officials solicited these documents because we
requested them. The draft report, which was due February, 1985, was not
received and waived by EPA due to' the lateness of the final report.
Project Number 2
Issue: No draft and final reports and data sets were received and accepted.
Response: Same as response to Project Number 1 (above) with the exception
that sediment data from FY '84 and FY '85 have not been received, but are
presently being entered into the computer. They are expected to be accepted
by the end of August.
Auditor Rebuttal: Same as Project Number 1.
Project Number 3
Issue: No reports on regional institutional arrangements and criteria and
candidates for case studies and research documents were received and accepted.
Response: The report on Regional Institutional Arrangements is on file at
the Liaison Office. The two other work products cannot be located.
Auditor Rebuttal: The report noted in the response as being on file was
previously examined. by us and found to be unacceptable. It was a draft and
not a final report and was prepared by an organization other than the grantee.
Project Numbers 4, 5 & 6
Issue: No final report submitted.
Response: A final report for this project was submitted and is on file at
the CBP offices, included in the grant file is a memo stating that peer review
was completed.
33
-------
Exhibit II
Page 2 of 6
Auditor Rebuttal: The final report on file was previously examined by us.
It is shown as received in Exhibit I. However, this report was peer reviewed
and not accepted. Additionally, the issue is that three final reports were
required and not one as the response suggests. We visited Che grantee and
found the second report. The third, in preliminary form, was received by the
grantee on the day of our v±. This report due March 1982 will not be
finalized until early 1987. See pages 3 and 4 of our report for additional
informa tion.
Project Number 7
Issue: No engineering and design report on file.
Response: This work was conducted to estimate nutrient loadings from the
major tributaries in the basin; the data was used to calibrate the basinwide
loading model; due to the importance of this work, the engineering design was
closely scrutinized throughout the project period; the design was peer re-
viewed and approved by the U.S. Geological Survey and EPA. Data reports
were submitted by USGS as the final project reports. The data was also
entered in the CBP computer and used in the "Characterization" report.
Auditor Rebuttal: Regardless of the response, the final report on engineering
and design study is still not available.
Project Number 8
Issue: No final report accepted.
Response: This project was one of the first major reports published by CBP
in 1979; the document is in CPB files in an official EPA/0RD cover; the report
is published and available through NTIS.
Issue: No synthesis paper.
Response: The synthesis paper for this project was published in Chapter IV
(Section IV) of the "Chesapeake Bay Program Technical Studies: A Synthesis."
Issue: No annotated bibliography.
Response: A bibliography accompanied the final report; the international
annotated bibliography was completed by Bert Brun (U.S. F&WS), submitted to
CBP and published in Bob Orth's work on the "Distribution and Abundance of
SAV in the Lower Chesapeake Bay."
Auditor Rebuttal: We agree with the documentation provided, after our review,
showing that ~he final report shown as received in Exhibit I was accepted.
However, neither the Synthesis Paper nor the Annotated Bibliography were
available for our review. The CHLO officials pre !sd alternative documen-
tation for the Synthesis Paper which was not acceptable.
34
-------
Exhibit II
Page 3 of 6
Project Number 9
Issue: No report on Proceedings of Symposium.
Response: The document published as a result of the Symposium is one of the
most well known pieces of work in Estuarine Science (Estuaries and Nutrients,
edited by Nielson and Cronin; Humana Press, Clinton, New Jersey, 1981.)
Issue: No report on diagrams on ecosystem functions.
Response: These diagrams were published in the CBP report "Chesapeake Bay:
Introduction to an Ecosystem".
Auditor Rebuttal: The report on Proceedings of the Symposium was provided
after the audit and is now shown in Exhibit I as received and accepted. The
final report on diagrams of interactions and conceptual models of system
functions is still not available.
Project Number 10
Issue: No final report received.
Response: A final report for this project was completed and accepted accord-
ing to Charles Plost (382-5796), the EPA project officer. Mr. Plost has
agreed to send a letter stating this and provide a copy of the final report.
Auditor Rebuttal: CBLO officials still did not have the report on August 6,
1986, the date we visited the CBLO to evaluate the response. We subsequently
contacted the project officer who obtained the report from the grantee. The
report was received by us on August 21, 1986. However, there is no evidence
of EPA acceptance of the report.
Proj ect Number 11
Issue: No synthesis report prepared.
Response: The SAV synthesis papers were peer reviewed, accepted and pub-
lished in Chapter .IV of "Chesapeake Bay Program Technical Studies: A
Synthesis".
Auditor Rebuttal: The report is not available. We agree that SAV is dis-
cussed in Chapter IV of the Chesapeake Bay Program Technical Studies: A
Synthesis. However, this does not ensure that grantee completed the required
report.
Project Number 12
Issue: No final report prepared.
Response: No final report was required for this project; the Connonwealth of
Virginia provided assistance throughout the program, quarterly reports con-
taining information on activities and accomplishments were maintained in the
35
-------
Exhibit II
Page 4 of 6
program files. Four reports required by the grant were completed: draft
Elizabeth River Characterization report; toxics source assessment report,
Phase III; semi-annual progress report; annual progress report. The State
also submitted each year a proposal outlining their expected progress in the
next year.
Auditor Rebuttal: The grant requires a camera-ready, final repo-- by
September 30, 1983 which was not available according to our discussion with
the grantee.
Project Number 13
Issue: No final report prepared.
Response: Same as Number 12 for.State of Maryland; additionally, the State
submitted three semi-annual progress reports.
Auditor Rebuttal: Same as Number 12.
Project Number 14
Issue: No statistical research report.
Response: The statistical research and development report noted by auditors
is unfamiliar and was not a major CBP report; the Synthesis, Characterization
and Management reports were major products and were produced (in part) by UWF
staff; the staff are acknowledged for their contributions as authors in the
report.
Issue: No evidence that CBP data base was maintained.
Response: The CBP data base was designed and maintained (in part) by UWF
staff between 1978 and 1982; UWF (Institute for Statistical and Mathematical
Modeling) designed and assembled CBP data system and provided the trend
analysis for Characterization.
Issue: Water quality production runs not completed.
Response: The water quality model (production) runs were completed and are
the basis for the recommendations in the "Framework for Action" report. UWF
staff assisted in completing the production runs.
Auditor Rebuttal: The response provided does not resolve the issue of the
missing statistical research report. The CBLO response did not produce any
evidence that the grantee designed or maintained the CBP data base. Addi-
tionally, the water quality model runs are still not available.
36
-------
txhibit li
Page 5 of 6
Project Number 15
Issue: No final report accepted.
Response: The non-point source loading model was used to make the recommenda-
tions in the "Framework for Action" report; the model was thoroughly peer re-
viewed and accepted; a final repoft was received and accepted.
Auditor Rebuttal: No evidence of peer review and acceptance was available
during the audit and during our followup visit to the CBLO.
Project Number 16
Issue: No evidence that UWF provided technical synthesis and technical
writing to CBP.
Response: Technical writing and synthesis was provided by UWF in the develop-
ment of the Synthesis Papers, Characterization report and Framework for Action
report; Geomet staff were acknowledged as authors throughout the reports.
Auditor Rebuttal: We have now considered as received and accepted the
technical writing. No additional documentation on the technical synthesis
was provided by the CBLO and in addition, the 11 draft reports not addressed
in the response remain missing.
Project Number 17
Issue: No final report accepted.
Response: The principal investigator and associates were killed in the Air
Florida plane crash in Washington, D.C.; no senior staff remained to complete
project; a draft final report was received and peer reviewed; the report was
not finalized.
Auditor Rebuttal: The issue is more than no final report accepted. Our
review disclosed that 15 work products were not completed. The Region's
comments concerning the death of the principal investigator are noted.
However, we found that two other members worked on this report and were
available to finish the project. In addition, discussions with CBLO and
contractor personnel disclosed the draft final report was received and peer
reviewed, but was rejected by the reviewer. See page 5 for further comments.
Project Number 18
Issue: No final reports received for Phase I and II.
Response: Reports were received for phases I, II and III; the reports for
all phases were accepted. The results were controversial as a high percentage
(80%) of the discharges to the system were highly toxic. An agreement was
made with the participating industries early in the research phase of the
program that the results would not be released until phase III was complete;
37
-------
Exhibit II
Page 6 of 6
the results were synthesized and published in one report "Toxic Point Source
Assessment of Industrial Discharges to the Chesapeake Bay Basin: Phase III -
Protocol Verification Study;" the protocol and toxicity values were published
in the "Framework for Action" report; the protocol was recommended toxicity
testing in the CBP "Framework for Action Report".
Auditor Rebuttal: At our pre-exit conference meeting on August 20, 1986,
CBLO officials provided us with Phase 1 and Phase II draft reports which we
reviewed and recognized as now being received. The Phase II final report
remains missing and we have not been provided with evidence of acceptance
for any of the three reports.
38
-------
appendix a
REGION III RESPONSE TO DRAFT AUDIT REPORT
NOTE: Several documents which accompanied Region Ill's
response to Che draft report were not attached to our
report. The omitted portions were not considered relevant
to the issues addressed in this report. Portions omitted
are:
Attachment 1 - Response to specific Implementation grant
questions which were asked by OIG during Che
field investigation phase.
Details of the Chesapeake Bay Program's Management Tracking
System for grants and contracts initiated as a result of
our audit.
Schedule of quarterly/annual grant review meetings.
Exhibit 6 - Closeout procedures for Chesapeake Program
Grants.
The documents are on file -in our office and are available
upon request.
39
-------
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
REGION III
841 Chestnut Building
Philadelphia. Pennsylvania "l9107
olIBJECT:
FROM.
Draft Report of Audit on the Management DATE
e Cje^apeake Bay Program Grants and Contracts
if, Regional Administrator
ce ofMlegional Administrator (3RA00)
P. Ronald Gandolfo, Divisional Inspector General for Audit
Office of Inspector General (3A100)
AUG 1 - 1S86
We have reviewed the June 24, 1986 subject audit report which
reviewed Qiesapeake Bay Program procedures for managing grants and
contracts from 1978 through 1984, Your audit recognized the Admin-
istration of the Qiesapeake Bay Program during this time frame as
having two distinct phases, namely: the Research and Planning phase
(1976 through 1983), and the present day Implementation phase,
which began after the signing of the Chesapeake Bay Agreement
(December 1983). This response addresses your review of grants and
contracts from both program phases.
Our response to this draft audit includes:
Attachment 1 - Response to specific Implementation grant questions
which were asked by OIG during the field Investigation phase.
Attachment 2 which is our updated 6tatus of Exhibit 1 of your
draft audit based on a review of the 23 grant and contract files.
Attachment 3 - our preliminary response to your recommendations
concerning "Improved Monitoring Procedures Needed" (p.10) which
may assist you in preparing your final audit.
Attachment 4 - Our response to Internal Control Review (p.14).
Attachment 5 - Our preliminary response to your recommendations
concerning "strengthening administration procedures" (p.17) which
may assist you in preparing your final audit.
Should you need to discuss this further or require additional
clarification or information please contact Al Morris or Bob Mitkus
(7-3420) or have your staff call Hank Zygmunt (8-922-2285).
Attachments
Appendix A
Page 1 of 17
^dnwn
7^
M6-4l9fr
-------
Atracnment 2
The draft audit report indicates that only 33 of 9U work products
were completed for the 23 grants ana contracts reviewed by the 01G (see
Exhibit 1 of the draft audit report). On the basis of our preliminary
follow-up, this is not an accurate assessment.
Final reports were received and accepted for all but four of the
18 grants/contracts reviewed by the 01G from the Research Phase.
(Discussions with the EPA project officer for project *10 in Exhibit 1
clarified that a final report was received and accepted; documentation
to that effect and a copy of the final report are being acquired tor
the Chesapeake Bay Program files.) Two of these grants (l/lZ and 013)
were State (Maryland and Virginia) participation agreement which did
not require final reports; resources from these agreements, which were
active beyond September 1983, were used in part to complete the Chesapeake
Bay Program management reports. Final reports accounting for two of
the four deliverables for project *3 are in Chesapeake Bay office files.
Finally, a draft final report submitted for project #17 was never
revised, due to the death of the principal investigator. Final reports
were submitted for all grants/contracts reviewed by the OIG from the
Implementation Phase, with the exception of one data set, addressed
below.
Eacn item identified in Exhibit 1 of the drart audit report is
addressee below. The project numbers reference the grants/contracts as
listed in Exnibit 1.
Project ir 1 (Virginia Mainstem Monitoring Grant (X-003296))
Issue: No draft and final reports and data sets were received
and accepted.
Response: Draft progress reports and the final report have Been
received and accepted by EPA. Data sets have also been
received and accepted by EPA.
Project 92 (Maryland Mainsten Monitoring Grants (X-OU3297))
Issue: No draft and final reports and data sets were received
and accepted.
Response: Same as response to project #1 (above) with the exception
chat sediment data from FY '84 and FY '85 have not been
received, but are presently being entered into tne
computer. They are expected to be accepted by the end
of August.
Project #3 (Environme Law Institute)
Issue: No reports on regional institutional arrangements and
criteria and candidates.for case studies and research
documents were received and accepted.
2-1
Appendix A
Page 2 of 17
-------
Response: The report on Regional Institutional Arrangements is on
file at the Liaison Office. The two other work, products
cannot be located.
Note: It is our understanding that the data tor ELI's award was
July 1979, not July 1984 as indicated in the draft audit
report.
Project r*,#5,lfb (Pequea Creek Study - X-UU3lHb)
Issue: No final report submitted.
Response: A final report for this project was submitted and is
on file at the- CBP offices, Included in the grant file
is a memo stating that peer review was completed.
Project 17 (Fall Line Monitoring - Water Quality Loads to
3 Major TriDutaries in Chesapeake Bay, USGS)
Issue: No engineering and design report on file.
Respor.se: This work, was conducted to estimate nutrient loadings
from the (3) major tributaries in the basin; the data
was used to calibrate the basinwide loading model; due
to the importance of this work, the engineering design
was closely scrutinized throughout the project period;
the design was peer reviewed and approved by the U.S.
Geological Survey and EPA. Data reports were submictea
by USGS as the final project reports. The data was
also entered in the CBP computer and used in the
"Characterization" report.
Project 9 6 (Relationship of SAV to Migratory Wateriowl, U.S.
F h W, LAG #7b-D-X0391)
Issue: No final report accepted.
Response: This project was one of the first major reports published
by CBP in 197 9'; the dociment is in CBP files in an
ofiicial EPA/ORB cover; tne report is published ana
available through NT1S.
Issue: No synthesis paper.
Response: The synthesis paper tor this project was published in
Chapter IV (Section IV) of the "Chesapeake Bay Program
Technical Studies: A Synthesis."
2-2
Appendix A
Page 3 of 17
-------
Issue: No annotated bibliography.
Response: A bibliography accompanied the final report; the
International annotated bibliography was completed by
Bert Brun (U.S. F&WS), submitted to CBP and published
in Bob Orth's work, on the the "Distribution and Abundance
of SAV in the Lower Chesapeake Bay."
Project #V (Eutrophication in the Chesapeake Bay, Chesapeake
Research Consortium)
Issue: No report on Proceedings of Symposium
Response: The document published as a result of the Symposium
is one of the most well known pieces of work in
Estuarine Science (Estuaries and Nutrients, edited by
Nielson and Cronln; Humana Press, Clinton, New Jersey,
1981.)
Issue: No report on diagrams on ecosystem functions.
Response: These diagrams were published in the CBP report
"Chesapeake Bay: Introduction to an Ecosystem".
Project #10 (Hampton Institute)
Issue: No final report received.
Response: A final report for this project was completed and
accepted according to Charles Plost (JtJ2-57yo) , the
EPA project officer. Mr. Plost has agreed to send a
letter stating this and provide a copy of the iinao.
report.
Project #11 (University of Maryland)
Issue: No synthesis report prepared.
Response: The SAV synthesis papers were peer reviewed, accepted
and published in Chapter IV of "Chesapeake bay Program
Technical Studies: A Synthesis".
Project #12 (Cooperative Agreement - Program Participation Commonwealth
of Virginia - ttU5859)
Issue: No final report prepared.
Response: No final report was required for this project; the
Commonwealth of Virginia provided assistance through-
out the program; quarterly reports containing information
Appendix A
-> Page 4 of 17
-------
on activities and accomplishments were maintained in
the program files. Four reports required by the grant
were completed: draft Elizabeth River Characterization
report; toxics source assessment report, Phase 111;
semi-annual progress report; annual progress report.
The State also submitted each year a proposal outlining
their expected progress in the next year.
Project #13 (Cooperative Agreement - Program Participation
State of Maryland - ttu5674)
Issue: No final report prepared.
Response: Same as 012 for State of Maryland; additionally, tne
State submitted three semi-annual progress reports.
Project *1" (Cooperative Agreement - Statistical Research and Development
for Giesapeake Bay, University of West Florida)
Issue: No statistical research report.
Response: The statistical research and development report noted
by auditors is unramiliar ana was not a major CBP
report; the Synthesis, Characterization and Management
reports were major products and were produced (in
part) by UWF staff; the staff are acknowledged for
their contributions as authors in the reports.
Issue: No evidence that CBP data base was maintained.
Response: The CBP data base was designed and maintained (in part)
by UWF staff between 1978 and 1982; UWF (Institute for
Statistical and Mathematical Modeling) designed and
assembled CBP data system and provided the trend analysis
for Characterization.
Issue: Water quality production run6 not completed.
Response: The water quality model (production) runs were completed
and are the basis for the recommendations in the "Framewark
for Action" report. UWF stait assisted in completing
the production runs.
Project #13 (Chesapeake Bay Basin Model, Hartigan NVPDC)
Issue: No final report accepted.
Response: The non-point source loading nodei wa6 used to make the
recommendations in the "Framework for Action" report;
the model was thoroughly peer reviewed and accepted; a
final report va6 received and accepted.
2-4
Appendix A
Page 5 of 17
-------
Project #lo (Geomet)
16sue: No evidence that UWF provided technical synthesis and
technical writing to CBP.
Response: Technical writing and synthesis was provided oy UWF in
the development < of the Synthesis Papers, Characterization
report and Framework for Action report; Geomet stati were
acknowledged as authors throughout the reports.
Project fl~ (Hydrodynamic Model of Chesapeake Bay, CDM)
Issue: No final report accepted.
Response: The principal Investigator and associates were killed in
the Air Florida plane crash in Washington, D.C.; no senior
start remained to complete project; a dratt iinal report
was received and peer reviewed; the report was not finalized.
Project fit (Point Source Assessment, MRC)
Issue: No rmal reports received for Phase 1 and II.
Response: Reports were received for phases I, 11 and III; the reports
for all phases were accepted. The results were contro-
versial as a high percentage (
-------
Ac.achaent 3
Recommendations on Improved Monitoring Procedures
Recommendation 1
Assure tnat the positive steps recently initiated as a result of our
audit are completed and officials accomplisn the intended results.
Response:
As stated, the Deputy Director, CBP recommended tnat a task. lorce be
assembled to address the OlG's questions and obtain the work, products
not available during the review. Based on that recommendation and as
a result oi your preliminary draft findings of May 5 and 7 and your
Draft Report or June 24, 19ob, the CBP will continue to take all actions
necessary to close out the cited 23 grants and contracts in accordance
with Chapter 4U, Par. 5 of the Assistance Administration Manual 57uu
dated 12/3/85. The recommended task force has been modified to insure a
more timely and streamlined approach to the issues and recommendations
you raised.
The Internal Control Review did identify the area or "Project Clo6eouts"
as a weakness and developed a program to respond to that weakness as
well as other internal and externa], areas of vulneraoility (Attachment 4).
Recommendation 2
Assure that the procedures for monitoring grants and contracts are fully
implemented. These procedures should adhere to the EPA Administrator's
Policy on Performance-Based Assistance dated May 31, 1985.
The Chesapeake Bay Program's tenagement Tracking System tor Grants and
Contracts, as described in Exhibit 2, has been tully implemented. One
cycle of grant and contract review has been completed and, another cycle
has been scheduled (Exhibit 3). The current systems toundation was
initiated in early 1985 when a manual Grants Tracking System was developed
and has since been augmented by a comprehensive grants/contracts management
system.
Recommendation 3
Take aggressive action to determine the status of all work products associated
with all grants and contracts awarded under the CBP. If the status and
benetits derived from these work products can not be determined, the Agency
should recover funds from grantees and contractors, it appropriate.
In addition to the overall objective a6 stated in Recommendation 1 above,
specific tasks have been identified ana assigned to tlrst verity the 6tatus
of work products (your Exhibit 1 of the audit) and then, based on chat
verification, formulate and implement specilic follow up actions which
will result in contract/grant closeout or a determination chat documentation
is no longer available to etfect close out in accordance with the Assistance
Administration Manual.
3-1
Appendix A
Page 7 of 17
-------
Attachment 4
Internal Control Review (p.14)
The last sentence on p. 15 states "corrective actions by CBLO
officials have not been sufficient causing deficiencies that have
a detrimental impact upon the CBP to continue" .
The ICR published in July 1985 in fact, prompted positive management
action by Regional Management which prevented/minimized the continuation
of past program grant/contract management deficiencies (Exhibit 4). Your
report selected only parts ox the ICR whereas the total ICR indicates
positive actions
-------
IKOCKAH AKEAS
AREAS OF VULNERABILITY
PKOCRAH WEAKNESS
CORRECTIVE ACTIONS
JUNE 30. 1985 UPDATE
1) Grant/Contract
Reviews
The Eligibility and/or pro-
priety of KY84 Grant and
Contract funding could be
questioned at *niw> future
I Imp.
No Guidance criteria
established by Federal
Guidelines or Policies.
Identify and formalize
Tllghman's Island crit-
eria tor FY84; forma 11 re
criteria for FYS5 add
obtain headquarters
approval tor both
years criteria.
Coapleted-NPS Task
Group developed KY85
grants crlce^a.
lapleaentat1; n Comm-
ittee and Kki cutlve
Council-approved. FY
86 proCetfB slailar
through the NFS
Subcommittee.
2) Quality
Assurance
Grantees and Contractors can
circumvent Grant conditions
and FEDERAL REGULATIONS
which could affect the
quality of the desired
results lor which the
Kr.i'it was made.
I.ack til trained per-
sonnel, lack ol per-
formance audits and
monitoring standards
that should be useil In
process lug grafitw and
contracts.
Provide properly
trained employees to
perform work, establish
boiler plate conditions
to Insure compliance
with Agency standards
and regulations, conduct
performance audits of
laboratories at both
contract and state
lacllltles.
QA Plan for MO and
VA reviewed, to be
approved by ESD by
9/30/8 5. CBP will
develop specific FY
8b QA work plans
with ESO through
MonltorIng
Subcommlt tee.
3) Monitoring
no >
«i *o
00 "O
(t>
a
vo a.
H-
O X
_ >
Grantees and Contractors may
nut adhere to grant require-
ments or job specification
and may take short cuts to
complete projects.
No specific monitoring
or tollow-up procedures
which could measure job
progress, quality absur-
ance, job completion
and proper grant funds
draw down with X of job
completIon.
Carefully establish
monitoring procedures
which will cover all
areas of grant and
contract follow-up,
assuring quality com-
pliance and an accept-
able end product, and
assuring that Federal
grant funds are being
drawn down properly.
Grants Management
Specialist and EPS
now on staff to
manage grants. Spec
111c tracking
systems being devel-
oped for KY8i
grants. Grants and
contract procedures
have been developed
provided to CBP
stall. Meetings wit
grantees have taken
place and will be
ongoing to discuss
proc 'procedures
and acklng.
-------
AREAS OF VULNEKAH1LAITY
4) Training No clone familiarity of
program regulations and
requirements on pari ol
.n)ml nl si rat fve and c«*<• l»-
1)) r ,11 stalls.
5) Oversight of all
State Grantees
and Contractors.
(.r.ml I'i'K ii.
6) Files i.ram hiuI Lmii r.nt I lies not
complete. Many old lilo
most h»- pul 1'i proper order
to be processed through in
I 1 11.11 r I oseoii 1 .
T> >
b> -a
oq ~o
n n
3
1— a.
O H-
X
O
•-n >¦
PROGRAM WEAKNESS
CORRECTIVE ACTIONS JUNE 30. I¥ti5 UPDATE.
Training Is definitely
needed In all admini-
strative and technical
jKpects ul the program.
No close mon 11 or I ng ol
work dune hy Suicb and
contractorti lor compll-
ic-
I'ompl I s lime 111 of deliver-
ables, or to determine 1 I
I hi- I oiuls ,irr tie lii); ose.l
wisely anil for' tin; Chesa-
pe.ike K.iy Program only.
I.xi sting till ng system
needs more .it tent Ion
and revisions. No pro-
cedures exist to properly
maintain I lie I lies and
net litem rt'.itly lor close-
i.nl when projects are
I'ompl 1' t e.
Establish fonaal
and on-the-job
training programs
with particI pat Ion
by HQ, regions, and
outHlde consultants.
See nuaber }.
IDPs will be
developed tor
FYH6.
tNtabllbli criteria
neccuuary to pertorn
oversight review of all
grantees and contractors,
schedule periodic reviews,
Identity any deficiencies
and any corrective actions
which must be taken to
eliminate same. Include
oversight stipulations
In all grAntti or contracts.
* KYtti grant a
criteria eat
abilshed (sei
1 abovej;
manual track
1 ng a y u t en 1
place; atal1
asslgnment a
made.
hsiablloh grants and
contracts llllng system to
allow tor storage ol all
necessary data and easy
retrieval ol same.
The filing system should
he maintained on a regular
bas is.
Ki 11 ng cab In
eta in plac<
stall aaslgi
ed; prior
c1oseouts
delayed-lacl
ol stall tio
Files allould be submitted
lor closeout on a timely
basts which should allow the
re-use ol any dcohllgated
Iunds lor other projects.
-------
" \MAS
Project
Closeout
AKIAS OF VULNfcKABlLITY
Si vit.jI >;ranls and one
iiMtir n r have been ciwr
I > J •-1 i • • I lor sumo I I nit' 'nit
¦ III .1 rjih have hi'iMI t.llx'll
< II l I I .
*¦ I I l'S I II <|llfSl I • 1(1.1 It I e
ii ¦ r .
Small Purchases
and P#tty Cash
Management
¦»' • m 11* • i |«¦ r I <>rmol
I- i ,.i 'i !'• • i sonui" I .
hko<;kam wkaknkss
CORRECTIVE ACTIONS JUNE 3U. 1983 UPDATE
No <: I oseon t 111 (K't'dtir es
III <»Xl KttMICL' at
I lme.
Most ulral ill Ml I il I vi- Hill
I «•< Ink leal I i I es d i o
he merged and organlzed.
I'iioI) I l >;.i t i'il >; r ¦ t¦ i L I mills
.Hi- t I i' win' it ( lie y
inlllil lit.' used Inl i > L In-1
l»r • > |it is.
An .li «. «-|•• i ii i t i .<( i ll l»y (..I-. I'ru-
l \ l iin ,i I ( i' r I'll V '• '' ¦'' 'no ve
I f'lin I .if) dI ) 11 i s .• itrf I ah
-is*. I si .ii»i <• 'is (in i nal cil.
Establish a special » No action-lack
team Including, 1 ot stall tine.
Technical, 1 Admini-
strative staff and I
Tin r<1 Harly 1 ami liar
with the (iranttt Program
and experienced with
i;rant y c 1 oseout.
train adralnlstrat lve
|liTbOlli s) ill CU
I'rogram, In a system
approved by Kegionai
lilt Ice and maintained
on current basis by
Lab stall. Stat t
should have knowledge
ot all appiI cable
refill at I ons .
1'etty cash program
approved by Kegion.il
Coropt ro11er,
awaiting sale;
una 11 purchases
authority yet to he
approved.
-------
AKKAS OK VULNERABILITY
1) Program Grant
Authority.
Lou Id be supporting
grains that are not
I <•rl grants
lit.11 slum Id not re-
i i• i v G.I). Kunds.
J) Grants Ad-
ministrat ion
si .hi(i <*s could abuse
I >i vK'w ol i'*|»er m-iicc
.1 p.ii.
3) a. Grants
Preparation
Otiii .1 I nMtl |ir<> |«•»:l s
t hit .|<> not i omjil y
>
•o
XJ
n
3
a.
lUltKIIAL >uu.
PROCRAM VLAKNhSS
CORRECTIVE ACTIONS
JUNE 30. 196b UPDATE
"Legal Review needed
on fc 1 unded pro-
ject a using H'< funds.
"In $ Io nut have ilt-ad-
<|ii.irteri> (>K on
Nat I dim I grant s
gtl ldafice/c I llrri.l,
" I.a«:k ol stall <> r
work overload I • /f
<• x I s t I nj: s t a I I .
' l.a t k ol r xjif r I i-nc »•
'I.,irk ol Uhiiiiiii',.
"Have Headquarters pro-
vide 0K-(legal ^ pro-
gram) on grants cri-
teria.
"Training "Agency
°1 rum Keg 1 on
°courses
'Additional Staff on
reduct ion In staff
work Ioad.
Coapieted-H<)
approved.
Coapi et ed-
Adequate funding
provided; clear
direction thru
R & P Plan.
" I firoflipl e t e i.r an t
.11>(> 1 i cat Inns.
"Have finance Region III
provide adm. req.
"Have Procedures prepared
lor Region ill and Liaison
Grants special-
ist hi red; .per-
iodic meetings
with ARA/I
-------
EXTERNAL VULNERABLE AKtAS
•» KAN AKf.AS
AREAS OF VULNERABILITY
PROGRAM WEAKNESS
CORRECTIVE ACTIONS
JUNE 30,1985 UPDATE
b. Grants
Tracking
Not !>rinf, performed
snl(Ir i cut Iy.
°No loroal syMiin
'Link ol Him i or
work overloHti lor
I'XISl |ll(i St .ill .
"Place on VAX/PC.
°Br able to communicate
wlth Keg Ion 111.
'Statf-prlor 11IzatIon ot
t abku.
Manual system in
place; grant
condltions/work
pirns lor FYNJ
lif pfocess ot
development;
PC ordered.
c. Crants
Close Out
•pre 84 grant
°84 grants
Not belli)', ilon«-
°0ocumeiit ,11 I on - I oi .it u
" l..ick of still I / wo t k
live r I oad .
'Staff to perform task-
prior 1 t 1 zat Ion ot tanks.
loam concept.
No action-lack
ol stall tine;
do to discuss
wl th AKA.
-------
Exhibit 5
Internal Control Review
Quality Assurance
Program Weakness: Lack, of trained personnel
Status : 1 FTE has been allocated since FYB5 to provide quality assur-
ance support for various aspects of the program. A work
plan between ESD and the CBP has been developed which assures
resource eftectiveness and accountability.
Program Weakness: Lack of performance audits
Status : Performance audits of laboratories have been completed for
recipients of monitoring funds (e.g. the Virginia Institute
of Marine Science, Old Dominion University, and the University
of Maryland).
Program Weakness: CBP should have standards to monitor the processing of
grants and contracts.
Status : As stated, grants and contracts management performance system
has been Implemented.
Mom toring
Program Weakness: No specmc monitoring or follow-up procedures which
could measure job progress, quality assurance, job
completion and proper grant funds draw down witn
percent of job completion.
Status : The Manual grants tracking system initiated in early 1985
established the foundation for implementing a detailed comput-
erized grants; and contract management oversight system that
became effective in March 1986.
Oversight of all Grantees and Contractors
Program Weakness: Mo close monitoring of work done by States and
contractors for compliance to job specifications,
no review to determine proper expenditure of funds
versus task completions or accomplistaent of deliv-
erables, or to determine if the funds are being
used wisely and for the Chesapeake Bay Program only.
Status : The grants and contracts management system referenced in the
March 25, 1986 memo includes that periodic grant and contract
program reviews (i.e. quarterly and annual) with the grantee
and contractor are to occur to ensure that the concerns
raised above are addressed. To date each graat has received
this scrutiny and the next cycle of reviews has begun.
Appendix A
D A AA 1 A 17
-------
4. Files
Program Weakness: Existing filing system needs sore attention and
revisions. No procedures exist to properly maintain
the tiles and get them ready for closeout when
projects are complete.
Status : The Chesapeake Bay Program has made Administrative improve-
ments in the Liaison Office which will result in establishing
a complete, neat and orderly official grant filing system
by the end of the calendar year. Some of these efforts have
included the hiring of a intern to organize and file research
and planning grant and contract files, sorting, cataloging,
and filing Chesapeake Bay Program reports, entering pertinent
information of the reports (over 2,000) onto the personal
computer for easy reference and access, the purchase of
accordlan and pressboard section files and the transfer of
the official grant files from the Regional Office to the
Liaison Office. Project Officers have been asked to use
these administrative aides in maintaining oflicial files in
standard sequence.
5. Project Closeout
Program Weakness: Several grants and one contract nave been completed
for some time but no steps have been taken to closeout,
Files are in questionable order. Mo closeout procedures
In existence at Che present time; most administrative
and technical files need to be merged and organized;
and unobligated grant funds are tied up when they
could be used for other projects.
Status : Much progress in closing out research and planning grants has
been made by the Chesapeake Bay Program. The Chesapeake Bay
Program has discussed the issue with several EPA officials
who were involved with the grants. Some Information listing
.the old grants, associated grant ouiber, project officer and
pertinent budget and planning period dates has been compiled.
Discussions with regional finance representatives have occurred.
The Liaison Office Is continuing to close out several research
and planning grants. Additionally, the specific regulations
on closeout have been reiterated to project otficers (see
Exhibit 6). In addition our response to Rec. *1 under "Improved
Monitoring Procedures Needed" addresses the issue of closeouts.
Appendix A
Page 15 of 17
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xttacfweat 5
Recommendations to strengthen administrative procedures
1. Safeguard grant and contract files as they represent the orticiai
record of actions relating to the projects. Files should contain
all significant information and document and be a complete record
of each grant and contract as required by 40 CFR 30.210 ana Chapter
5 of the £PA Assistance Administration Manual. Maintenance ana
transfer of files to the Federal Records Center should be in
accordance with EPA's Records Management Manual and Chapter 41 of
the Assistance Administration Manual.
RESPONSE: Agree. Actions that support this recommendation are underway
and are presented in Attachment 4, regarding our Internal
Control Review and its update.
2. Take immediate action and obtain the necessary docmentation to
close completed grants and contracts in accordance vltn Chapter 40
of EPA's Assistance Administration Manual. Current and future projects
must be closed in a timely manner, and CBLO personnel should be
instructed in the areas of records maintenance, storage, retention
and transfer.
RtSPONSE: Agree. Actions that support this recommendation arc underway
as previously described. It has been noted in the ICR that
the performance of these tasks is resource intensive. The
audit report should recognize this fact.
3. Ascertain that a work program, as required by 40 CFR 3b.130, is in-
cluded in each grant application and effectively used as a basis
tor tracking grantee performance. Proposals, memoranda or under-
standing , ana quality assurance plans, although necessary, should
not be used as substitutes for a work program.
RESPONSE: Agree. The attached Grant Application Qieckiist will insure
Che inclusion of an adequate wark plan. (Exhibit 7}
4. Assure grantee compliance with all grant conditions and take corrective
action when significant grant requirements are not satisfied.
REACTION: Agree. The Chesapeake Bay Program Project Officers through
the Grants and Contracts Management Tracking System review
and report on a monthly basis on special grant conditions
and CBLO officials review and discuss all grant/contract
requirements on a quarterly basis.
5-1
Appendix A
Page 16 of 17
-------
03/10/86
GRANT APPLICATION CHECK LIST
»ard applicant:
17) A copy oC the statement of work has been transmitted to CSC for evaluation
Appendix A
Paerp 17 Of 17
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