EPA-350-R-08-002
January 2008
OFFICE OF INSPECTOR GENERAL
Catalyst for Improving the Environment
Annual Performance Report
Fiscal Year 2007
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This report was produced by the EPA Office of Inspector General,
Office of Planning, Analysis, and Results
(202) 566-0913
This report is available in hard copy from the
Office of Inspector General (Room 2104, EPA West)
U.S. Environmental Protection Agency
1200 Pennsylvania Avenue, NW
Washington, DC 20460
To report fraud, waste, or abuse, contact the OIG Hotline:
OIG Hotline@epa.gov
1-888-546-8740
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Foreword and Overview
I am pleased to present the sixth Annual Performance Report of the U.S. Environmental
Protection Agency's (EPA's) Office of Inspector General (OIG). This report presents statistical
and narrative summaries of OIG performance results for Fiscal Year (FY) 2007 compared to our
FY 2007 Annual Performance Targets. It also presents cumulative OIG results for FY 2003
through 2007 compared to the OIG Annual Performance Goals. Of special interest for FY 2007,
the EPA OIG questioned $56.3 million in costs; identified nearly $40 million in cost efficiencies;
and recorded almost $5 million from fines, restitutions, and settlements, with over $53 million in
questioned costs and efficiencies sustained from recommendations of current and prior periods.
This report supplements, in greater statistical and narrative detail, the OIG summary
performance results presented in EPA's FY 2007 Performance Accountability Report available
at www.epa.gov/ocfopage. It also includes items required by the Government Performance and
Results Act specific to the OIG, such as financial summaries and management challenges, as
well other relevant measures of performance activity and accountability.
Based on the performance measures and results from this and prior OIG Annual
Performance Reports, we are continuing to make significant improvements in applying
performance measures to demonstrate our value added. In FY 2007, the OIG worked
collaboratively with the Agency Office of the Chief Financial Officer to strengthen the Agency's
audit management resolution and began implementing a systematic post close-out followup
process to account for and report on completing agreed-upon Agency actions from OIG
recommendations. The OIG conducted a comprehensive Agency risk assessment based upon
previous OIG reviews and risk assessments to identify systemic areas of vulnerabilities for future
OIG review. Based on previous OIG recommendations, the Agency improved its management
of grants, enabling that area to be removed from the list of the Top Ten Management Challenges.
Also in FY 2007 the OIG identified new cross-cutting themes to guide its future work and added
a new Risk and Performance Assessment product line. The OIG concluded its work in providing
timely audit, evaluation, and investigative support for EPA and the government-wide hurricane
emergency response effort. Additionally, the OIG has shifted resources from support to mission
production work to improve overall output productivity, received a "clean" opinion on the
quality of it work through a rigorous peer review, and won an A-76 competition for its Financial
Statement Audits as a Most Efficient Organization.
We rely upon our customers and stakeholders to inform us about the quality of our
performance while helping us identify and reduce areas of risk. Please do not hesitate to contact
me for any reason, as one of my personal goals is to build constructive relationships that promote
the economic, efficient, and effective delivery of EPA's mission.
Bill A. Roderick
Deputy Inspector General
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About the EPA OIG 1
Vision, Mission, Goals 1
OIG Product and Service Lines for Strategic Areas of Performance 2
Linking Our Work to Outcomes and Impacts 2
Planning Starts with the End in Mind 2
Performance Presented in a Hierarchy of Related Measures 2
Scoreboard of OIG Fiscal 2007 Performance Results
Compared to Fiscal 2007 Annual Performance Goal Targets 3
OIG Strategic Cumulative Performance Results FYs 2003-2007 4
Summary of FY 2007 Performance Results by Product Line 6
Air 6
Water 7
Land 8
Cross Media 10
Congressional and Public Liaison 11
Assistance Agreements 12
Contracts 13
Financial 14
Risk Assessment and Program Performance 14
Information Technology & Business Systems 15
U.S. Chemical Safety and Hazard Investigation Board 16
Investigations 16
OIG Enabling Support Programs 17
OIG Reported Key Agency Management Challenges 19
OIG FY 2007 Resource Use and Allocation 20
OIG Management Challenges 21
Appendices
Profile of FY 2007 OIG Performance Activity 22
Listing of OIG Reports, Timeliness, and Costs 23
OIG Financial Statement: Analysis of FY 2007 Fund Use
and Carryover Balances 27
OIG Data Verification and Validation 28
OIG Future Annual Performance Targets (FYs 2007-2008) 29
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Vision
We are catalysts for improving the quality of the environment and Government through problem
prevention and identification, and cooperative solutions.
Mission
Add value by promoting economy, efficiency, and effectiveness within EPA and the delivery of
environmental programs. Inspire public confidence by preventing and detecting fraud, waste, and abuse
in Agency operations and protecting the integrity of EPA programs.
Goals
1. Contribute to Improved
Human Health and
Environmental Quality
Objectives
Influence programmatic
and systemic changes and
actions that contribute to
improved human health
and environmental quality.
Add to and apply
knowledge that contributes
to reducing or eliminating
environmental and
infrastructure security risks
and challenges.
Identify recommendations,
best practices, risks, and
opportunities to leverage
results in EPA programs
and among its partners.
2. Contribute to Improved
Business Practices and
Accountability
Objectives
Influence actions mat
improve operational
efficiency and
accountability, resolve
public concerns and
management challenges,
and achieve monetary
savings.
Improve operational
integrity and reduce risk of
loss by detecting and
preventing vulnerabilities
to fraud, abuse, or breach
of security.
Identify recommendations,
best practices, risks,
weaknesses, opportunities
for savings, and operational
improvements.
3. Continuously Improve
OIG Products and
Services
Objectives
Improve the timeliness,
responsiveness, and value
of our products and
services to our clients and
stakeholders.
Apply technology,
innovation, leadership, and
skill proficiency for
motivated staff and highly
regarded products.
Align organization plans,
performance, measurement,
processes, and follow-up
for a cost-accountable
results culture.
Maximize use of available
resources.
Develop constructive
relationships to leverage
resources effectively and
foster collaborative
solutions.
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OIG Product and Service Lines for Strategic Areas of Performance
Investigations
Performance
Evaluations
Financial/Information
Technology Audits
Public Liaison/
Advisory/Analysis
Air
Water
Land
Cross Media
Financial Statements
Contracts
Assistance
Agreements
Information
Technology
Financial Fraud
Program Integrity
Employee Integrity
Laboratory Fraud
Computer Crimes
Legislation/Policy
Regulation Review
Special Review
Public Inquiry/
Outreach
President's Council
on Integrity and
Efficiency
Linking Our Work to Outcomes and Impacts
All of our work is planned based on the anticipated contribution to influencing resolution of the Agency's major
management challenges, reducing risk, improving practices and program operations, and saving taxpayer dollars,
leading to positive human health and environmental impacts and attaining EPA's Strategic Goals.
Planning Starts with the End in Mind
We measure the return on our investment by how efficiently our resources are converted into products, and how
effectively our products drive outcomes.
Logic Model Example
Resources
"Staff
' Contracts
Technology
" Training
Travel
Leadership
<
N
Products/
Services
Audits
Evaluations
11 Investigations
" Special Analysis
= Consulting
Legislation/
Regulation
Reviews
s 1
N,
1 Outputs
- Recommendations
" Referrals to DOJ
" Best Practices
Risks Identified
" Management
Challenges
Identified
<=
Intermediate
Outcomes
" Savings/
Recoveries
"' Process/Policy
Changes
= Indictments/
Convictions
Certifications
B Civil Judgments
" Legislative/
Regulatory
Changes
" Administrative
Action
[ Impact
Outcomes
" Environmental
Risks Reduced
Improved
Efficiency
Examples of
Environmental
Improvement
3 Examples of
Health
Improvement
J Operational Risks
Reduced
Efficiency Ratio
Cost/Activity
Effectiveness Ratio
Outputs/Impacts
Performance Presented in a Hierarchy of Related Measures
The Logic Model diagram above demonstrates how we "Start With the End in Mind" to align our organizational
factors of performance for achieving our strategic goals. The performance results in this report represent the ways
we measure value added along this continuum, both quantitatively and qualitatively, in relation to the resources
expended. Our annual performance and progress toward our strategic goals is demonstrated by the Scoreboard of
Results compared to the FY 2006 Annual Performance Goal Targets. Our long-term performance progress is
demonstrated by the charts comparing our results against our goal targets for FY 2003 to FY 2007.
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All results reported in Fiscal 2007, from current and prior years' work, are as reported in OIG Performance
Measurement and Results System and IGOR.
OIG FY 2007 Government Performance and Results
Act Annual Performance Targets
Compared to Fiscal 2007 Results Reported
Supporting Measures
Goal: Contribute to Human Health and Environmental Quality Through Improved Business Practices,
Accountability, and Integrity of Program Operations
Environmental Improvements/Actions/Changes
Improvements in Business/Systems/Efficiency
Risks Reduced or Eliminated
Target: 318; Reported: 464 (146%)
7 Legislative/regulatory changes/decisions
7 Examples of environmental improvement
5 Environmental best practices Implemented
19 Management best practices Implemented
27 Environmental policy, process, practice, control
change actions
115 Management policy, process, practice, control
changes actions
268 Certifications/validations/verifications/corrections
16 Environmental/mgt risks reduced/eliminated
Environmental & Business Recommendations,
Challenges Best Practices and Risks Identified
Target: 925; Reported: 949 (103%)
26 Environmental recommendations (forAgency/
stakeholder action)
784 Management recommendations (for Agency/
stakeholder action)
28 Critical congressional or public mgt. concerns
addressed
12 Environmental best practices identified
59 Management best practices identified
19 Referrals for Agency action
13 NewFMFIA/A-123/mgt challenges/risks identified
8 Environmental risks identified
Return on Investment: Potential $ Return as
Percentage of OIG Budget $50.4 Million
Target: $75.6 M; Reported: $ 95.2 (126%)
(Dollars in Millions)
$ 56.3 Questioned costs net EPA
$ 29.7 Recommended efficiencies, costs saved (EPA)
$ 5.0 Fines, recoveries, settlements
$ 4.2* Additional efficiencies not in resolution process
Criminal, Civil, and Administrative Actions
Reducing Risk of Loss/Operational Integrity
Target: 80; Reported: 103 (129%)
10 Criminal convictions
21 Indictments/informations/complaints
4 Civil judgments/settlements/filings
68 Administrative actions
Sustained Monetary Recommendations and Savings
Achieved from Current and Prior Periods: $ 53.4 M
Sustained Environmental and Management
Recommendations Sustained for Resolution:
(no goals established)
354
(Dollars in Millions)
$ 36.3 Questioned costs sustained
$17.1* Cost efficiencies sustained or realized
15 Environmental recommendations sustained
339 Management recommendations sustained
* $2 million in efficiencies from investigative operations was sustained but not submitted through Agency resolution process.
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This section demonstrates the EPA OIG annual progress in attaining its Strategic Performance Goals for FY
2003 through FY 2007 in compliance with the Government Performance and Results Act. OIG performance
can best be considered and evaluated over a period of several years rather than a single year. A lengthy time lag
may occur before the outcome actions can come to fruition and be substantiated.
Performance Progress
The OIG has significantly exceeded its performance goals during FY 2007 as many time-lagged actions
from current and prior years' recommendations are coming to fruition. The OIG has also increased its
focus on identifying cost efficiencies through performance audits and program evaluations. Among the
results, the OIG identified questioned costs and efficiencies, totaling over $90 million and over $5 million
in fines, settlements, and recoveries. Also, EPA sustained over $53 million in OIG monetary
recommendations and savings from current and prior periods. During the fiscal year, the OIG improved
its overall efficiency and productivity despite a smaller workforce, by converting a number of overhead
staff and resources to direct product-line functions, reducing the production cycle time and resources
required to perform OIG work. Three examples include reducing staff days required to perform the EPA
financial statement audit, which resulted in EPA winning an A-76 competitive sourcing challenge;
creating a new Risk Assessment, and creating follow-up product lines. Also, the OIG received a "clean"
or "unmodified" opinion through a rigorous peer review certifying the quality of its auditing and
evaluation work. While the OIG has not met all of its Annual Performance Goal targets every year due to
the time delay and variable nature of OIG results, the charts on the next page demonstrate that the OIG
has exceeded its aggregate cumulative Government Performance and Results Act (GPRA) targets for FYs
2003-2007.
Challenges
During FY 2007, the OIG identified three issues this year as OIG-level weaknesses pertaining to
Information Technology, Product Timeliness, and Quality Office Security - Controls over Equipment.
The OIG is continuing to improve its information technology and data quality by applying new tools to
consolidate, integrate, or replace its many specific-use databases and systems. The OIG is improving its
product timeliness and quality by streamlining its processes and organizational structure. The OIG is also
working to provide greater followup on actions the Agency has agreed to take as a result of OIG
recommendations. Also, during FY 2008, the OIG is initiating a new Product Line on Risk Assessment
and Program Performance and will be revising its Strategic Plan.
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Environmental and Business Recommendations or Risks
Identified for Corrective Action
Cumulative Results FY2003-2007
D FY 2007
D FY 2006
O FY 2005
FY 2004
D FY 2003
Targets
Results
Return on the Annual Dollar Investment in the OIG Annual
Targets: 150% of the Budget in Millions
Cumulative Results FY2003-2007
$1,6001
DFY2007
DFY2006
DFY2005
FY2004
DFY2003
Targets
Results
Criminal, Civil, Administrative and
Fraud Prevention Actions
Cumulative Results FY 2003-2007
Q FY 2007
D FY 2006
D FY 2005
FY 2004
D FY 2003
Targets
Results
Environmental and Business Actions Taken for
Improved Agency Performance and Risk Reduction
Cumulative Results FY2003-2007
Targets
Results
5
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AIR
Air Return on Investment Summary
Reports Issued: 3
Total Staff Days: 1,515
Total Cost: $983,720 (net of overhead)
Environmental and Business Results
10 Environmental/Management Recommendations
1 Legislative Change
6 Environmental Policy, Process Changes
2 Environmental Risk Reduced
1 Environmental Critical Public/Cong. Issues Resolved
3 Environmental Risks Identified
4 Recommendations Sustained
Performance Highlights
In the OIG report, EPA Relying on Existing Clean Air Act
Regulations to Reduce Atmospheric Deposition to the
Chesapeake Bay and its Watershed, we found that EPA's
Chesapeake Bay Program Office is relying on anticipated
nitrogen deposition reductions from Clean Air Act (CAA)
regulations already issued by EPA, combined with anticipated
reductions from other non-air sources, to meet water quality
goals for the Bay watershed. EPA estimates that CAA
regulations already issued will reduce nitrogen that falls
directly into the Bay. as well as nitrogen deposited to the Bay
watershed, by 19.6 million pounds annually by 2010.
Accordingly, State and EPA strategies do not include
additional air reduction activities specifically designed to clean
up the Bay. Many State activities being implemented to meet
national air quality standards should have the co-benefit of
reducing nitrogen deposition in the Bay watershed, including
four Chesapeake Bay watershed States adopting legislation
and/or regulations that go beyond EPA's air regulations. We
recommended that the EPA Region 3 Regional Administrator
instruct the Chesapeake Bay Program Office to use the results
of emissions monitoring studies of animal feeding operations
to determine what actions and strategies are warranted to
address nitrogen deposition to the Bay from such operations.
http://www.epa.gov/oig/reports/2()()7/20070228-20C)7-P-
00009.pdf
In the OIG report, EPA 's Oversight of the Vehicle Inspection
and Maintenance Program Needs Improvement, we found that:
Properly implemented, inspection and maintenance (MVI)
programs ensure that poorly performing vehicles are
identified and timely repaired.
EPA lias not ensured that States have fully met their I/M
program commitments.
Because State I/M programs generally do not have access to
the databases of each other, they have been unable to verify
the outcome of many vehicles that failed their I/M tests.
EPA does not have reasonable assurance that emission
reductions claimed by some I/M programs were achieved.
We recommended that EPA obtain and evaluate all required
I/M reports to ensure that the programs are operating
effectively, and follow up with States on significant issues
identified; provide more technical assistance and guidance to
States, and work with State I/M programs to follow up on
vehicles with no known final outcome to a degree proportional
to the problem.
http://www.epa.gov/oig/reports/2007/20061005-2007-P-
00001.pdf
In the OIG report, EPA Did Not Properly Process a Hospital
Disinfectant and Sanitizer Registration, we found that EPA's
Office of Pesticides Program-Antimicrobials Division (OPP-
AD) did not properly process registration for an antimicrobial
pesticide. Specifically: OPP-AD did not properly recognize
that the antimicrobial pesticide product contained a new active
ingredient and did not collect the $50,000 registration fee.
Staff consistently indicated a former manager exerted verbal
pressure for them to approve the product reviewed contributing
to a working environment of distrust, fear, and confusion
OPP-AD branch management did not resolve all science
reviewers' concerns regarding the product leading EPA
enforcement officials asking the registrant to voluntarily
withdraw the product from the marketplace. We recommend
that the Director, Office of Pesticides Program, establish
procedures to determine the accuracy of active ingredient
status and to assign responsibilities, document and resolve
discrepancies between staff concerns and management
decisions, and document the resolution of data deficiencies.
We also recommend surveying staff to determine if they still
have concerns about their work environment and, if so, take
steps to resolve their issues. In addition, we recommend
performing a detailed root cause analysis of products similar to
the one that failed to identify why a significant number of
antimicrobial products are not effective.
http://www.epa.gov/oig/reports/2007/20070329-2007-P-
00018.pdf
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WATER
Reports Issued: 8
Total Staff Days: 3,153
Cost: S2,047,305 (net of overhead)
Water Return on Investment Summary
Environmental and Business Results
36 Environmental/Management Recommendations
1 Regulatory Change
11 Environmental/Management Policy, Process Changes
4 Example of Environmental Improvement
1 Environmental Risks Identified
1 Environmental Risks Reduced
9 Environmental Best Practices Identified
5 Environmental Certifications /Validations
7 Environmental Critical Public/Cong. Issues Resolved
1 New Management Challenge/FMFIA Risk Identified
3 Recommendations Sustained
Performance Highlights
In the OIG reports, Development Growth Outpacing Progress
in Watershed Efforts to Restore the Chesapeake Bay, and
Saving the Chesapeake Bay Watershed Requires Better
Coordination of Environmental and Agricultural Resources,
we found that not only will EPA and its Chesapeake Bay
watershed partners not meet load reduction goals for developed
lands by 2010 as established in the Chesapeake 2000
Agreement, but also new development is increasing nutrient
and sediment loads at rates faster man restoration efforts are
reducing them. Despite significant efforts to improve water
quality in the Chesapeake Bay watershed, excess nutrients and
sediment continue to impair progress. Improving water quality
conditions in the Bay is necessary to support living resources
throughout the ecosystem, which in turn supports commercial
and recreational uses, such as fishing/shell fishing. As a result,
we recommended and die Agency agreed that die EPA
Chesapeake Bay Program Office Director prepare and
implement a strategy for reversing the trend of increasing
nutrient and sediment loads from developed and developing
lands. In addition, the EPA Region 3 Water Protection
Division Director should establish a storm water permitting
approach that achieves greater nutrient and sediment
reductions. EPA also agreed to improve coordination and
collaboration with its Bay partners and the agricultural
community for reducing nutrients and sediment EPA by
executing a new Memorandum of Agreement with the U.S.
Department of Agriculture (USDA) that specifically identifies
tasks and timeframes for meeting shared goals in the cleanup
of the Chesapeake Bay watershed EPA. We also
recommended that USD A should assign a senior level official
to coordinate with EPA's Chesapeake Bay Program and review
the feasibility of targeting USD A funds geographically.
http://www.epa.gov/oig/repons/2007/20070910-2007-P-
0003l.pdf. and
http://www.epa.gov/oig/repons/2007/20061120-2007-P-
00004.pdf
In the OIG report. Federal Facilities in Chesapeake Bay
Watershed Generally Comply with Major Clean Water Act
Permits, EPA and the States are doing well managing how
major Federal facilities comply with their NPDES permits. In
EPA's last reporting period (2004), major Federal facilities in
the Chesapeake Bay watershed had a lower rate of Significant
Nonconipliance than other Federal and non-Federal niajor-
pennit facilities nationwide.
http://www.epa.gov/oig/reporls/2007/20070905-2007-P-
00032.pdf
In the OIG report, EPA Can Improve Its Oversight of Audit
Followup, several actions in response to individual
recommendations from seven OIG reports directed to the
Office of Water (OW) and two OIG reports directed to the
Office of Enforcement and Compliance Assurance (OECA)
were delayed past milestone dates agreed to by the OIG.
Implications from these results and opportunities for
improvement are widespread across the Agency's audit follow-
up action process. We recommended that OW and OECA
implement EPA Order 2750 and biannually review audit
management information for accuracy and completeness. We
also recommend that OW and OECA follow the certification
process for closing out reports, maintain a list of corrective
actions taken, and obtain OIG approval for significant changes
to corrective action plans. We recommended, and the Chief
Financial Officer agreed, to take several steps, including
monitoring EPA Order 2750 compliance throughout the
Agency; reporting to Congress the report names and reasons
for delay past 365 days for completing corrective actions as
required under EPA Order 2750 and the IG Act; ensuring the
validity and reliability of data in MATS by documenting a
quality assurance plan; issuing necessary guidance; and
providing refresher training to Audit Followup Coordinators.
http://www.epa.gov/oig/reports/2007/20070524-2007-P-
00025.pdf
In the OIG report. Better Enforcement Oversight Needed for
Major Facilities with Water Discharge Permits in Long-Term
Significant Noncompliance, we found that EPA did not provide
effective enforcement oversight of major facilities with
National Pollutant Discharge Elimination System permits in
long-term significant noncompliance. While flexibility is
required in a national program, EPA inconsistently applied
guidance defining timely formal actions. In addition, EPA
and States also did not maintain complete and accurate records
of National Pollutant Discharge Elimination System
compliance and enforcement activities. Many region and State
files were incomplete, and data in EPA's information systems
were incomplete and inaccurate. Further, regions and States
did not report inspection-related violations in EPA's Permit
Compliance System. We recommend that the Assistant
Administrator for the Office of Enforcement and Compliance
Assurance clarify and implement guidance regarding facilities
in significant noncompliance, implement a quality assurance
program, and establish controls allowing EPA leadership to
identify significant noncompliance by bacteria-only violators.
http://www.epa.gov/oig/reports/2007720070514-2007-P-
00023.pdf
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In the OIG report, EPA 's Allowing States to Use Bonds to Meet
Revolving Fund Match Requirements Reduces Funds Available
for Water Projects, we demonstrated that EPA can greatty
increase the amount of funds available for loans to State water
projects by revising its regulations and policies to restrict
States from using bonds to meet their Revolving Fund
Matching requirements. The current policy has resulted in
$937 million less being available for loans to States since the
inception of the State Revolving Fund (SRF) programs. We
recommend that the Assistant Administrator for Water revise
its regulations and policy on State match options to no longer
allow States to use bonds repaid from the SRF to meet State
match requirements. The Office of Management and Budget
agreed that based on the amount that could have been available
in the past, much more money can be leveraged for State water
projects by EPA revising its regulations and policy on State
match options to no longer allow States to meet its matching
fund requirement with bonds repaid from the SRF.
hUp://www.epa.gov/oig/reports/2(X)7/20070329-2007-P-
OOU12.pdf
In the OIG report, Total Maximum Daily Load Program Needs
Better Data and Measures to Demonstrate Environmental
Results, we found that EPA does not have comprehensive
information on the outcomes of the total maximum daily load
(TMDL) program nationwide, nor national data on TMDL
implementation activities. Although EPA and States are
responsible for implementing point source TMDLs, EPA
cannot identify all of the permitted dischargers that should
receive or have received wasteload allocations. We
recommend mat the Assistant Administrator for the Office of
Water require regions to ensure that the National TMDL
Tracking System is complete; report information on TMDL
implementation activities and on the water qualify
improvements associated with TMDLs; and clarify
terminology, activities included, and other elements of the
TMDL development measures, and the surface water
program's efficiency and effectiveness measures.
hltp://vv\vw.epa.gov'/oig/reporls/20()7/20070919-2007-P-
00036.pdf
LAND
Reports Issued: 7
Total Staff Days: 3,516
Land Return on Investment Summary
Total Cost: $2,283,009 (net of overhead)
Environmental and Business Results
$3.32 Million Cost Efficiencies (not including $9.3M in
Superfund Cooperative Agreements)
2 Environmental Recommendations
4 Environmental Policy, Process Changes
2 Environmental Risks Identified
2 Environmental Certifications/Validations
3 Environmental Critical Public/Cong. Issues
30 Recommendations for Management Improvement
11 Management Actions Taken
7 Best Management Practices Identified
10 Best Management Practices Implemented
3 Examples of Environmental Improvements
1 FMFIA Management Challenge Identified
10 Environmental/Management Certifications
4 Environmental Best Practices Identified
3 Environmental Best Practices Implemented
Performance Highlights
In the OIG report, Superfund's Board of Directors Need to
Evaluate Actions to Improve the Superfund Program, we found
that EPA completed its work to determine the financial impact
of RCRA-regulated facilities on the Superfund program. The
Agency is still assessing the financial impacts of non-RCRA
facilities on the Superfund program. However, we found that
some of EPA's planned actions to address its Study
recommendations were different than the actions
recommended. We recommend that the Board review a
sample of the implemented Study recommendations to confirm
that the actions taken were complete and responsive to the
original Study recommendation(s).
http://ww\Y.epa.gov/oig/reports/2007/20070801-2007-P-
00029.pdf
In the OIG report, EPA Needs to Take More Action in
Implementing Alternative Approaches to Superfund Cleanups,
we found that EPA has not implemented effective management
tools or controls for the Superfund Alternative (SA) approach,
specifically:
EPA has not finalized the universe of SA sites.
EPA does not have controls over designating SA sites in
Superfund information systems or documenting hazard
assessments for SA sites.
EPA only measures results at SA sites for one of six
Superfund cleanup measures.
We recommended EPA track and report cleanup progress at
SA sites, and improve its communications, information, and
transparency about the SA approach.
ht1p://www'epa.go\7oig/reporis/2007/20070606-2007-P-
00026.pdf
In the OIG report, EPA Can Improve Its Managing of
SuperfundInteragency Agreements with U.S. Army Corps of
Engineers, EPA needs to better justify and support its
decisions to enter into Superfund Interagency Agreements
(lAGs) with the Corps. Decision memorandums used to justify
awarding Superfund lAGs to the Corps did not contain
comparisons of alternatives considered, nor did EPA develop
independent cost estimates. This occurred because EPA
generally believes the Corps has more construction and
contracting expertise to manage Superfund projects than its
own personnel. As a result, EPA has limited assurance that the
Superfund lAGs it awards to the Corps are based on sound
decisions. EPA regions have initiated some corrective actions,
but further steps are needed. EPA needs to develop its own
independent cost estimates for Corps in-house costs, conduct
cost analysis of alternatives when determining whether to use
the Corps, and document actions taken. EPA also needs to
require the Corps to improve the format of its monthly reports,
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use the Intra-govermnental Payment and Collection System to
reimburse the Corps for its in-house costs, address the $2.5
million in Management and Support fees being held by the
Corps, include terms in future lAGs to allow better monitoring,
and develop a plan on using feedback reports.
http://www.epa.gov/oig/repo rts/2007/20070430-2007-P-
00021.pdf
In the OIG report, EPA Has Improved Five-Year Review
Process for Superfund Remedies, But Further Steps Needed,
we found since our last review in 1999, EPA has taken actions
to improve the five-year review process, including issuing the
Comprehensive Five-Year Review Guidance, providing
training, and reducing the review backlog but needs to take
additional steps to better support and communicate
conclusions, continue to improve review timeliness, and
provide fuller assurance that cleanup actions protect human
health and the environment. We recommended that EPA (1)
expand the scope of quality assurance reviews of five-year
review reports, and revise guidance to define short- and long-
term protectiveness determinations; (2) evaluate the regions'
workloads and available resources for five-year reviews for
meeting due dates; and (3) use data in a new information
system to measure the effectiveness and impacts of five-year
reviews.
littp://www.epa.gov/oig/reports/2007/20061205-2007-P-
QQQ06jdf
In the OIG report, EPA Needs to Plan and Complete a Toxicity
Assessment for the Libby Asbestos Cleanup, we identified
significant issues that we believe are critical to a successful
cleanup in Libby, Montana:
EPA has not completed a toxicity assessment of amphibole
asbestos necessary to determine the safe level for human
exposure. Therefore, EPA cannot be sure that the Libby
cleanup sufficiently reduces the risk that humans may
become ill or, if ill already, get worse.
EPA's public information documents Living with
Vermiculite and Asbestos in Your Home are inconsistent
about safety concerns.
We recommend EPA:
Fund and execute a comprehensive amphibole asbestos
toxicity assessment to determine (1) the effectiveness of the
Libby removal actions, and (2) whether more actions are
necessary. The toxicity assessment should include the
effects of asbestos exposure on children. The EPA Science
Advisory Board should review the toxicity assessment and
report to the Office of the Administrator and the Libby
Community Advisory Group whether the proposed toxicity
assessment can sufficiently protect human health.
Review and correct any statements that cannot be supported
in any documentation mailed or made available to Libby
residents regarding the safety of living with or handling
asbestos until EPA confirms those facts through a toxicity
assessment.
http://vvww.epa.gov/oig/reports/2007/20061205-2007-P-
00002.pdf
In the OIG report, EPA 's Management of Interim Status
Permitting Needs Improvement to Ensure Continued Progress,
we found that interim status is a temporary designation, but
some units have existed for as many as 25 years without formal
issuance or denial of a permit, or other regulatory controls. As
of 2005, EPA had attained the "controls in place" designation
for 89 percent of RCRA hazardous waste facilities. However,
EPA's continued progress may be compromised because (1)
the Agency has not sufficiently documented some changes to
the baseline it uses to measure progress; (2) EPA does not
prioritize its National Permitting Goal activities according to
the potential risks posed by hazardous waste facilities or units,
including the amount of time a unit may have been operating
without required controls; (3) EPA does not monitor the
creation of "new" interim status units in its reporting and
tracking system (RCRAInfo); and (4) RCRAInfo lacks other
system controls to protect data integrity and data quality,
which may lead to losing historical information needed to track
permit status. Despite data quality problems, RCRAInfo data
are available for public use without appropriate disclaimers.
To ensure valid progress in achieving "controls in place" at
interim status units, we recommended that the Assistant
Administrator for Solid Waste and Emergency Response:
Implement a process to document changes to the GPRA
National Permitting Goal baseline.
Review State GPRA National Permitting Goal projections
for 2008 and 2011 to identify- opportunities for prioritizing
facilities based on risk, including time in interim status.
Oversee designating "new" interim status units in
RCRAInfo.
Implement RCRAInfo system controls to ensure data
integrity and improve data quality.
http://www.epa.gov/oig/reports/2007/20Q61204-2007-P-
00005.pdf
In the OIG report, Making Better Use of Superfund Special
Account Funds for Thermo Chem, we found that Region 5
missed an opportunity to make timely and better use of the
funds in the Thermo Chem special account. In 2004, Region 5
staff recommended reclassifying approximately $2.8 million
from the Thermo Chem special account for program use.
However, these funds were not reclassified because the site
managers were unaware that action was needed or required.
We recommended that the Region 5 Administrator: (1)
reclassify approximately $2.8 million (plus additional accrued
costs) of the Thermo Chem special account to fund other
priority response activities; and (2) reclassify, or transfer to the
Trust Fund (as appropriate) approximately $524.000 of the
Thermo Chem special account that lias no planned future use.
http://vvvvw.erxi.gov/oig/repoi1s/2007/20070820-2007-S-
00002.pdf
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CROSS MEDIA
http://www.epa.gpv/oig/repons/2007/20070503-2007-R-
00022.pdf
Reports Issued: 8
Total Staff Days: 2,543
Total Cost: $1,651,221 (net of overhead)
Cross Media Return on Investment Summary
Environmental and Business Results
$1.5 Million Cost Efficiencies
1 Environmental Risk Identified
1 Environmental Certification/Validation
4 Environmental Critical Public/Cong. Issue Resolved
2 Management Actions Taken
jOEnviromnental/ Management Recommendations
1 lEnvironmental Policy changes
lEnvironmental Risk Reduced
1 Example of Environmental Improvement
10 Environmental Recommendation Sustained
Performance Highlights
In the OIG report, Energy Star Program Can Strengthen
Control Protecting the Integrity of the Label, the OIG
recommended ways EPA can improve the public confidence in
the Energy Star Program by strengthening requirements and
procedures over how products qualify for and earn the Energy
Star label. As a result of the OIG reviewing the EPA Energy
Star product labeling program processes, the Agency agreed
with OIG recommendations for improvements, including
determining the need for spot testing, to assure the integrity of
the Energy Star label for consumers of home and office
products. EPA disagreed with many of our conclusions, but
stated it had implemented many of the recommendations.
However, EPA's planned actions do not address the intent of
our recommendations, and we consider the issues unresolved.
http:/Av\v\v.epa.gov/oig/reports/2007/20070801-2007-P-
00028.pdf
In a joint effort between the EPA and DOI, at the request of
EPA's Administrator, the two agencies wrote Promoting
Tribal Success in EPA Programs. The OIG found that tribes
have made progress in overcoming barriers to successful
management of environmental programs. As a result, we
recommended that EPA further build on successful practices
by promoting innovation as the key for tribes to maximize the
effectiveness of their programs through:
Collaboration and Partnerships. Marty of the successful
projects result from efforts to foster good communication
and positive relationships. Tribes work cooperatively with
Federal agencies, other tribes, State and local governments.
educational institutions, and the private sector.
Education and Outreach. Tribes educate the community
regarding environmental programs. Further, tribes value
community input and understand that project success often
depends on community support.
Expanding Resources. Based on its size, capacity, and
structure, each of the visited tribes has its own processes for
finding sources of revenue to ensure sustainability of natural
resource and environmental programs.
In the OIG report, Assessment of EPA 's Projected Pollutant
Reductions Resulting from Enforcement Actions and
Settlements, we found that the accuracy and reliability of
EPA's projected pollutant reductions for Fiscal Years 2003-
2006 depended on the specific program in which an
enforcement action took place. Also, we found that EPA has
improved its internal control process for ensuring more
accurate pollutant reduction estimates from concluded
enforcement cases.
http://www.epa.gov/oig/reports/2007/20070724-2007-B-
00002.pdf
In the OIG report, Overcoming Obstacles to Measuring
Compliance: Practices in Selected Federal Agencies, the OIG
found that Federal regulatory agencies with missions and
obstacles similar to EPA use statistical methods to generate
compliance information. These Federal programs extensively
use statistical methods to identify and analyze risk, set goals,
develop strategies to manage the most significant risks, and
report their accomplishments. The programs we reviewed used
practical approaches to overcome similar obstacles as those in
OECA. and could potentially apply to OECA's programs. We
recommended, and the Agency agreed, that the Assistant
Administrator for Enforcement and Compliance Assurance
establish a plan of action, with milestones, to incorporate
statistical methods to demonstrate the results of EPA's
enforcement and compliance strategies. Also, OECA can
coordinate with the in-house statistical expertise in EPA's
Office of Research and Development and Office of
Environmental Information to help develop statistical models
and evaluate external proposals.
littp:/Avww.epa.gov/oig/reports/2007/2007()620-2007-P-
00027.pdf
In the OIG report, Performance Track Could Improve Program
Design and Management to Ensure Value, we found that
Performance Track did not have clear plans that connect
activities with its goals, and include performance measures that
show if it achieves anticipated results. We recommended, and
the Agency agreed to:
Design a comprehensive strategic plan to connect activities
with goals and to encourage staff and management to focus
on program goals and member commitments.
Design the program to measure and report on performance
related to activities and goals.
Maintain centralized databases for compliance screening and
program member information so that it can readily
demonstrate that members meet program criteria.
Encourage member facilities to set and achieve
commitments so that the public has a clear idea of what
results members will actually produce.
Include assessing member leadership in compliance and
toxic releases in the program criteria.
http://www.epa. gov/oig/'reports/2007/20070329-2007-P-
00013.pdf
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In the OIG report. Strategic Agricultural Initiative Needs
Revisions to Demonstrate Results, we found that the Strategic
Agricultural Initiative (SAI) program does not have
performance measurement tools or performance measures in
place to demonstrate how it fulfills its unique role of helping
growers transition away from Food Quality Protection Act
high-risk pesticides or to facilitate continuous improvement.
The program does not have a strategic plan or similar
documents that link project mission and goals, logic model,
performance measures, and the data collected by the program.
Headquarters and the regions have inconsistent priorities for
implementing the program. The SAI databases, which are used
to gather data on project performance, lack definitions and
structure, and thus contain incomplete and extraneous
information. We recommended that EPA develop a needs
assessment for the SAI program to demonstrate how it fulfills
its role in meeting Food Quality Protection Act requirements
and a strategic plan which sets clear priorities for the direction
of the program. For the SAI Projects database, the Agency
should create guidance, standards, and procedures for data
collection into these databases and data and results should be
stakeholders, http://wvvw.epa.gov/oig/reports/2007/20070926-
2007-P-00040.pdf
In the OIG report. Voluntary Programs Could Benefit from
Internal Policy Controls and a Systematic Management
Approach, we found that EPA has no Agency-wide policies
that require voluntary programs to collect comparable data or
conduct regular program evaluations to determine program
success and environmental impact. EPA lacks internal controls
that outline specific ways to determine the success or failure of
EPA's overall voluntary program effort. Changes to voluntary
program definitions and expanding the scope of the
populations lias caused confusion and difficulty for EPA
program offices. EPA does not have a system to develop, test,
and market new programs. EPA also lacks a system to evaluate
existing programs. Further, EPA lacks a systematic method to
design, evaluate, and model programs that are effective at
achieving environmental results. OIG recommends that the
Deputy Administrator provide the Associate Administrator for
the Office of Policy, Economics, and Innovation with the
authority to develop, implement, and oversee mandatory
Agency-wide management policies for voluntary programs.
Further, those mandatory policies should implement a
systematic management approach similar to a research and
development model, and develop specific definitions or criteria
that outline the general intent and function for the groups or
categories of EPA voluntary programs that are currently
implemented, http://www.epa.gov/oig/reports/2007/20070925-
2007-P-00041.pdf
CONGRESSIONAL AND
PUBLIC LIAISON
Reports Issued: 6
Total Staff Days: 1,312
Congressional and Public Liaison
Return on Investment Summary
Total Cost: $919,712 (net of overhead)
Environmental and Business Results
$50,000 Cost Efficiency
27 Environment/Management Actions Taken
21 Environmental/Management Recommendations
7 Environmental Critical Public/Cong. Issues Resolved
2 Allegations Disproved
1 Environmental Risk Identified
5 Recommendations for Management Improvement
4 Examples of Environmental Improvements
2 Environmental Risks Reduced
18 Congressional Testimonies/Briefings
Performance Highlights
In the OIG report, EnvironmentalJustice Concerns and
Communication Problems Complicated Cleaning Up
Ring\voodMines/Landfill Site, we did not find evidence that
EPA's actions or decision making to investigate or remediate
environmental conditions at the Ringwood Mines/Landfill site
were affected by the area's racial, cultural, or socioeconomic
status. However, we did find that problems with
communications and relationships impeded effective
cooperation between EPA and residents. We recommend that
the Regional Administrator, Region 2:
Address the Ringwood community's perception of unfair
treatment and concerns regarding completely cleaning up
the site by ensuring that the new Record of Decision
includes a detailed comparison of current and prior site
investigations and cleanups.
Prepare and implement a new community involvement plan
for the Ringwood site.
Help the community correct the deficiencies in the
Community Advisory Group so its meetings are regularly
held and productive.
Increase communication with the community about Region
2 efforts to ensure that the Ford Motor Company properly
performs the correct work at the site.
littp:/Avww.epa.gov/oig/reports/2007/20070402-2007-P-
00016.pdf
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ASSISTANCE AGREEMENTS
Assistance Agreements Return on Investment
Summary
Reports Issued: 15 (152 Single Audits)
Total Staff Days: 3,442
Total Cost: $2,344,935 (net of overhead)
Environmental and Business Results
! $38.1 Million in Questioned Costs ($8.6 M from
Single Audits)
$ 9.3 Million Cost Efficiencies
3 Best Management Practices Identified
l» 5 Management Actions Taken
l» 589 Recommendations for Management Improvement
10 Environmental/Management Best Practices Identified
1 Corrected Management Challenge
Performance Highlights
In the OIG report, Number of and Cost to Award and Manage
EPA Earmark Grants, and the Grants' Impact on the Agency's
Mission, we found mat between January 1, 2005, and March
31, 2006, EPA awarded 444 earmark grants totaling $454
million, accounting for about 13 percent of EPA grant dollars
awarded. EPA also spent about $4.9 million to award and
manage the 444 grants. Our review of 86 earmark grants
found that 82 were for projects aimed at contributing to EPA's
Strategic Plan mission and goals. Grant work plans for the
other four grants did not demonstrate how the projects would
promote EPA goals:
A non-profit organization used about half its grant funds to
purchase computers for a high school and support student
trips between the United States and the U.S. Virgin Islands.
A university studied noise levels from parked, idling trains.
A local government did not identify' how two of the earmark
grants were going to achieve the objectives stated in the
work plans or how the projects would impact the
environment.
http://www.epa.gov/oig/repoits/2()07/20070522-20C)7-P-
00024.pdf
In the OIG report, Ozone Transport Commission Incurred
Costs Under EPA Assistance Agreements ^98379901,
OT83098301, XA97318101, and OT83264901, we questioned
$2,723,706 of the $9,042,706 in reported outlays because the
recipient claimed unallowable outlays for contractual services,
indirect costs, and in-kind costs. Specifically, the recipient: (1)
did not compete contracts, justify sole-source procurements, or
perform cost analysis of contracts; (2) claimed indirect costs
without approved indirect rates; and (3) did not maintain
adequate documentation for in-kind costs used as recipient
match. We recommended that EPA should recover questioned
outlays of $2,723,706 unless the recipient provides sufficient
documentation to support the related claimed costs in
accordance with Federal regulations. We also recommended
that EPA direct the recipient to implement procedures to
address issues relating to procurement of contracts, indirect
cost rates, and documentation of in-kind costs, and monitor the
recipient's sub-recipient and procurement activities until EPA
is assured that the recipient is consistently meeting Federal
requirements, http://www.epa.gov/oig/reports/2007/20070731 -
2007-4-00068.pdf
In the OIG report. The Environmental Careers Organization
Reported Outlays for Five EPA Cooperative Agreements, we
found mat the recipient did not comply with the financial and
program management standards. We questioned $6,027,814 of
claimed costs because the recipient could not support its costs,
did not maintain adequate records, and drew funds in excess of
it needs. We recommended that the Director for the Grants
and Interagency Agreements Management Division address the
questioned costs by (1) recovering payments of $4,750,342
unless the recipient can comply with accounting requirements;
(2) recover payments of $1,277,472 incurred for ineligible
costs: (3) rescind the final indirect cost rate approved for the
fiscal year ended December 31, 2004; and (4) require the
recipient to establish policies and procedures for relocating
interns that comply with OMB Circular A-122. Due to the
significance of these findings, we also recommended that EPA
stop work on all active agreements and not award any new
agreements until the recipient meets minimum financial
management requirements and repays all disallowed costs.
http://www.epa. gov/oig/reports/2007/20070625-2007-4-
00065.pdf
In the OIG report, International City/County Management
Association Reported Outlays Under Seven Selected
Cooperative Agreements, we found that the reported Federal
outlays by the International City/County Management
Association (recipient) on the Financial Status Reports do not
present fairly, in all material respects, the allowable outlays
incurred in accordance with the terms and conditions of the
grants and applicable EPA regulations. We questioned
$1,007,858 of the $9,871,025 in reported outlays because the
recipient claimed unallowable outlays for contractual services,
sub-grant costs, indirect labor and facilities costs, and in-kind
costs. We recommend that EPA: (1) disallow the questioned
outlays of $78,298 that were prohibited by law; (2) obtain
sufficient documentation to support the remaining questioned
outlays of $929,560 in accordance with EPA regulations or
disallow the costs from Federal grant participation; and (3)
direct the recipient to establish procedures to address issues
relating to procurement of contracts, management of sub-
recipients, and documentation of in-kind costs.
http://www.epa.go\7oig/'reporis/2()07/20061128-2007-4-
00026.pdf
In the OIG report. Grants Competition Needed, we found that
grants management has been a significant challenge for EPA
for several years. At the recommendation of the OIG. EPA
issued an Order requiring some grants to be competed. To
evaluate EPA's progress, we assessed whether (1) the Order
promoted competition, and (2) the competitions were fair and
open. We recommended in our report that EPA increase
competition by eliminating the justification for non-
competition routinely used for those organizations that
represent the interests of States, tribes, and local governments
(what EPA called "co-regulators"). On April 3, 2007,
12
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Assistant Administrator Luis Luna signed a memo to the
Deputy Administrator Marcus Peacock entitled Elimination of
the Co-Regulator Organization Grants Competition Exception.
In the memo, AA Luna states that they will eliminate the
automatic exception to competition for co-regulators as of Oct.
1. 2007. because it has been difficult to administer and has
been criticized by the OIG and Congress. On April 9, DA
Peacock approved the following approach: eliminate the
exception as of 10/1/07; allow using the public interest
exception for co-regulators where it makes sense; and by
October 2010, OARM will do a lessons learned study to see
how eliminating the exception worked out. We believe this
action, taken because of our grants competition audit, will
increase competition.
In the OIG report, America's Clean Water Foundation
Incurred Costs for EPA Assistance Agreements X82835301,
X783142301, andX82672301, we found that the Foundation
did not comply with the financial, program management, and
procurement standards and regulations. The Foundation's
procurement practices and procedures did not comply with the
grant regulations, including awarding a contract to a member
of its Board of Directors. As a result, we questioned the
Federal share claimed of $25,372,590 and recommend that the
Director for the Grants Administration Division:
Disallow and recover the Federal share claimed of
$25,372,590, and recover payments made of $25,173,266,
unless the Foundation reconstructs its accountings records to
meet the required financial management standards.
Rescind provisional indirect rates for fiscal years ended June
30, 2005, and June 30, 2006.
Require the Foundation to obtain single audits for fiscal
years ending June 30, 2003, 2004, and 2005.
Require the Foundation to prepare and submit overdue
Standard Form 272 Federal Cash Transactions Reports.
Disallow contract costs procured, claimed, and administered
in violation of the requirements in Title 40 CFR Part 30.
Disallow contract costs that were not authorized under the
contract terms.
Stop work on all active grants.
Do not award any new grants until the Foundation meets
minimum financial management requirements and repays all
disallowed costs.
http://www.epa.gov/oig/reports/2007/20070220-2007-4-
00045.pdf
CONTRACTS
Reports Issued: 13 (198 DC AA Reports)
Total Staff Days: 2,763
Total Cost: $1,882,625 (net of overhead)
Contracts Return on Investment Summary
Environmental and Business Results
$11.8 Million in Questioned Costs ($9.3 M from DCAA)
$ 13.1 Million in Cost Efficiencies ($13 M from DCAA)
3 Environmental Recommendations
31 Agency Management Actions Taken
103 Recommendations for Improvement
8 Best Management Practices Identified
8 Best Management Practices Implemented
1 Legislative Change
1 Environmental Critical Public Issue Addressed
251 Management Certifications
Performance Highlights
In the OIG report, Inter agency Agreements to Use Other
Agencies' Contracts Need Additional Oversight, we found that
while improving some interagency contracting processes, EPA
entered into some interagency contracts without meeting all
requirements. EPA often entered into interagency contracts
without conducting cost reasonableness assessments, or
identifying alternatives, such as determining whether EPA's
in-house acquisition staff should acquire the services or
products for them. We recommended that the Assistant
Administrator for the Office of Administration and Resources
Management:
Provide guidance to project officers on conducting cost
reasonableness assessments and identifying alternatives
before using IAG contracts.
Strengthen training to include how to develop independent
government cost estimates or other appropriate cost
information, conduct cost reasonableness assessments, and
identity alternatives.
Ensure that the Grants Administration Division requires that
the IAG decision memorandum better explains why an IAG
is more cost effective, and include an evaluation of cost
reasonableness assessments in reviews.
http://www.epa.gov/oig/reports/2007/20070327-2007-P-
00011.pdf
In the OIG report. New Housing Contract for Hurricane
Katrina Command Post Reduced Costs but Limited
Competition, we found that Contract EP-R6-06-03 contained
several improvements over the previous housing contracts for
the Metairie incident command post. The new contract terms
were more flexible, allowing for various options regarding the
numbers of trailers to be leased. It also resulted in a price
reduction for each trailer (including some services) to $95 per
day per trailer compared to over $300 under the prior contracts.
We found that both EPA's Office of Administration and
Resources Management personnel and Region 6 procurement
staff worked together diligently to attempt to refine the
statement of work and make sure that the requirements did not
13
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limit competition. These personnel performed admirably and
deserve much of the credit for reducing costs. We recommend
that the contract's statement of work exclude unnecessary and
ambiguous requirements that limit competition.
http://www.epa. gov/oig/reports/2007/20070329-2007-P-
00015.pdf
In the OIG report. Examination of Financial Management
Practices of the National Rural Water Association, Duncan,
Oklahoma, we found that the National Rural Water
Association's (NRWA's) method of allocating indirect costs
over total direct costs is contrary to the requirements of the
Office of Management and Budget (OMB) Circular A-122.
From March 1, 1999, to February 29, 2004, EPA grants may-
have been over-allocated by $2,021,821 in indirect costs. We
also found that NRWA's procedures do not identify all
unallowable costs. NRWA's direct and indirect costs may
include unallowable costs and would conflict with its assertion
in the cost allocation plan that only allowable costs are
allocated to specific grants and programs. We recommend that
the Director of the Grants Administration Division obtain final
negotiated indirect cost rates for NRWA; require NRWA to
develop written procedures to (a) identify unallowable costs in
accordance with OMB Circular A-122, and (b) develop written
procedures for preparing cash draws.
hUp:/Avww.epa.gov/oig/repons/2(.)07/20070620-2007-P-
00027.pdf
In response to a previous OIG report on purchasing using the
GSA schedule, we recommended that the Assistant
Administrator for the Office of Administration and Resources
Management:
1) Provide examples on EPA's Intranet of adequate
justifications for limiting competition.
2) Emphasize Quality Assessment Plan requirements for
evaluating the effectiveness of market research, justifying
limiting competition, developing IGCEs, and using the FSS
order checklist.
3) For the order to obtain an intern, ensure the unauthorized
commitment entered into by the program office is ratified.
4) Require the Office of Acquisition Management to market
the benefits of online procurement tools such as FedBid.
OAM concurred with all four recommendations and indicated
it would post good examples of justifications for limiting
competition on its Website. OAM also indicated it will
emphasize, in a report to be issued by September 30, 2007,
Quality Assessment Plan requirements for effective market
research, justifications for limiting competition, developing
IGCEs, and using the FSS checklist. OAM plans to ratify the
unauthorized commitment by October 2007, and conducted
several training sessions on Fedbid. It will continue to
promote procurement tools such as Fedbid and e-Buy through
various means. OAM's actions taken and planned meet the
intent of our recommendations and should improve the
Agency's use of FSS orders.
FINANCIAL
Reports Issued: 8
Total Staff Days: 5,474
Total Cost: S3,599,022 (net of overhead)
Financial Return on Investment Summary
Business Results
7 Certifications
3 Agency Management Policy, Practice Change
13 Recommendations for Improvement
6 Management Recommendations Sustained
Performance Highlights
In the OIG report. State of New Hampshire Drinking Water
State Revolving Fund Program Financial Statements for the
Year Ended June 30, 2005, we rendered an unqualified
opinion on the New Hampshire Drinking Water State
Revolving Fund (DWSRF) Program financial statements for
the year ended June 30, 2005, noting various weaknesses in
internal controls. We qualified our opinion on compliance with
applicable laws and regulations. We recommended that EPA
require the New Hampshire Department of Environmental
Services coordinate with the State Treasury for documentation
on cash and investment transactions, properly reconcile
subsidiary schedules, develop and implement procedures for
reviewing and reporting transactions, and develop training on
the accounting system. We also recommended that EPA
require the State to deposit $228,436 to correct the
underfunded State matching funds, establish subcodes for each
set-aside, and implement a policy for Single Audit report
review.
littp://mvw.epa.gov/oig/reports/2Q07/20070226-2QU7-l-
00044.pdf
RISK ASSESSMENT AND PROGRAM
PERFORMANCE
Performance Highlights
In the OIG report, Using the Program Assessment Rating Tool
as a Management Control Process, the OIG found that the
Program Assessment Rating Tool (PART) is a good diagnostic
tool and management control process to assess program
performance and focus on achieving results. However, as
currently designed, programs can be rated "adequate" with a
passing PART score of just 50 percent. Low passing scores
heightens the risk that actual program results may not be
achieved, and detracts from PART'S overall focus on program
results. We recommended that OMB modify the Performance
Improvement Initiative criteria to provide incentives for
program managers to raise Program Results/Accountability
PART scores; and increase the transparency of PART results to
demonstrate the relationship between results and the overall
PART ratings. We recommended, and the Agency agrees, that
the EPA Deputy Administrator (1) increase using program
evaluation to improve program performance by establishing
policy/ procedures requiring program evaluations of EPA's
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programs. (2) designate a senior Agency official responsible
for conducting and supporting program evaluations, and (3)
allocate sufficient funds/ resources to conduct systematic
evaluations on a regular basis.
http://www.epa. gov/oig/reports/2007/200709-P-00033.pdf
INFORMATION TECHNOLOGY &
BUSINESS SYSTEMS
l» Reports Issued: 7
! Total Staff Days: 2,222
Total Cost: $1,430,968
Information Technology & Business Systems
Return on Investment Summary
Environmental and Business Results
43 Recommendations for Improvement
21 Agency Management Policy, Process Changes
l» 24 Management Recommendations Sustained
10 Management Challenges or Risks Identified
1 Management Risks Corrected
Performance Highlights
In the OIG report, EPA Needs to Strengthen Its Privacy
Program Management Controls, the OIG reported that
although EPA lias progressed toward establishing its Privacy
Program. EPA needs to set up a more comprehensive
management control structure to govern and oversee the
program by establishing goals, activities, and measuring
progress. We recommended, and the Agency agreed, mat the
EPA Office of Environmental Information's Director. Office
of Information Collection, establish goals and performance
measures for the program and update the Agency's Privacy
Program policies and procedures; establish a process for
managing and monitoring compliance; and that the Director
work with the Office of Administration and Resources
Management to develop sample cascading goals and objectives
that managers to establish Privacy Program accountability
processes. The Agency agreed with these recommendations.
http://www.epa.gov/oig/repoits/2007/20070917-2007-P-
00035.pdf
In the OIG report, Improved Management Practices Needed to
Increase Use of Exchange Network, we found mat partners in
EPA's Exchange Network's could fully utilize the Network by
Improving its methods for selecting and prioritizing which
data flows to implement.
Completing measurements of Network initiatives to ensure
investments are delivering expected results.
Improving its internal system development practices to
ensure EPA offices perform cost benefit analyses for new or
upgraded environmental systems.
Strengthening its policies to define when offices should
utilize the Network for receiving environmental information.
The OIG recommended, and the Agency agreed, that the
Office of Environmental Information (OEI):
Execute the Exchange Network Marketing and
Communications plan and evaluate data;
Develop a new plan for completing the Exchange Network
performance measures project;
Develop policies and procedures to guide program offices to
use the Network and conduct Exchange Network Cost
Benefit Analysis, and Include the Exchange Network in the
Enterprise Architecture.
http:/Avww.epa.gov/oig/reports/20()7/20070820-2007-P-
00030.pdf
In the OIG report, EPA Needs to Strengthen Financial
Database Security Oversight and Monitor Compliance, we
found weaknesses in how EPA offices (1) monitor databases
for known security vulnerabilities, (2) communicate the status
of critical system patches, and (3) monitor using and accessing
database administrator accounts and privileges. We
recommend that OCFO. the Office of Environmental
Information (OEI), and the Office of Research and
Development address areas where EPA could improve.
Specifically, we recommended, and the Agency agreed, that:
OCFO update process to require program/regional offices to
actively monitor the security status of systems that share
data with IFMS.
OEI strengthen followup procedures for obtaining complete
responses from program and regional offices regarding high-
level critical system patch alerts,
The system owners for each reviewed application correct all
identified weaknesses and develop a Plan of Action for all
noted deficiencies.
http://www.epi. gov/oi g/reports/2007/200703 29-2007-P-
00017.pdf
In the OIG report, EPA Could Improve Processes for
Managing Contractor Systems and Reporting Incidents, we
found that EPA had defined the specific requirements for
contractor systems, but had not established procedures for
identifying all contractor systems. Without all relevant
security incident data, EPA may not accurately inform senior
Agency officials regarding the performance and security of the
Agency's network. We recommended that EPA:
Assign responsibilities for posting and updating EPA's Web-
site on weaknesses associated with contractor systems.
EPA update its guidance for identifying contractor systems.
Establish formal procedures to ensure that all responsible
program offices update and maintain their EPA-specific
contract clauses.
Update the Agency's computer security incident guide to
cover reporting instructions for all locations, establish a
target date for when it will configure the Agency's anti-virus
software to utilize the central reporting feature, train
Information Security Officers on new procedures, and
provide Information Security Officers with computer
security incident reports.
http://www.epa. go\7oig/reports/2007/20070111 -2007-P-
OOOOTndf
15
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U.S. CHEMICAL SAFETY AND
HAZARD INVESTIGATION BOARD
Performance Highlights
In the OIG report, U.S. Chemical Safely and Hazard
Investigation Board (CSB) Should Track Adherence to Closed
Recommendations, we found that recipients have adhered to
closed recommendations issued by CSB. Although CSB has
continued to increase its investigative productivity, it does not
follow up on closed recommendations to track adherence. As a
result, CSB may be unaware of whether report recipients
continue to adhere to recommended safety procedures or return
to prior practices. We recommended that CSB (1) revise its
guidance. Board Order 022, to include followup on closed
recommendations; and (2) follow up on a sample of closed
recommendations every 3 years and analyze whether
adherence and/or recipient conditions have changed.
http://www.epa.gov/oig/repoils/2007/20070326-2007-P-
00010.pdf
INVESTIGATIONS
l» 99 Investigations Closed
l» 44 Investigations Opened
Total Staff Years: 58.8
l» Total Cost: $10,355,680
Investigative Return on Investment Summary
Environmental and Business Results
$5 Million in Fines, Settlements, Restitutions
$2 Million in Cost Efficiencies
9 Environmental Risk Reduced
1 Environmental Risks Identified
5 Convictions of Persons or Finns
21 Indictments/Informations of Persons or Finns
4 Civil Judgments/ Settlements/ Filings
68 Administrative Actions
15 Refenals for Agency Action
2 Environmental Best Practices Implemented
Performance Highlights
As a result of an OIG investigation, Hassan Ali Raza was
sentenced to 41 months imprisonment followed by 3 years
probation on conspiracy charges, ordered to perform 200 hours
of community service, and pay $3,185,344 in restitution and
assessments. The sentence stems from charges that Raza was
charged with importing luxury vehicles into the United States
that did not meet the U.S. Department of Transportation or
EPA vehicle standards for sale and use on U.S. roads. This
investigation was conducted jointly with the Department of
Homeland Security Immigration and Customs Enforcement
and the U.S. Department of Transportation OIG with
assistance from the Department of Homeland Security's
Customs and Border Patrol, the U.S. Department of
Transportation's National Highway Traffic Safety
Administration, and the EPA Office of Transportation and Air
Oita/itv. (Case Cost: $282,780)
LMI & Associates (LMI) and its owners, Larry and Laura
McClure, of DeSoto, Texas, agreed to pay $15,000 to settle a
civil false claims case. The Government claimed that LMI and
the McClures submitted a $6,200 invoice to EPA, which it
paid, for work that was not authorized by EPA nor performed
by LMI. Prior to reaching this settlement, the McClures and
LMI were debaned from Government contracting for 3 years.
Both McClures were indicted by the State of Texas for
defrauding EPA and were each charged with theft, a felony
under Texas law. (Case Cost: SJ6,008)
As a result of an OIG investigation involving an EPA grantee,
the EPA Office of Grants and Debannent estimates that EPA
saved $1,962,925. Since 1989, EPA lias awarded more than
$50 million in grants to the grantee. The investigation
detennined that, since at least 1997, the grantee improperly
treated its Government agreements as fixed rate rather than
cost reimbursable resulting in "surplus" funds that the grantee
failed to return to the Government. The investigation further
detennined that the grantee did not track all of its costs as
required by Federal Regulations. As a result of the
investigation, EPA terminated the program and the grant. This
investigation was a joint effort of the OIGs of the General
Sen-ices Administration, U.S. Department of Agriculture, and
U.S. Department of Commerce. (Case Cost: SI 27,028)
Jason Scardecchio was sentenced to 1 year and 1 day in prison,
followed by 36 months of supervised release and ordered to
pay $12,105 in restitution and assessments after pleading guilty
to charges of mail fraud and improperly removing asbestos.
Scardecchio a supervisor with Indoor Air Quality, Inc.,
Phoenixville, Pennsylvania, its owner, Wallace Heidelmark,
and the company were sentenced for similar charges. As a
result of the convictions, all three defendants were detennined
to be ineligible to receive government contracts or benefits at
the Phoenixville location until the underlying conditions that
caused the Clean Air Act offense have been conected. The
investigation was conducted jointly with the EPA Criminal
Investigation Division, with help from the Occupational Safety
and Health Administration. (Case Cost: $323,562)
Gulf Services Contracting, Inc. (GSC). an asbestos and lead
abatement contractor located in Theodore, Alabama, was
sentenced after pleading guilty to a charge of fraud. Michael
Thomas Burge, president and owner, and Jonathan Valle.
supervising foreman, were also sentenced as a result of their
guilty pleas to submitting false statements to the government.
GSC was placed on probation for 5 years and ordered to pay
$96,851 in fines and assessments. Burge and Valle were fined
$5.000 and $1,000 respectively and both sentenced to home
detention for 4 months, placed on 3 years probation, and
ordered to pay a $100 special assessment. GSC lied to the
government about the identities and qualifications of
employees who perfonned asbestos and lead removal on
various military installations in Florida, Alabama, and
Mississippi, as well as other abatement work on schools and
municipal projects putting the public at risk. This investigation
was conducted jointly with the EPA Criminal Investigation
Division: FBI: Defense Criminal Investigative Service; Naval
16
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Criminal Investigative Service; Air Force Office of Special
Investigations: and Department of Homeland Security,
Immigration and Customs Enforcement. (Case Cost: 8189,122)
While admitting no wrongdoing, Liberty Analytical
Corporation entered into a $200,000 Civil Settlement
Agreement to settle allegations that the company submitted
false claims to EPA. Compuchem Environmental, a division
of Liberty Analytical, Gary, North Carolina, failed to properly
calibrate gas chromatograph/mass spectrometer (GC/MS)
instruments used in analyzing samples from EPA Superfund
sites as was required. The investigation determined that
quality control standards were routinely bypassed, in that
improper calibration procedures extended the "ran time" of the
GC/MS instruments, producing false analytical data. Some
analysts admitted that they had been following this procedure
since as early as 1992. Three Compuchem analysts involved in
the improper calibration practice pleaded guilty and received
probation, fines or restitution, community service, and were
subsequently debarred. (Case Cost: Si33,869)
Duratek Federal Sendees (DPS) pleaded guilty to unlawfully
discharging refuse into a waterway without a permit. DPS was
sentenced to a $10.000 fine, $290,000 in restitution, and a
$125 special assessment. DPS managed a multi-celled, above
ground, U.S. Department of Energy waste management facility
in Oak Ridge, Tennessee. The contact water ponds were
expected to be tested to ensure that the level of both
radioactive contaminants and chemical constituents were
within the acceptable levels before the water could be released
into nearby Bear Creek. Following heavy rains, to avert pond
failure, the landfill manager, without notifying or consulting
with any Duratek management, pumped the water from one of
the contact water ponds into a drainage ditch that ran directly
into Bear Creek, knowing the water in the contact pond
exceeded the allowable contaminant amounts for release. As a
result, 350,000 to 400,000 gallons of water containing
radionuclides were discharged directly into Bear Creek. The
investigation was conducted jointly with the Tennessee
Environmental Crimes Joint Task Force. (Case Cost: SI0,875)
In the OIG report, EPA Needs to Respond More Timely to
Reports of Investigation, we found that while EPA took
disciplinary action where deemed appropriate, it did not take
the actions timely, or in some cases were significantly less than
appropriate. EPA policies require the Agency to initiate
disciplinary actions within 30 days from the date the OIG's
Office of Investigations issues a Report of Investigation.
However, EPA took an average of almost 200 days to do so.
According to several EPA action officials, EPA may not take
disciplinary action within 30 days because the Agency cannot
complete the process recommended hi the EPA Disciplinary
Process Handbook within 30 days. We recommend that the
EPA Deputy Administrator (1) consider a timeframe more in
line with the time necessary to accomplish EPA's disciplinary
process;.(2) when the Agency is unable to meet established
timeframes, provide an action plan that minimize the risks of
continued misconduct pending final disciplinary action; (3)
assure that disciplinary actions taken in employee integrity and
misconduct cases are sufficient and appropriate.
hUp://www.epa.gov/oig/reports/2007/20070507-2007-M-
00003.pdf
17
OIG ENABLING SUPPORT PROGRAMS
The Immediate Office of the Inspector General
The Office of Planning, Analysis and Results
The Office of Mission Systems*
The Office of Human Capital
The Office of Inspector General Counsel
The Office of Congressional and Public Liaison*
* also have mission product lines.
Total Staff Years: 62.4 (20% of total OIG FTE)
Total Cost: $8,963,448 (18% of total OIG costs)
^ Program Contract & Support Costs $3,639,628 (7.5%)
Support Return on Investment Summary
Internal (OIG) and External (EPA) Business Results
16 Recommendations for Management Improvement
1 New Management Challenges/FMFIA Risks Identified
3 Agency Management Actions Taken
1 Certification
6 Recommendations Sustained
» 58 OIG Reports Scored in Quality Measurement Process
Performance Highlights
New Follow-up Initiatives Promotes Better Program and
Management Results: To improve the economy, efficiency,
and effectiveness of Agency programs and operations, the OIG
initiated a new procedure to conduct and report the results of
followup reviews to Agency Leadership on the status of EPA
actions taken on OIG recommendations. An OIG report on the
Agency's follow-up process recommended how the Agency
could better manage resolving audit/evaluation
recommendations for greater performance and operational
accountability. As a result, OCFO acted to improve follow-up
performance by conducting joint training with the OIG, issuing
strong Agency-wide guidance on the requirements for
managing audit recommendations, and requiring certifying
completed actions. This combined effort is promoting greater
accountability and diligence by EPA in implementing the
actions for improved operations and program management.
Implementation of Cost Accounting Methodology: To
determine the costs of specific OIG work products associated
with disaster relief, the OIG developed and applied cost
accounting methodology to all OIG mission products and
services. The OIG cost accounting model, developed in
compliance with Generally Accepted Cost Accounting
Principles and Standards (separating costs into the traditional
categories of direct, indirect, and overhead [general and
administrative]), grouped costs by office and products. We
developed an overhead cost rate that was consistently applied
to incremental costs of specific products and services, resulting
in fully-loaded billable staff-day costs. We validated the
model by equating the cost of total billable hours to the total
budget expended. The success in applying this methodology is
demonstrated in the total costs reported for the work of each
product line, and in the appendix listing the cost of each OIG
report issued.
Outreach Planning With Agency Leadership: The OIG
implemented a combination of risk-based and a customer-
-------
driven planning process to develop an FY 2008 work plan that
addresses EPA's most significant environmental and
management risks, priorities, and challenges. About a third of
the planned assignments resulted from stakeholder input. The
planning process featured an Agency-wide risk assessment
based on historical OIG work. Agency FMFIA assessments,
major management challenges, and GAO high-risk
assessments. It also included recent input from EPA
leadership and results of interviews with Agency leadership on
risks, challenges, priorities, and opportunities for Agency-wide
management, media-specific areas, and regional issues. As a
result, the OIG developed new cross-Agency themes of
Research, Data Validation, Enforcement, and Homeland
Security to guide future work.
Legislation, Regulation and Policy Review: The OIG
analyzed 45 legislative, regulatory, or policy items. It made
recommendations and suggestions for improvements and/or
additions on 27. Items on which the OIG made significant
recommendations include Generally Accepted Government
Auditing Standards Draft Revision, which were modified
based on our input; Personal Identity Verification and Smart
Card Policy for Assistance Recipients; Proposed Revision to
Resources Management Directive System 2520, Administrative
Control of Appropriated Funds, Exposure Draft 3.1; EPA's FY
2006 Performance and Accountability Draft Report; Proposed
Reorganization of the Office of Criminal Enforcement.
Forensics, and Training. Office of Enforcement and
Compliance Assurance; Draft EPA Order: EPA Personal
Identity* Verification and Smart Card Program; EPA Working
Capital Fund Charter; and amendments to the IG Act.
EPA OIG Leads PCIE Training of New Federal Auditors:
EPA OIG staff played an important role in developing and
presenting key training courses for Government auditors
through the President's Council on Integrity and Efficiency
(PCIE). With the dissolution of the Inspector General Audit
Training Institute, a collaborative effort among the Inspector
General audit community filled a critical gap to provide basic
training in professional competencies through five 2-week
sessions of intensive classes for nearly 200 entry-level
personnel from 22 Federal Inspector General and Department
of Defense audit organizations. Several EPA OIG staff were
key task force organizers, helped develop the curriculum,
instructional and presentation materials, and were instructors
for the following topics: Overview of the Government
Auditing Standards; Evidence, Documentation, and
Determining Significance of Results and Sufficiency of
Evidence; Inspector General Act; Audit Planning; Fraud
Detection; Followup; Communications; Reporting; and
Behavioral Aspects of Auditing for Change.
OIG Receives "Clean Opinion" on External Peer Review:
EPA OIG received an unmodified opinion in an external peer
review covering the fiscal year ended September 30. 2005.
This means that the OIG's system of internal control for the
audit and evaluation function in effect for that year was
designed to meet the requirements of the quality control
standards established by the Comptroller General of the United
States for a Federal Government audit organization. This
review was a milestone for the OIG since it was the first
external peer review that included work completed by its
Office of Evaluation. The U.S. Postal Service OIG conducted
the peer review in accordance with guidelines established by
the President's Council on Integrity' and Efficiency.
OIG Implements Streamlined Quality Assurance Process:
In FY 07. the OIG fully implemented a process to apply
specific quality measurement criteria to 57 major OIG reports.
The process continually monitors the OIG's efforts to
consistently provide products that meet these specific criteria,
including adherence to GAGAS and all OIG policies and
procedures. The goal of this measuring process is to assess
trends in quality so that necessary adjustments can be made to
policies and procedures or other OIG activities. The criteria to
assess quality include factors such as (a) cost, (b) documentary
reliability of evidence, (c) timeliness in preparing reports, (d)
readability of reports including whether reports are clear,
concise, convincing, logical, and relevant. An Inspector
General Statement was issued on October 10, 2006, that fully
explains the process and all the criteria used to measure
reports.
18
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The Reports Consolidation Act of 2000 requires the OIG to report on the Agency's most serious management
and performance challenges, known as the Key Management Challenges. Management Challenges represent
vulnerabilities in program operations and their susceptibility to fraud, waste, abuse, or mismanagement. This
fiscal year, the OIG identified three new Challenges. The Agency took sufficient action on three previous
challenges and they were removed from the list. The table below includes issues the OIG identified as Key
Management Challenges facing EPA and the relationship of the issues to the Agency's Strategic Plan and the
President's Management Agenda.
EPA's Top Major Management Challenges
Reported by the Office of Inspector General
Link to
Link to EPA President's
FY FY FY Strategic Management
2005 2006 2007 Goal Agenda
Managing for Results: * Focusing on the logic of design, measures of
success (outputs and outcomes), and measures of efficiency, so that
EPA programs and processes can be set up to evaluate results and
make necessary changes.
Agency Efforts in Support of Homeland Security: Implementing
a strategy to effectively coordinate and address threats.
Data Standards and Data Quality: ** Improving the quality of data
used to make decisions and monitor progress, and data accessibility to
EPA's partners.
Emissions Factors for Sources of Air Pollution: Reliable
emission factors and data are needed for targeting the right control
strategies, ensure permitting is done properly, and measure the
effectiveness of programs in reducing air pollution.
Workforce Planning: *** Implementing a strategy that will result in a
competent, well-trained, and motivated workforce.
Voluntary Programs: **** Applying voluntary approaches and
innovative or alternative practices to provide flexible, collaborative,
market-driven solutions for measurable results.
Efficiently Managing Water and Wastewater Resources and
Infrastructure: Current drinking water, treatment and supply, and
wastewater treatment and disposal systems are wearing out and will take
huge investments to replace, repair, and construct facilities.
Information Technology Systems Development and
Implementation: Overseeing information technology projects to
ensure they meet planned budgets and schedules.
Data Gaps: Deciding what environmental and other indicators will be
measured, providing data standards and common definitions to ensure
that sufficient, consistent, and usable data are collected.
Privacy Program: Integrating policies and controls into EPA's E-
Government and other systems infrastructure for the protection of
personal identifiable information.
Cross-Goal
Cross-Goal
Cross-Goal
Goal 1
Cross-Goal
Cross-Goal
Goal 2
Cross-Goal
Cross-Goal
Cross-Goal
Integrating
Performance &
Budget
Homeland
Security
E-Gov
Human Capital
E-Gov
E-Gov
E-Gov
Homeland
Security
From FY 2004 and 2005. Working Relationships with the States and Linking Mission to Management were consolidated into Managing for
Results.
** From FY 2004 and 2005. Information Resources Management and Data Quality were consolidated into Data Standards and Data Quality.
*** FY 2006 and 2006 titled Human Capital Management.
**** FY 2006 titled Voluntary, Alternative, and Innovative Practices and Programs.
19
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OIG FY 2007 Resource Use and Allocation
FY 2006 Appropriation - Final Utilization Rate
Account $ Appropriation Available $ Appropriation Used
% $ Appropriation Used
Management
Superfund
TOTAL
$36,896,858
13,334,489
$50,231,347
$36,879,994
13,330,304
$50,210,298
FY 2007 Appropriation Usage
Account $ Appropriation Available $ Appropriation Used
100.0%
100.0%
100.0%
% $ Appropriation Used
Management
Superfund
TOTAL
$37,111,000
13,336,853
$50,447,853
$33,419,716
12,099,470
$45,519,186
90.1%
90.7%
90.2%
FY 2007 FTE Usage
Account FY 07 FTE Available
Management (on board 10/1/06238) 268.0
Superfund (on board 10/1/06 88) 93.8
TOTAL (on board 10/1/06 326) 361.8
*FY 2006 funds were available through FY 2007 * *Unused FY 2007 funds are available through FY 2008
FY 07 FTE Used
224.2
84.0
308.1
% FTE Budget Used
83.7%
89.5%
85.1%
FY 2007 Funds Used (FY 06 Carryover and FY 07 Appropriation) By Object Class: $48.752.387
(97% of FY 07 Appropriation)
Contracts Expenses WCF
$4,454,277~\ $921'353 $2,522,259
Grants
$104,319
Travel
$2,558,910
FY 2007 FTEs Used By Component: Total 308
Awards
$550,212
Salaries
$37,641,057
Investigations
58.8
Immediate IG
4.1
Counsel
8.8
Program
Evaluation
70.6
Planning, Analysis
& Results
12.2
Congressional
& PublicLiaison
27.5
Human Capital
Mission Systems 8.2
39.9
20
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OIG Management Challenges
In fiscal 2007, for the eighth straight year, the OIG reported no material weaknesses under the Federal
Managers' Financial Integrity Act. Further, the OIG continues to make progress in addressing reported
OIG-level weaknesses. Several of the weaknesses identified in FY 2006 were not fully resolved in FY 2007
because of their complexity.
OIG - Level Weakness
Records Management - Controls Over Equipment
Information Technology
OIG Intranet/Internet
Product Timeliness and Quality
Follow-up on Corrective Actions
Data Quality
Office Security - Controls Over Equipment
2005
2006
2007
The OIG took the following steps to assess and improve management controls:
Q Scored specific quality characteristics of all reports issued by the OIG during fiscal 2007.
(J Revised the Project Management Handbook.
Q Developed policies and procedures on funds control; communications devices; purchase cards; policy
development; external review of regulations; policies and exposure drafts; independence; efficiencies
(funds put to better use); reviewing report resolution status codes; and resolving unsupported costs
claimed under assistance agreements.
Q Received an unmodified opinion in an external peer review recently completed by the U.S. Postal
Service (USPS), which assessed complying with Government Auditing Standards requirements.
Q Conducted a records management review of seven OIG offices.
LJ Reviewed and commented on 56 regulator}' and policy issues, and Agency directives.
LI Completed the self-study courses "E-Mail Records Training" and "Telework."
Q Delivered training to Office of Public and Congressional Liaison (OCPL) and Office of Program
Evaluation (OPE) staff on the 2007 changes to Government Auditing Standards.
(J Issued the lanuary 2007 OIG FY 2006 annual performance report demonstrating specific progress on
OIG goals.
Q Provided hands-on training to OIG staff on the Inspector General Enterprise Management System
(IGEMS) to all field offices and piloted the new functions OIG-wide.
Q Reconciled working capital fund information on site licenses of software in OPE.
(J Conducted periodic inventories of (issued and stored) firearms, badges, credentials, and other law
enforcement equipment.
U Reviewed the usage of all law enforcement vehicles, resulting in approximately $24,000 savings.
LJ Launched The Inspector General Enterprise Resource (TIGER) system, our new electronic case
management system for the Office of Investigations.
Q Initiated and processed paperwork to recoup student loan repayments from students who had received
loan payments and were departing OIG prior to meeting work commitments.
Q Completed the OPM Performance Appraisal Assessment Tool evaluation of the OIG Performance
Appraisal and Review System.
LI Developed an implemented an OIG Policy on Follow-up to conduct reviews on the status of Agency
actions taken on OIG recommendations.
i J Collaborated with the Agency Office of Chief Financial Officer on helping the Agency strengthen its
audit management and follow reporting process.
21
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Appendices
Audit/ Evaluation Activity and Agency Action
Reports Issued
Reviews performed by OIG
Reviews by another Federal Agency
Single Audit Reviews
TOTAL Reports
Monetary Results
Questioned costs (in millions)
Questioned costs form DCAA/OIG coordinated
* Cost efficiencies (in millions)
Cosf efficiencies from DCAA/OIG coordinated
* Costs sustained (from current and prior periods)
Reports resolved (from current and prior periods)
Agency recoveries (from current and prior periods)
*lncludes $4.2 in efficiencies not in the resolution
process, of which $2 is from investigative operations
Audit Resolution (Dollars in Millions)
Recommendations as Costs
With no management decision start
FY 2007 (80)
Issued in FY 2007 (92)
Agreed to/sustained by management
or value of nonawards (not including
prior to issuance) (67)
* Not agreed/sustained to by
management (42)
With no management decision,
end FY 2007 (131)
Percent of total costs agreed to by mgmt.
Total audits with no Federal actions as
of 9/30/07 which are over 365 days
past issuance date: 45 reports
Reports with costs for which no
management decision was made
within 6 months of issuance at 9/30/07:
26 reports
Audit Resolution Reported by EPA
Audits with management decision but
without final action start FY 2007 (60)
Audits for which management
decisions were reached in FY 2007
Total audits pending final action during
FY 2007
Final action taken during FY 2007
Audits without final action end of
FY 2007
Percent $ value final action taken FY 2007
Questioned
$117.3
$56.1
$36.3
$83.20
$54.0
21%
$37.00
$63.5
$31.7
$95.2
$32.6
$62.6
34.4%
71
198
152
421
$56.3
$9.3
*$33.9
$13.0
$53.4
236
$1.6
Efficiencies
$5.6
$29.7
$15.1
$5.6
$14.5
43%
$13.01
$41.4
$5.8
$47.2
$.02
$27.2
0.05%
Investigative Activity
Investigations opened
Investigations closed
Pending investigations as of
9/30/07
Indictments persons/firms
Convictions persons/firms
Administrative actions: EPA
employees/firms
Civil judgments
Fines and recoveries (in millions)
Prison time in months
Suspended time in months.
Probation in months
Community service in hours
44
99
111
21
10
68
4
$5.0
185
120
636
408
Other
Hotline complaints received
Hotline complaints opened
Hotline complaints closed
Public inquiries addressed
Referrals to other offices
Legislative/regulatory/policy
items reviewed
798
7
9
188
603
45
22
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Calendar
Report Days in Staff
Number Report Name Production Days Total Cost
2007-P-00001
2007-P-00006
2007-1-00001
2007-P-00023
2007-1-00002
2007-P-00004
2007-4-00019
2007-P-00034
2007-P-00005
2007-1-00037
2007-4-00026
2007-P-00026
2007-M-00001
2007-P-00018
2007-P-00015
2007-4-00027
2007-4-00052
2007-P-00007
2007-P-00003
2007-1-00044
2007-P-00030
2007-P-00008
2007-P-00022
Effectiveness of Vehicle Inspection and Maintenance Programs
Superfund Five Year
2005 FIFRA FINANCIAL STATEMENTS
Clean Water Compliance and Enforcement
2005 PRIA FINANCIAL STATEMENTS
Nonpoint Source BMPs in Chesapeake Bay Restoration
E&E SubK Admin Noncomp - Cost Impact
Groundwater Contamination Panola County TX
Review of RCRA Interim Status Permits
SRF-New Hampshire 2005 Clean Water Audits
AA - International City County Management Association
Status of Superfund Alternative Sites with No Signed Agreement
OECAANDOSWER
EPA DID NOT PROPERLY PROCESS HOSPITAL DISINFECTANT
HURRICANE KATRINA
AA - National Rural Water Assoc - Congressional
REPORT ON EXAMINATION OF CONTRACTOR FY2001 I/C-E&E
MANAGING CONTRACTOR SYSTEMS AND REPORTING INCIDENTS
Voluntary Program Cost and Measurement Census
SRF-New Hampshire 2005 Drinking Water Audit
EPA's Implementation of Electronic Data Collection hi
EPA COULD IMPROVE CONTROLS OVER MAINFRAME SOFTWARE
AA - Tribal Program Implementation Issues
699
755
629
827
656
593
570
873
567
633
515
704
473
598
555
427
542
463
399
502
669
466
547
749
694
278
634
255
546
105
430
642
129
283
750
257
14
933
75
406
639
404
162
749
173
568
$572,990
$528,328
$219,302
$482,798
$201,751
$419,571
$86,680
$375,251
$492,224
$107,112
$233,944
$585,365
$200,562
$12,265
$777,801
$62,939
$338,546
$532,887
$315,286
$135,051
$625,311
$143,942
$474,327
23
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Calendar
Report Days in Staff
Number Report Name Production Days Total Cost
2007-P-00031
2007-P-00027
2007-P-00017
2007-2-00003
2007-P-00012
2007-1-00019
2007-P-00020
2007-4-00063
2007-P-00009
2007-P-00011
2007-2-00001
2007-1-00020
2007-4-00062
2007-4-00034
2007-4-00033
2007-4-00045
2007-P-00021
2007-1-00070
2007-1-00071
2007-P-00039
2007-P-00013
2007-P-00028
2007-M-00002
2007-P-00029
CHESAPEAKE BAY LAND USE
Benchmarking Other Organizations' Statistically Valid Compliance
EPA'S IMPLEMENTATION OF DATABASE SECURITY
Superfund Cooperative Agreement Obligations
AA-SRF Policy Review
2006 AGENCY F/S - GENERAL
FY2006 Peer Review of Commerce
E&E FY 2005 Adequacy Review
Air Deposition Reduction Activities in Chesapeake Bav Restoration
Review of Interagency Contracts
2006 PAYROLL AUP
GFRS
Application Controls Over E&E's Time & Expense System
E&E Voucher Review - DACW56-02-G-1001
E&E 2006 Floorcheck
AA-America's Clean Water Foundation-Grant Cost
EPA Contracting Through The Corps of Engineers
2006 FIFRA Financial Statement Audit
2006 PRIA Financial Statement Audit
OIG Congressional Request Rmgwood Mines/Landfill Superfund
Evaluation of NEPT
Effectiveness of Energy Star
OSWERANDOW
RCRA Referrals to Superfund
677
587
497
273
418
282
432
420
330
356
187
226
402
252
251
298
349
378
378
493
307
427
167
406
998
557
484
377
490
4636
335
170
466
356
74
20
117
53
75
93
282
344
304
710
325
430
295
314
$783,488
$436,623
$403,805
$314,288
$408,920
$2,960,000
$262,821
$141,988
$365,120
$297,056
$58,370
N/A
$97,794
$43,944
$62,746
$77,785
$235,813
$277,826
$252,724
$558,650
$258,662
$338,079
$231,090
$246,432
24
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Calendar
Report Days in Staff
Number Report Name Production Days Total Cost
2007-P-00025
2007-4-00078
2007-P-00036
2007-4-00065
2007-P-00040
2007-4-00068
2007-P-00010
2007-P-00016
2007-P-00002
2007-B-00001
2007-P-00024
2007-P-00035
2007-P-00041
2007-P-00019
2007-1-00023
2007-S-00001
2007-S-00002
2007-P-00032
2007-4-00053
2007-4-00064
2007-4-00056
2007-P-00037
2007-P-00038
2007-2-00030
2007-S-00003
Follow-Up on Actions in Response to OIG Water Reports
CHEYENNE RIVER SIOUX TRIBE
Planning for Future TMDL Reviews
ENVIRONMENTAL CAREERS ORGANIZATION
Strategic Agricultural Initiative (SAI)
OZONE TRANSPORT COMMISSION
Facility Adherence to the CSB's Closed Recommendations
Ringwood Mines/Landfill Superfund Site
Asbestos Cleanup in Libby Montana
OFFICE OF INTERNATIONAL AFFAIRS
Impact of Earmarks
EPA'S PROTECTION OF PII & PRIVACY PROGRAM
VPS COULD BENEFIT FROM INTERNAL POLICY CONTROLS
CHEMICAL SAFETY BOARD - FISMA & PII REPORT FOR FY06
2006 CSB Financial Statement Audit
CSB Personnel Activities
Superfund Special Accounts
Chesapeake Bay Federal Facilities Compliance with the CWA
Mixed Funding Claim Number Two - Bofors-Nobel
Mixed Funding Claim No 2 - Armour Road
York Oil CERCLA Response Claims 3 and 4
PROGRESS IN USE OF FSS ORDERS, BUT MORE ACTION NEEDED
Lake Anna Permit
Citv of Huron South Dakota
FY 2007 FISMA Evaluation
314
431
412
312
403
326
190
194
76
173
219
339
341
185
36
212
290
273
85
144
72
189
155
95
146
142
268
233
318
390
250
111
321
289
155
342
110
168
543
12
188
148
234
35
27
40
217
69
30
13
$112,105
$224,142
$183,547
$266,248
$307,569
$209,016
$87,636
$287,341
$254,856
$122,075
$286,226
$91,793
$132,391
$44,825
N/A
$169,678
$116,743
$184,914
$28,943
$22,413
$33,018
$181,758
$54,842
$24,868
$11,076
25
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Calendar
Report Days in Staff
Number Report Name Production Days Total Cost
2007-2-00040
2007-4-00069
2007-2-00039
2007-B-00002
FALLON, NV -EPA GRANTS X98989101 AND XP979 14901
York Oil Mixed Funding Claim No 5
MIDDLETOWN GRANT REVIEW
OMB Briefing on Emissions Projections for Air Enforcement
135
56
95
193
49
.5
5
301
$40,855
$313
$4,179
$237,584
76 OIG Reports Produced and Issued, including 2 Memo Reports, 2 Briefings, 1 Peer Review
Comparison of Production Statistics FY 04 to FY 07
Total Number of
Reports
Avg. Calendar Days
Elapsed
Avg. Staff Days
Charged
Avg. Loaded Cost.
FY2004
57
351**
341**
$259,357**
FY2005
65
380**
331**
$257.056**
FY2006
65
288**
278.3**
$231,005**
FY2007
71 (net)
383**
297**
$239.215**
Avg. for Period
64.5
350
312
$246,658**
Calendar Days Elapsed
Direct Staff Days
Charged
Loaded Cost
210
6,110
(30.6 FTE)
$3,50,000
283.5
5,270
(28 FTE)
$3,126,000
298.7
5,019
(25 .6FTE)
$2,,970,000
281.5
4,636
(22.5 FTE)
$2,833,000
*includes FIFRA and PRIA requirements
**not including Financial Statement Audit shown separately
Financial Statement Audit costs as presented are direct costs + indirect costs
26
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OIG Financial Statement: Anal
MANAGEMENT
PC&B
Travel
Expenses
Contracts
WCF
Grants
Total Mgmt
SUPERFUND
PC&B
Travel
Site Travel
Expenses
Contracts
WCF
Grants
FY06
Carryover
Avail in 07
$57,074
(9,303)
364,203
2,053,784
(255,930)
4,830
$2,214,658
FY06
Carryover
Avail in 07
($327,231)
700,679
5,000
163,618
716,769
(221 ,633)
2,390
FY06
Carryover
Used in 07
$135,189
(10,092)
351,302
1,973,288
(256,023)
$2,197,794
4,130
FY06
Carryover
Used in 07
($263,396)
695,773
5,000
158,253
659,405
(221,718)
of FY Fund and
FY06
Lapsed
Funds
($78,115)
789
12,901
80,496
93
700
$16,864
FY06
Lapsed
Funds
($63,835)
4,906
0
5,365
57,364
85
300
FY 2007
Approp.
$29,823,000
1,812,000
748,000
2,161,000
2,449,000
118,000
$37,111,000
FY 2007
Approp.
$11,116,053
588,000
0
341,800
690,000
551,000
50.000
FY 07 Funds
Used in 07
$27,960,529
1,337,523
304,794
1,296,257
2,449,000
71,613
$33,419,716
FY2007
Used in 07
$10,358,947
530,706
0
107,004
525,327
551,000
26,486
FY 2007
Carryover
$1,862,471
474,477
443,206
864,743
0
46,387
$3,691,284
FY 2007
Carryover
$757,106
57,294
0
234,796
164,673
0
23.514
Total Cost
of FY 07
Operations
$28,095,718
1,327,431
656,096
3,269,545
2,192,977
75,743
$35,617,510
Total Cost
of FY07
Operations
$10,095,551
1,226,479
5,000
265,257
1,184,732
329,282
28,576
Total Cost
as % of
07 Approp
94%
73%
88%
151%
90%
64%
96%
Total Cost
as % of
07 Approp
91%
209%
78%
1 72%
60%
57%
Total SF
$1,039,592 $1,035,407
2,090
Total Mgmt &SF $3,254,250 $3,233,201
PC&B: Personnel Compensation and Benefits
WCF: Working Capital Fund
$4,185 $13,336,853 $12,099,470 $1,237,383 $13,134,877
$21,049 $50,447,853 $45,519,186 $4,928,667 $48,752,387
98%
97%
Usage of expiring 2006 funds = greater than 99.95%
27
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Performance Database: The OIG Performance Measurement and Results System captures and aggregates
information on an array of measures in a logic model format, linking immediate outputs with long-term intermediate
outcomes and results. OIG performance measures are designed to demonstrate value added by promoting economy,
efficiency, and effectiveness; and preventing and detecting fraud, waste, and abuse as described by the Inspector General
Act of 1978 (as amended). Because intermediate and long-term results may not be realized for several years, only
verifiable results are reported in the year completed.
Data Source: Designated OIG staff enter data into die systems. Data are from OIG performance evaluations, audits,
research, court records, EPA documents, data systems, and reports that track environmental and management actions or
improvements made and risks reduced or avoided. OIG also collects independent data from EPA's partners and
stakeholders.
Methods, Assumptions, and Suitability: OIG performance results are a chain of linked events, starting with OIG
outputs leading to subsequent actions taken by EPA or its stakeholders/partners reported as intermediate outcomes to
improve operational efficiency and environmental program delivery. The resulting improvements in operational
efficiency, risks reduced/eliminated, and conditions of environmental and human health are reported as outcomes. The
OIG can only control its outputs, and has no authority, beyond its influence, to implement its recommendations that lead
to environmental and management outcomes.
Quality Assurance/Quality Control Procedures: All performance data submitted to the database require at least
one verifiable source assuring data accuracy and reliability. Data quality assurance and control are performed as an
extension of OIG products and services, subject to rigorous compliance with the Government Auditing Standards of the
Comptroller General Government Auditing Standards (2003 Revision), Government Accountability Office, GAO-07-
731G. July 2007; available on the Internet at www.gao.gov/govaud/vbkO 1.htm, and regularly reviewed by an
independent OIG Quality Assessment Review Team, and external independent peer reviews. Each Assistant Inspector
General certifies the completeness and accuracy of his or her respective performance data. Additionally, the EPA OIG
earned a "clean" or unmodified opinion in FY 2007 through a rigorous peer review performed the previous year.
Data Limitations: All OIG staff are responsible for data accuracy hi their products and services. However, a
possibility of incomplete, miscoded, or missing data in the system could exist due to human error or time lags. Data
supporting achievement of results are often from indirect or external sources, with their own methods or standards for
data verification/validation.
Error Estimate: The error rate for outputs is estimated at +1-2%. while the error rate for outcomes is presumably
greater because of the longer period needed for realizing results and difficult}7 in verifying a nexus between our work and
subsequent impacts beyond our control. Errors tend to be those of omission.
28
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Annual Performance
Measures
Environmental and Business
Actions Taken for Improved
Performance from OIG Work
Supporting Indicators
o Policy, process, practice or control changes
implemented
o Environmental or operational risks reduced or
eliminated
o Critical congressional or public concerns resolved
o Certifications, verification, or analysis for decision
or assurance
FY2007 FY2008
Targets Targets*
318
334
Environmental and Business
Recommendations or Risks
Identified for Corrective Action
by OIG Work
o Recommendations or best practice identified for
implementation
o Risks or new management challenges identified for
action
o Critical congressional/public actions addressed or
referred for action
925
971
Potential Monetary Return on
Investment in the OIG, as a
Percentage of the OIG Budget
o Recommended questioned costs
o Recommended cost efficiencies and savings
o Fines, penalties, settlements, restitutions
150%
($72.6
Million)
120%
(without
DCAA
work)
Criminal, Civil, Administrative
and Fraud Prevention Actions
Taken from OIG Work
o Criminal convictions
o Indictments/Informations
o Civil judgments
o Administrative actions (staff actions and
suspension or debannents)
80
80
All targets are set, consistent with relative changes in funding. Outputs change in nearly direct
proportion, while outcomes are further adjusted for growth because a lag generally occurs between all
previous outputs (recommendations) before they come to fruition as outcomes (action on
recommendations).
29
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