EPA-350-R 08-004
November 2008
U.S. ENVIRONMENTAL PROTECTION AGENCY
OFFICE OF INSPECTOR GENERAL
Semiannual Report to Congress
April 1, 2008 - September 30, 2008
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I We are catalysts for improving the quality of the environment and government
through problem prevention and identification, and cooperative solutions.
I 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.
Abbreviations
BEI
GATE
CCAR
CD
CERCLA
CSB
CWTAP
DCAA
ECO
EPA
EPASS
FIFRA
FISMA
FMFIA
FY
GIAMD
ID
MACT
OECA
OIG
OMB
PCIE
PP&E
PRIA
SFFAS
VPC
Bennett Environmental, Inc.
Citizens Against Toxic Exposure
Coordinating Committee on Automotive Repair
Compact Disc
Comprehensive Environmental Response, Compensation, and Liability Act
U.S. Chemical Safety and Hazard Investigation Board
Colonias Wastewater Treatment Assistance Program
Defense Contract Audit Agency
Environmental Careers Organization, Inc.
U.S. Environmental Protection Agency
EPA Personnel Access Security System
Federal Insecticide, Fungicide, and Rodenticide Act
Federal Information Security Management Act
Federal Managers' Financial Integrity Act
Fiscal Year
Grants and Interagency Agreements Management Division
Identification
Maximum Achievable Control Technology
Office of Enforcement and Compliance Assurance
Office of Inspector General
Office of Management and Budget
President's Council on Integrity and Efficiency
Property, Plant, & Equipment
Pesticide Registration Improvement Act
Statement of Federal Financial Accounting Standards
Vapor Phase Combustion
Cover photos: Clockwise, from top left: A combined sewer overflow outlet (EPA photo); sailing and
fishing activities in the Chesapeake Bay (Chesapeake Bay Program photo); the capped
contaminated soil mound at the Escambia Treating Company Superfund site (EPA OIG
photo); a Passaic Valley Sewerage Commissioners plant (EPA OIG photo); construction
of a wastewater treatment plant through the Colonias program (EPA photo); and a Seattle
public hospital being constructed as part of the brownfields program (EPA OIG photo).
To find out more about the U.S. Environmental Protection Agency
Office of Inspector General and its activities, visit our Website at:
http://www.epa.gov/oig
Printed on 100% recycled paper (minimum 50% postconsumer)
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EPA OIG Semiannual Report to Congress April 1, 2008 - September 30, 2008
Message to Congress
In these difficult economic times, all of us are more acutely aware of the need for every
government dollar to be spent wisely. Through our work, the Office of Inspector General
has identified various instances where funds have been sitting idle for years. Properly
using these funds for valid projects will not only save the taxpayers' dollars but will
provide more funds that the U.S. Environmental Protection Agency (EPA) can direct to
vital efforts to protect public health and the environment.
We found that EPA could reclassify, or transfer to the Superfund Trust Fund, up to
$47.8 million in special account funds for the Stringfellow Superfund site, located near
Glen Avon, California. We discovered this as part of our review of EPA's use of special
accounts that had high available balances or were at least 10 years old. EPA agreed to
reclassify $20 million in the near term and could potentially reclassify or transfer the rest
to the Superfund Trust Fund by the end of Fiscal Year 2010.
Further, nearly 10 years after EPA awarded the last Colonias Wastewater Treatment
Assistance Program grant to Texas, $78 million still has not been spent. We
recommended that EPA amend workplans and/or operating agreements to avoid delays in
disbursing the funds, since delays reduce the purchasing power of the grant dollars and
slow improvements. We also found that EPA needs to close old brownfields grants.
While the Agency has made progress in this area, we noted 48 brownfields grants that
were more than 5 years old for which funds were unspent. Of the almost $11 million of
unliquidated funds reviewed, EPA deobligated $1.3 million during our audit and may
deobligate at least $6.8 million more.
To ensure progress at seven New Jersey-led Superfund clean-ups listed on the National
Priorities List for over 20 years, EPA needs to improve controls and better coordinate
clean-up efforts with New Jersey. If the Agency and New Jersey agree it would be
beneficial, EPA should assume lead status.
We reviewed several voluntary greenhouse gas reduction programs and found
weaknesses in data collection and reporting systems. There was also little assurance that
firms are actively participating in the programs. From this, we determined that if EPA
wishes to further reduce greenhouse gas emissions, it needs to consider additional policy
options. EPA is also administering a voluntary program to reduce indoor residential
exposure to radon. However, 20 years after passage of the 1988 Indoor Radon
Abatement Act, exposure to indoor radon continues to grow. According to EPA, more
than 20,000 Americans die from radon-related lung cancer every year - radon is the
second leading cause of lung cancer in America, after smoking.
As a result of our joint investigation with other law enforcement organizations, a
company president was found guilty of defrauding the U.S. Government and investors
concerning a proposed alternative fuel additive. This included obtaining a $3.6-million
earmark grant from Congress for testing. EPA paid out approximately $2 million of the
grant.
The Office of Inspector General continued implementing a new audit follow-up strategy
for strengthening both Office of Inspector General and Agency control processes for
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EPA OIG Semiannual Report to Congress April 1, 2008 - September 30, 2008
closing out, accounting for, and completing agreed-to actions on our recommendations.
Further, to comply with Inspector General Act reporting requirements and help EPA
managers gain greater awareness of outstanding commitments for action, we have
developed a "Compendium of Unimplemented Recommendations" that has already
yielded significant measurable results in terms of improved accountability and actions
taken.
The Office of Inspector General continues to work with the Agency on improving audit,
inspection, and evaluation management and follow-up processes for recording, reporting,
and ensuring that agreed-upon actions on our recommendations are completed. Further,
we will continue to work with both the Agency and Congress as we pursue common
goals of safeguarding human health and the environment while using resources more
efficiently.
Bill A. Roderick
Deputy Inspector General
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EPA OIG Semiannual Report to Congress April 1, 2008 - September 30, 2008
Table of Contents
OIG Management's Focus 1
EPA OIG Reported Fiscal Year 2008 Key Management Challenges 1
Agency Has Agreed to Make Improvements as a Result of OIG Work 2
OIG Hiring Initiative Making Progress 3
Congressional Requests Addressed, Testimony Provided 3
Significant OIG Activity 5
Air 5
Water 6
Superfund/Land 8
Enforcement 11
Cross-Media 12
Public Liaison and Special Reviews 14
Grants 16
Contracts 20
Forensic Audits 21
Financial Management 23
Information Resources Management 25
Investigations 27
Testimony 31
Chemical Safety and Hazard Investigation Board 34
Other Activities 35
Statistical Data 39
Profile of Activities and Results 39
Audit, Inspection, and Evaluation Report Resolution 40
Hotline Activity 42
Summary of Investigative Results 43
Scoreboard of Results 44
Appendices 45
Appendix 1 - Reports Issued 45
Appendix 2 - Reports Issued Wthout Management Decisions 49
Appendix 3 - Reports with Corrective Action Not Completed 62
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EPA OIG Semiannual Report to Congress
April 1, 2008 - September 30, 2008
Inspector General Act
The Inspector General Act of 1978, as amended, requires the Inspector General to (1) conduct and
supervise audits and investigations relating to programs and operations of the Agency; (2) provide
leadership and coordination, and make recommendations designed to (a) promote economy, efficiency,
and effectiveness; and (b) fully inform the Administrator and the Congress about problems and
deficiencies identified by the Office of Inspector General relating to Agency programs and operations.
Index of Reporting Requirements
Inspector General Act of 1978, as Amended
Requirement Subject
Pages
Section 4(a)(2) Review of legislation and regulations 35-37
Section 5(a)(1) Significant problems, abuses, and deficiencies 5-30
Section 5(a)(2) Significant recommendations for corrective action 5-26
Section 5(a)(3) Reports with corrective actions not completed 62
Section 5(a)(4) Matters referred to prosecutive authorities 27-30, 39, 43-44
Section 5(a)(5) Information or assistance refused None
Section 5(a)(6) List of reports issued 45-48
Section 5(a)(7) Summaries of significant reports 5-26
Section 5(a)(8) Audit, inspection, and evaluation reports - questioned costs 39-41, 44-48
Section 5(a)(9) Audit, inspection, and evaluation reports - funds to be put to better use 39-41, 44-48
Section 5(a)(10) Prior audit, inspection, and evaluation reports unresolved 40-41, 49-61
Section 5(a)(11) Significant revised management decisions None
Section 5(a)(12) Significant management decisions with which OIG disagreed None
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EPA OIG Semiannual Report to Congress
April 1, 2008 - September 30, 2008
OIG Management's Focus
EPA OIG Reported Fiscal Year 2008 Key Management Challenges
On July 2, 2008, we provided the U.S. Environmental Protection Agency (EPA)
Administrator with a list of key management challenges for Fiscal Year (FY) 2008. The
Office of Inspector General (OIG) defines management challenges as a lack of capability
derived from internal self-imposed constraints or, more likely, externally imposed
constraints that prevent EPA from reacting effectively to a changing environment. The
challenges, as listed below, are based primarily on our audit, inspection, evaluation, and
investigative work.
Threat and Risk Assessments: The Agency does not comprehensively assess
threats to human health and the environment across media to ensure EPA's
actions are planned, coordinated, designed, and budgeted to most efficiently and
effectively address environmental risks. The fragmentary quality of EPA's
approach continues because environmental laws often focus on single media or
threats.
EPA's Organization and Infrastructure: EPA maintains 204 offices and
laboratories in 144 locations with over 18,000 staff. With diminishing resources,
the autonomous nature of regional and local offices, and the growing pressure to
expand its role globally, EPA will be challenged to assess the efficiency and
effectiveness of its current structure to identify opportunities for consolidating
and reducing operating costs.
Performance Measurement: EPA must focus on the logic and design of its
measures for success and efficiency, along with data standards and consistent
definitions, to ensure that usable, accurate, timely, and meaningful information is
used to evaluate and manage EPA programs, operations, processes, and results.
Water and Wastewater Infrastructure: Drinking water and wastewater
treatment systems are wearing out, and it will take huge investments to replace,
repair, and construct facilities.
Meeting Homeland Security Requirements: EPA needs to implement a
strategy to effectively coordinate and address threats, including developing a
scenario to identify resource needs, internal and external coordination points, and
responsible and accountable entities.
Oversight of Delegations to States: Implementing EPA's programs,
enforcement of laws and regulations, and reporting on program performance has
to a large extent been delegated to States and tribes, with EPA retaining oversight
responsibility. However, inconsistent capacity and interpretation of
responsibility among State, local, and tribal entities limits accountability for and
compliance with environmental programs and laws.
Chesapeake Bay Program: After more than 20 years of effort by federal, State,
and local governments, Bay waters remain degraded and required nutrient and
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EPA OIG Semiannual Report to Congress April 1, 2008 - September 30, 2008
sediment reductions will not be met by the 2010 target. EPA needs to institute
management controls ensuring that actions to manage land development,
agricultural runoff, nutrient reduction technology, and air emissions are
implemented, and that consistent sources of funding are identified by EPA
partners.
Voluntary Programs - Update: EPA must ensure that applying voluntary
approaches and innovative or alternative practices to provide flexible,
collaborative, and market-driven solutions for measurable results are managed
using standards, consistent processes, and verifiable data, to ensure that programs
are efficiently and effectively providing intended and claimed environmental
benefits.
Agency Has Agreed to Make Improvements as a Result of OIG Work
During this reporting period, EPA agreed to take many actions as a result of OIG work.
The following actions relate to the OIG's two external goals; further details on each are
provided throughout this semiannual report.
To contribute to improved human health and environmental quality:
For seven New Jersey Superfund sites, EPA agreed to assume a lead role for
those sites where both New Jersey and EPA agree it would be beneficial.
EPA agreed to review $78 million in grants to Texas for the Colonias
Wastewater Treatment Assistance Program that has not been spent, and identify
specific projects for which those funds should be used.
EPA agreed to develop a strategy for achieving the long-term goal of the Indoor
Radon Abatement Act that considers using the authorities authorized by
Congress or explain its alternative strategy.
For Greenhouse Gas voluntary programs, EPA agreed to review emission
reduction cost analyses annually and update as needed.
To improve EPA's management, accountability, and program operations:
EPA agreed to reclassify $20 million in special funds for the Stringfellow
Superfund site in California for use at other sites, and may reclassify as much as
$27.8 million more.
EPA has already deobligated $1.3 million in brownfields grants more than
5 years old, and may deobligate up to $6.8 million more.
EPA may save up to $3.2 million in questioned costs under five grants to a
watersheds improvement organization because of unallowable outlays.
EPA is looking into savings of up to $2.5 million in Special Appropriation Act
Project funds for several grants.
Improvements resulting in potential monetary benefits result in more funds being available
to contribute to improved human health and environmental quality.
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EPA OIG Semiannual Report to Congress
April 1, 2008 - September 30, 2008
OIG Hiring Initiative Making Progress
In December 2007, Congress provided the EPA OIG with a needed but unanticipated
Continuing Resolution budget funding level that was above both the FY 2007 enacted
and FY 2008 President's Budget levels. In accordance with a congressional directive
pertaining to the Consolidated Appropriations Act for 2008, the OIG commenced a hiring
initiative to increase its staffing level to that of prior years, consistent with the available
funds.
Difficulties with the hiring process hindered the OIG's efforts to increase its staffing
level as quickly as anticipated. However, the OIG was able to hire 35 new employees
during FY 2008, and an additional 41 staffing actions were in various stages of the
recruitment and selection process at the end of the fiscal year.
Below is a summary of the OIG actual and projected resource levels/expenditures for
FYs 2000 though 2009.
Historical Budget and Manpower Summary
Fiscal Year
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
Enacted Budget
(after rescissions
where applicable)
$43,379,700
$45,493,700
$45,886,000
$48,425,200
$50,422,800
$50,542,400
$50,241,000
$50,459,000
$52,585,000
$52,585,000*
On-Board Staff
(as of October 1 )
340
351
354
348
363
365
350
326
290
304
Expenditures
(includes
carryover)
$39,384,100
$41,050,807
$45,238,608
$46,023,048
$52,212,862
$61,733,781
$49,583,584
$48,658,217
$52,231,690
$56,362,400**
* H.R. 2638, the Consolidated Security, Disaster Assistance, and Continuing
Appropriations Act, 2009
** Projected
Sources: OIG archives and analysis and EPA Integrated Financial Management System
The lag in the hiring process created a gap between funding and staffing levels. The OIG
partially compensated for the gap in specialized skills by contracting and entering into
interagency agreements for specialty evaluative services. Additionally, FY 2008 funds
planned for the unfulfilled staffing level were carried over into 2009. The OIG will use
these carryover funds, in addition to new FY 2009 funding, to support increased staffing
levels as much as possible.
Congressional Requests Addressed, Testimony Provided
As the culmination of various reviews stemming from a U.S. Senator's 2005 request for
information on the Chesapeake Bay watershed, we issued a summary report on the
challenges facing Bay partners (see page 6). Despite many noteworthy achievements, the
Bay remains degraded, and EPA should better report on these conditions to Congress and
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EPA OIG Semiannual Report to Congress April 1, 2008 - September 30, 2008
the community. The Bay program has fallen significantly short of its goals, and partners
need to make major changes if goals are to be met. Current efforts will not enable
partners to meet their goal of restoring the Bay by 2010. In particular, Bay partners need
to address uncontrolled land development, limited implementation of agricultural
conservation practices, and limited control over air emissions affecting water quality.
We also followed up on a September 2005 report on grants accountability that had been
conducted as a result of a request by the then Chairman of the House Committee on
Transportation and Infrastructure. We evaluated whether EPA held supervisors and their
project officers accountable for grants management responsibilities. We found that EPA
had implemented the corrective action plan in response to our prior report. Details are on
page 18.
On July 30, 2008, the Assistant Inspector General for Program Evaluation testified before
the House Transportation and Infrastructure Subcommittee on Water Resources and
Environment during a hearing on protecting and restoring the Chesapeake Bay. On
September 25, 2008, the Assistant Inspector General for Investigations testified before
the Senate Environment and Public Works Committee on the OIG's investigation of EPA
clean-up actions at the Libby, Montana, Superfund site. Details begin on page 31.
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EPA OIG Semiannual Report to Congress
April 1, 2008 - September 30, 2008
Significant OIG Activity
Helping to make air safe and healthy to breathe.
Exposure to Indoor Radon Continues to Grow
Nearly two decades after passage of the 1988 Indoor Radon Abatement Act,
exposure to indoor radon continues to grow. Efforts to reduce exposure through
mitigation or building with radon-resistant new construction have not kept pace.
Indoor residential exposure occurs when radon gas enters through cracks in floors, walls,
and construction joints, or gaps in foundations around pipes, wires, and pumps. Indoor
radon is the leading cause of lung cancer among non-smokers and the second leading cause
of lung cancer in America, according to EPA and the U.S. Surgeon General. According to
EPA, more than 20,000 Americans die from radon-related lung cancer every year.
As shown in the illustration, radon
can enter homes via many paths
(courtesy U.S. Geological Survey).
Of 6.7 million new single family detached homes built nationwide
between 2001 and 2005, only about 469,000 incorporated radon-
resistant features. Of 76.1 million existing single family homes in the
United States in 2005, only about 2.1 million had radon-reducing
features in place.
The Indoor Radon Abatement Act established the goal that indoor air
be as free of radon as outdoor air. Since 1988, EPA has administered
a voluntary program to reduce exposure to indoor radon by promoting
awareness, testing, installing radon mitigation systems in existing
homes, and using radon-resistant new construction techniques.
However, EPA's ability to achieve results with a voluntary program is
limited. EPA has not decided how to use all the authorities or tools
available to it to achieve the Act's goals. Also, EPA has not been
reporting program results in relation to homes at risk in its
performance reporting.
We recommended that EPA develop a strategy for achieving the long-term goal of the
Indoor Radon Abatement Act that considered using the authorities authorized by
Congress or explain its alternative strategy, which it agreed to do. We also recommended
that EPA identify limitations to meeting the goal to Congress. EPA agreed to share the
augmented strategy, including any limitations it may cite, with staff of the appropriate
congressional committees. Further, we recommended that EPA revise its performance
measuring data to include metrics that better measure the potential radon problem, which
it agreed to do. EPA also agreed to propose revisions on how it reports results for the
Indoor Radon Program in its Annual Performance and Accountability Report.
(Report No. 08-P-0174, More Action Needed to Protect Public from Indoor Radon Risks,
June 3, 2008 - Report Cost: $629,228)
-or details on an additional air issue, please refer to page 12, "Voluntary Greenhouse Gas
Reduction Programs Have Limited Potential."
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EPA OIG Semiannual Report to Congress
April 1, 2008 - September 30, 2008
Water
Helping to ensure that drinking water is safe and waterbodies are protected.
EPA Needs to Better Report Chesapeake Bay Challenges
Despite many noteworthy achievements by the Chesapeake Bay partners, the
Bay remains degraded, resulting in continuing threats to aquatic life and human
health. EPA should better report on these conditions to Congress and the
community.
The Chesapeake Bay is North America's largest and most biologically diverse estuary
and provides the area with economic and environmental benefits. We have already
published several reports that focused on specific areas and made recommendations, as a
result of a request from a U.S. Senator
from Maryland. This report
summarizes some key overall issues
that need the attention of the EPA
Administrator.
Through its reporting, EPA could
better advise Congress and the
Chesapeake Bay community that
(a) the Bay program is significantly
short of its goals, and (b) partners
need to make major changes if goals
are to be met. Current efforts will not
enable partners to meet their goal of
restoring the Bay by 2010. Further,
new challenges are emerging. Bay
partners need to address:
Sailing and fishing are popular recreational activities
in the Chesapeake Bay (photo courtesy Chesapeake
Bay Program).
uncontrolled land development
limited implementation of agricultural conservation practices
limited control over air emissions affecting Bay water quality
EPA does not have the resources, tools, or authorities to fully address all of these
challenges. Farm policies, local land development decisions, and individual lifestyles
have huge impacts on the amount of pollution being discharged to the Bay. We
recommended that the EPA Administrator improve reporting to Congress and the public,
develop a strategy to further engage local governments and watershed organizations in
efforts to clean up the Bay, and provide the Chesapeake Bay Program Office with the
opportunity to comment on any proposed rulemakings related to pertinent air issues.
EPA concurred with our recommendations.
(Report No. 08-P-0199, EPA Needs to Better Report Chesapeake Bay Challenges -
A Summary Report, July 14, 2008 - Report Cost: $253,615)
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EPA OIG Semiannual Report to Congress
April 1, 2008 - September 30, 2008
EPA Needs to Improve Oversight of Tribal Water Systems
Through a review of EPA records and independent OIG sample results, we
determined that selected tribal drinking water supplies generally met regulatory
requirements. However, internal control deficiencies existed in administering
EPA's oversight of tribal community water systems in two of the five regions we
reviewed.
Nano-filtration system at a tribal
drinking water facility (EPA OIG
photo).
EPA, rather than the States, has the responsibility for protecting human
health and the environment on tribal lands. Approximately 600 tribal
community water systems serve an estimated 622,000 people. We sought
to verify, through independently collected samples, that these tribal water
systems did not exceed drinking water regulatory limits. Of the
approximately 2,300 samples analyzed, only 7 were above the limits. To
varying degrees, tribal drinking water records in four of the five regions we
reviewed were incomplete due to a failure to maintain oversight of system
operations and/or poor records management.
We recommended that EPA establish standard operating procedures in
coordination with regional offices, direct regions to issue monitoring and
reporting violations, and take appropriate enforcement action when
necessary. The Agency agreed with our recommendations.
(Report No. 08-P-0266, EPA Assisting Tribal Water Systems but Needs to
Improve Oversight, September 16, 2008 - Report Cost: $830,903)
For details on additional water issues, please refer to:
Page 16, "Millions of Federal Dollars Remain for Colonias Projects."
Page 21, "Reviews of Special Appropriation Act Project Grants Note Potential Savings."
Page 31, "Assistant Inspector General Testifies on EPA's Role in Restoring the Chesapeake Bay."
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EPA OIG Semiannual Report to Congress
April 1, 2008 - September 30, 2008
Superfund/Land
Improving waste management and clean-up.
EPA Can Reclassify or Transfer up to $47.8 Million from
Stringfellow Site
By FY 2010, EPA Region 9 could reclassify, or transfer to the Hazardous
Substance Superfund Trust Fund, up to $47.8 million in special account funds for
the Stringfellow Superfund site, located near Glen Avon, California. This would
potentially allow $47.8 million to be available for better use in Region 9's
Superfund program or elsewhere in the Nation.
EPA retains funds received in settlements in site-specific accounts, called "special
accounts." The OIG has been evaluating EPA's use of special accounts that had high
available balances or were at least 10 years old. The special accounts for the Stringfellow
Superfund site had a high available balance of
. - $117.8 million.
We recommended that the Region 9 Administrator
reclassify or transfer to the Superfund Trust Fund, as
appropriate, $47.8 million of the Stringfellow special
accounts. In response to our draft report, EPA agreed
to reclassify $20 million by the end of FY 2008. The
Agency stated that the remaining amount (up to
$27.8 million) was a "buffer for unknowns," some
amount of which will be needed for oversight costs,
and indicated that it could potentially reclassify or
transfer this remaining amount to the Superfund Trust
Fund (plus any earned interest) by the end of FY 2010.
The northern former disposal area in Zone 1 for
the Stringfellow Superfund site (EPA photo).
The $70 million remaining in the accounts (out of $117.8 million) are to cover potential EPA
clean-up costs if the responsible party (the State of California) is unable to pay. In a future
report, the OIG plans to address EPA's management of funds held back for these purposes.
(Report No. 08-P-0196, Making Better Use of Stringfellow Superfund Special Accounts,
July 9, 2008 - Report cost part of overall report to follow)
Improved Controls Needed to Reduce Superfund Backlogs
Neither EPA nor the New Jersey Department of Environmental Protection took
actions needed to ensure progress at seven New Jersey-led Superfund site
clean-ups listed on the National Priorities List for over 20 years.
The Office of Management and Budget (OMB) had asked us to evaluate EPA's
management of the backlog of Superfund sites. We focused on New Jersey because it
had 38 of the 144 non-federal sites on the National Priorities List as of February 2007
that were over 20 years old but had still not reached construction completion. That was
26 percent of the sites, more than any other State.
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EPA OIG Semiannual Report to Congress April 1, 2008 - September 30, 2008
Delays at the New Jersey sites occurred primarily because EPA Region 2 and New Jersey
did not use available authorities to prevent delays and implement internal controls.
Region 2 and New Jersey did not implement agreements on clean-up milestones, Agency
responsibilities, and enforcement actions. Continued clean-up delays will result in
increased costs, prevent appropriate land reuse and redevelopment, and perpetuate
concern about the risks associated with living near these sites.
For the seven sites reviewed, various interim clean-up actions had been taken to address
the impact of site contaminants on human health. However, the site progress profiles on
EPA's public Website did not include these interim actions as part of the status of clean-
up progress. As a result, progress being made on sites may not be readily communicated
to the public.
We recommended that EPA Region 2 coordinate with New Jersey officials cleaning up
specified sites more than 20 years old. Region 2 should assume lead status from New
Jersey for those sites where both agencies agree it would be beneficial. We also
recommended that EPA improve Internet site profiles as needed. EPA agreed with all of
our recommendations.
(Report No. 08-P-0169, Improved Controls Would Reduce Superfiind Backlogs, June 2,
2008 - Report Cost: $986,320)
Seven New Jersey National Priorities List Sites Reviewed Over 20 Year Old
Brick Township Landfill, Brick Township, Ocean County
Evor Phillips Leasing Company, Old Bridge Township, Middlesex County
Hercules, Inc., Gibbstown, Gloucester County
American Cyanamid, Bridgewater Township, Somerset County
Jones Industrial Services Landfill, Inc., South Brunswick, Middlesex County
Universal Oil Products, East Rutherford, Bergen County
Ventron/Velsicol, Wood Ridge Borough, Bergen County
Source: EPA OIG analysis
EPA Needs to Track Compliance with Superfund Clean-up Requirements
EPA lacks the internal controls necessary to monitor compliance with Superfund
enforcement instruments nationally.
As of September 30, 2007, Superfund had almost 3,400 active enforcement instruments
to ensure clean-ups at National Priorities List sites. The instruments are authorities to
compel responsible parties to conduct and pay for Superfund clean-ups; they include
settlement agreements and unilateral administrative orders.
EPA does not nationally compile or track data on substantial noncompliance based on the
enforcement instruments. In 2000, EPA acknowledged it needed to improve its
enforcement data and wrote a report on the subject, but has yet to implement its own
recommendation for regions to improve data. As a result, the Agency lacks the internal
controls necessary to monitor compliance with Superfund instruments nationally.
We recommended that EPA track and monitor substantial noncompliance by using and
modifying, as appropriate, the existing Superfund information system. We also
recommended that EPA establish enforceable response actions to address contamination
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EPA OIG Semiannual Report to Congress
April 1, 2008 - September 30, 2008
from the Muskego Landfill Site, in Waukesha County, Wisconsin. EPA agreed with our
recommendations and proposed responsive actions.
(Report No. 08-P-0141, EPA Needs to Track Compliance with Superfund Cleanup
Requirements, April 28, 2008 - Report Cost: $326,997)
Superfund Site Deletions Should Undergo Quality Assurance Review
As of September 2007, EPA had deleted 322 sites from the Superfund National
Priorities List. However, of the eight sites we reviewed, EPA's documentation for
deleting three of those sites was not consistent with Agency guidance.
Generally, EPA may delete a site
from the National Priorities List
either when all appropriate
responses under the
Comprehensive Environmental
Response, Compensation, and
Liability Act have been
implemented or a response under
the Act is not appropriate.
EPA's Deletion Process
Complete final close-out report for site
Prepare draft notice of intent to delete
Obtain State concurrence for deletion
Compile the deletion docket
Publish notice of intent to delete and provide
30-day public comment period
Prepare and place final responsiveness summary
in deletion docket and public repositories
Publish notice of deletion
Source: Office of Solid Waste and Emergency
Response Directive 9320.2-09A-P, January 2000,
Close Out Procedures for National Priority Sites
For three of the eight sites
reviewed, documentation on the
Agency's decision to delete the
sites was not consistent with
EPA guidance. Two of these sites also were not supported by data and analysis.
Therefore, EPA did not ensure clean-up activities and goals were complete and remedies
were fully protecting human health and the environment before deleting those two sites.
EPA has conducted limited national oversight of deletion decisions made by EPA's
regional offices. Not all regions submitted required information, so when decisions were
made EPA did not verify that sites met criteria.
We recommended that EPA implement a national quality assurance process that ensures
deletion decisions meet criteria and are supported. EPA agreed with our
recommendations.
(Report No. 08-P-0235, EPA Decisions to Delete Superfund Sites Should Undergo
Quality Assurance Review, August 20, 2008 - Report Cost: $809,869)
details on additional Superfund/land issues, please refer to:
Page 14, "Follow-up at Escambia Superfund Site Found Most Recommendations Implemented."
Page 14, "Corrective Actions Generally Implemented at Stauffer Superfund Site."
Page 17, "EPA Needs to Continue Reducing Unliquidated Obligations in Brownfields Grants."
Page 23, "Corrective Actions Not Complete for Undistributed Superfund Site Costs."
Page 28, "Pleas Entered in Bid Rigging Case."
Page 32, "Assistant Inspector General Testifies on Investigation of EPA's Clean-up of
Libby, Montana, Superfund Site."
10
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EPA OIG Semiannual Report to Congress
April 1, 2008 - September 30, 2008
Enforcement
Helping to improve compliance with environmental requirements.
Strategic Planning for Priority Enforcement Areas Initiated,
but Key Elements Missing
EPA has instituted a process for strategic planning in its national enforcement
priority areas. However, the plans we reviewed were missing key elements to
monitor progress and accomplishments and efficiently utilize Agency resources.
EPA's Office of Enforcement and Compliance Assurance
(OECA) focuses on core program activities and a limited number
of national priorities. Through the national priorities, OECA
directs its resources to significant environmental problems where
patterns of noncompliance have been established and a direct
federal role is needed.
OECA has developed strategic planning guidance and a strategy
template to facilitate continual reviewing and improving of the
strategies. The FYs 2008-2010 strategic plans we reviewed - for
air toxics, combined sewer overflows, and mineral processing -
contain many of the elements required in a complete plan.
However, strategies for all three lack a full range of measures to
monitor progress and achievements. Two strategies lack detailed
exit plans. Also, the combined sewer overflow strategy does not
address the States' key roles in attaining the strategy's overall
goal. The absence of these elements hinders OECA from
monitoring progress and achieving desired results in a timely and
efficient manner.
We recommended that EPA issue a policy that requires strategy
documents for the priority areas to include the key elements, and
EPA concurred. We also recommended that EPA develop a cost-
effective methodology for measuring resource inputs in the
national priorities, but EPA did not agree with that
recommendation.
(Report No. 08-P-0278, EPA Has Initiated Strategic Planning for
Priority Enforcement Areas, but Key Elements Still Needed,
September 25, 2008 - Report Cost: $544,912)
Examples of the three enforcement
priority areas reviewed, from top:
an industrial plant emitting air toxics;
a combined sewer overflow outlet;
and a cement plant engaged in
mineral processing (EPA photos).
=or details on additional enforcement issues, please refer to:
Page 7, "EPA Needs to Improve Oversight of Tribal Water Systems."
Page 9, "EPA Needs to Track Compliance with Superfund Clean-up Requirements."
11
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EPA OIG Semiannual Report to Congress
April 1, 2008 - September 30, 2008
Cross-Media
Evaluating non-traditional approaches to protecting the
environment and challenges that cut across programs.
Voluntary Greenhouse Gas Reduction Programs Have
Limited Potential
The ability of voluntary greenhouse gas reduction programs to reduce emissions
is limited; reporting and data limits impede assessing these programs.
EPA has initiated greenhouse gas voluntary programs to help reduce future greenhouse
gas emissions. We found that the greatest barriers to participating in these programs
were the perceived emission reduction costs and reporting requirements. Also, it is
unlikely that these programs can reduce more than 19 percent of the projected 2010
greenhouse gas emissions for their industry sectors.
Of the 11 programs we reviewed, 8 showed weaknesses in their data collection and
reporting systems. None of the programs' memoranda of understanding establish
consequences for failure to report, and generally provided little assurance that firms are
actively participating in the program.
We recommended that EPA review emission reduction cost analyses annually. For
programs that recruit and enroll participants, EPA should adopt written partnership
agreements requiring stronger data quality provisions. For programs that do not recruit
and enroll participants, EPA should develop a policy or procedure that specifically
identifies how these programs link their reported outcomes to program efforts. EPA
concurred with most of the recommendations.
(Report No. 08-P-0206, Voluntary Greenhouse Gas Reduction Programs Have Limited
Potential, July 23, 2008 - Report Cost: $445,318)
Voluntary Greenhouse Gas Programs Reviewed
AgSTAR
Coalbed Methane Outreach Program
Coal Combustion Partnership Program
Hydrofluorocarbon-23 Program
Landfill Methane Outreach Program
Natural Gas STAR
Perfluorocarbon Reduction/Climate Partnership for the Semiconductor Industry
Sulfur Hexafluoride Emission Reduction Program for the Electrical Power Systems
Sulfur Hexafluoride Emission Reduction Program for the Magnesium Industry
Voluntary Aluminum Industrial Partnership
WasteWise
Source: Websites of EPA Partnership Programs
12
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EPA OIG Semiannual Report to Congress
April 1, 2008 - September 30, 2008
Border 2012 Program Needs to Improve Program Management
The current organizational structure of the Border 2012 Program allows it to
achieve a collaborative relationship at the U.S.-Mexico border and address
environmental issues. However, management controls do not ensure that project
and program results are documented or that Border 2012 goals are achieved.
The Border 2012 Program emphasizes a bottom-up, regional approach to address
environmental issues at the U.S.-Mexico border. The program was launched in 2002 as a
10-year joint effort to improve the environment and protect the health of the nearly
12 million people living along the more than 2,000-mile border.
We found that Border 2012 lacks a systematic roadmap that defines the relationships
between resources, activities, and intended outcomes. We also found a lack of
management oversight regarding the program process toward meeting goals and
objectives. Current performance measures focus on outputs rather than outcomes, and
several measures were not assessable.
We recommended that the Agency develop a strategic plan, issue guidance to better
support program results, improve performance measures, and develop criteria for
determining what constitutes successful completion of program goals. The Agency
concurred with all our recommendations.
(Report No. 08-P-0245, Border 2012 Program Needs to Improve Program Management
to Ensure Results, September 3, 2008 - Report Cost: $442,794)
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EPA OIG Semiannual Report to Congress
April 1, 2008 - September 30, 2008
Public Liaison and
Special Reviews
Addressing specific concerns of the public.
Follow-up at Escambia Superfund Site Found
Most Recommendations Implemented
EPA Region 4 implemented all but one of our prior report recommendations at
the Escambia Treating Company Superfund site in Pensacola, Florida.
Our September 2004 report noted various areas needing improving at the Escambia site,
an abandoned wood preserving facility where various health risks were identified and
from which about 358 households were permanently relocated. We had made several
recommendations in that prior report.
In our follow-up review, we found that EPA and the U.S. Army Corps of Engineers
monitored the housing inspection process, updated the Community Involvement Plan,
conducted public availability sessions with the
public, and provided the administrative record
compact discs (CDs) to the site repository. Overall,
residents, local governments, and businesses
indicated Region 4 openly communicated and
provided timely information regarding the site.
The contaminated soil mound contained within a high
density polyethylene cap at the Escambia Treating
Company Superfund site (EPA OIG photo).
Although Region 4 indicated it had provided
electronic files containing the site administrative
record to Citizens Against Toxic Exposure (GATE),
an environmental group, CATE's current president
told us during the follow-up review that the
organization did not receive any CDs from the
Region. The Region was unable to locate any
evidence (e.g., a copy of a transmittal letter) that it
had submitted the CDs to GATE. We recommended that EPA Region 4 provide copies
of the updated administrative record CDs to GATE; the Region concurred and indicated it
provided the CDs on May 8, 2008.
(Report No. 08-P-0200, Follow-up Review on Progress at Escambia Treating Company
Superfund Site, Pensacola, Florida, July 14, 2008 - Report Cost: $162,970)
Corrective Actions Generally Implemented at Stauffer Superfund Site
EPA Region 4 generally made corrective actions in response to a 2004 EPA OIG
report on the Stauffer Chemical Company Superfund Site, Tarpon Spring, Florida.
The plant was used from 1947 to 1981 to process phosphorous. EPA approved leaving
the contaminants at the site after consolidating and solidifying them and installing a cap.
In June 2004, the OIG identified actions needed to allay public concerns about clean-up
actions proposed for the site.
14
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EPA OIG Semiannual Report to Congress
April 1, 2008 - September 30, 2008
Under a consent decree, Stauffer is preparing a design for EPA-approved clean-up actions.
In December 2007, the design was 30-percent complete. Region 4 had revised the
community involvement plan for the site to include some community activity during the
^^^^^^^^^^^^^^^^^^^^^ design phase, and these activities were being
performed. Also, Region 4 is examining whether
karst (limestone formation) was present at the
clean-up site and could affect the site.
We did not make any recommendations for
further corrective actions.
(Report No. 08-P-0264, Corrective Actions Were
Generally Implemented at Stauffer Chemical
Company Superfund Site, Tarpon Springs,
Florida, September 16, 2008 - Report Cost:
$165,151)
The South Parcel of the Stauffer Chemical Company
Superfund Site (EPA OIG photo).
15
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EPA OIG Semiannual Report to Congress
April 1, 2008 - September 30, 2008
Grants
Improving EPA's use of assistance agreements.
Millions of Federal Dollars Remain for Colonias Projects
Nearly 10 years after EPA Region 6 awarded the last Colonias Wastewater
Treatment Assistance Program (CWTAP) grant to the Texas Water Development
Board, $78 million still has not been spent.
A colonia is a residential area along the border that may lack some of the most basic
living necessities, such as drinking water and sewer systems, electricity, paved roads, and
safe and sanitary housing. These conditions can pose potentially serious consequences
for public health and quality of life.
We conducted an audit of the CWTAP because of a large unliquidated obligation balance
in the program almost a decade after the last grant had been awarded. EPA Region 6 had
awarded five assistance agreements (grants) totaling $300 million to the Texas Water
Development Board under
CWTAP between FYs 1993
through 1999. The grant funds,
combined with State funds, were
to be used to construct water
infrastructure projects in colonias
along the border with Mexico.
As of September 2007,
24 colonias projects were
completed and operating. When
the remaining 17 projects are
completed, more than 150,000
residents will benefit. However,
if Region 6 does not improve its
oversight of the program, the
funds will probably not be fully
spent by the current CWTAP
grant fund drawdown projection of 2010. Every delay in disbursing CWTAP funds
reduces the purchasing power of the grant dollars and delays improvements.
We recommended that the Regional Administrator for Region 6 amend workplans and/or
operating agreements for open CWTAP grants to include specific projects, schedules, and
dollar amounts. We also recommended developing a policy that specifies a process for
taking corrective actions when projects are delayed. EPA concurred with our
recommendations.
(Report No. 08-P-0184, Millions of Federal Dollars Remain for Colonias Projects,
June 23, 2008 - Report Cost: $90,169)
'dl"*?.^7- _
Construction of a wastewater treatment plant in Tornillo,
Texas, funded through the Colonias Wastewater
Treatment Assistance Program (EPA photo).
16
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EPA OIG Semiannual Report to Congress
April 1, 2008 - September 30, 2008
Incurred Outlays of $3.2 Million by Canaan Valley Institute
Questioned
We questioned $3.2 million reported by the Canaan Valley Institute, Inc.,
because of unallowable outlays for indirect, contractual, and in-kind costs.
EPA awarded five cooperative agreements to the Institute, headquartered in Thomas,
West Virginia, to provide enhancements to the Mid-Atlantic Highland environment and
economic sustainability, and continued support for the Highland action plan. The
recipient works to improve watersheds in Maryland, Pennsylvania, Virginia, and West
Virginia.
We questioned $3,235,927 of the $6,686,424 in reported net outlays because the recipient
reported unallowable outlays for indirect, contractual, and in-kind costs. For example,
the recipient claimed indirect costs without approved indirect rates, and did not credit all
program income back to the agreements.
We recommended that EPA recover questioned outlays of $3,218,661 unless the recipient
provides sufficient documentation to support the costs. EPA should also require the
recipient to prepare and submit its indirect cost rate proposals for negotiation. The
recipient should also credit $17,266 in program income to the agreements. The recipient
agreed with some, but not all, of our recommendations.
(Report No. 08-4-0156, Canaan Valley Institute, Inc., Incurred Cost Audit of Five EPA
Cooperative Agreements, May 19, 2008 - Report Cost: $369,957)
EPA Needs to Continue Reducing Unliquidated Obligations in
Brownfields Grants
EPA recently emphasized the need to close old brownfields grants, and
decreased unliquidated obligations from about $29.8 million in November 2007 to
$20.9 million in March 2008. Nonetheless, 48 grants more than 5 years old were
still open as of March 2008, and funds were sitting idle.
A brownfield is an abandoned property that parties would
like to redevelop or reuse but the property might be
contaminated by hazardous substances or pollutants. EPA
provides funds to local governments to clean up and reuse
brownfields.
Of the almost $11 million of unliquidated funds reviewed
in Regions 2 and 4 for brownfields projects, the regions
deobligated $1.3 million (almost 12 percent) during our
audit. Up to an additional $6.8 million could be available
for deobligation for the 21 grants that had ended or were
scheduled to end by September 30, 2008. Deobligated
funds from these grants can be put back into the national
Superfund account and thus be used for other projects.
Construction taking place at a Seattle public
hospital that is a cleaned-up brownfields site
(EPA OIG photo).
17
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EPA OIG Semiannual Report to Congress April 1, 2008 - September 30, 2008
EPA Headquarters has not provided specific guidelines on when grants should be
terminated, nor has it defined inadequate progress for grant performance. Regions have
generally allowed time extensions when grantees requested them.
We recommended that EPA Headquarters establish a process for reviewing
nonperforming grants, and develop procedures for terminating and deobligating funds
from those grants. We also recommended that regions deobligate the remaining funds
noted. EPA agreed with our recommendations and is establishing needed procedures.
(Report No. 08-P-0265, EPA Should Continue Efforts to Reduce Unliquidated
Obligations in Brownfields Pilot Grants, September 16, 2008 - Report Cost: $229,829)
EPA Actions Should Lead to Improved Grants Accountability
EPA implemented the corrective action plan it prepared in response to a
September 2005 OIG report on grants accountability.
In February 2005, the Chairman of the House Committee on Transportation and
Infrastructure asked us to evaluate whether EPA held supervisors and their project
officers accountable for grants management responsibilities. During the course of that
audit, we found that EPA managers were not holding personnel accountable.
We conducted this follow-up review in 2008 to determine whether EPA followed through
in completing the corrective action plan steps presented in response to our 2005 audit
report and, ultimately, whether EPA addressed the recommendations. We found that:
EPA established a process to measure performance,
Project officers and supervisors reported discussing grants management during
performance evaluations,
EPA communicated weaknesses identified during management reviews to
appropriate project officers and supervisors, and
EPA tracked recommendations in the management audit tracking system.
These actions should lead to improved grants management accountability. Our follow-up
audit did not contain any recommendations.
(Report No. 08-P-0276, EPA Actions Should Lead to Improved Grants Accountability,
September 24, 2008 - Report Cost: $200,145)
Region 8 Needs to Better Track Oglala Sioux Tribe Corrective Actions
EPA Region 8 continues to take actions to resolve the internal control findings in
single audit reports of the Oglala Sioux Tribe. However, the Region did not
monitor implementation of the corrective actions in the Agency's tracking system
until all corrective actions were completed.
The OIG is increasing its focus on whether audit report recommendations are being
implemented. In this case, we looked at whether the recommendations in the FYs 2000-
2003 single audit reports for the Oglala Sioux Tribe had been implemented. The
FY 2003 single audit report listed 43 repeat findings that remained unresolved since
18
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EPA OIG Semiannual Report to Congress April 1, 2008 - September 30, 2008
2000. The OIG had questioned $2.5 million that EPA awarded to the Tribe during the
audited time frame.
Region 8 identified the Tribe as a high risk grantee, requested a corrective action plan,
and reviewed accounting documentation. However, the Region did not monitor the
corrective actions in the Agency's Management Audit Tracking System until all actions
were completed. Thus, the Agency did not accurately report on the status of
unimplemented actions.
Region 8 did not obtain sufficient documentation to support resolving $2.5 million in
questioned costs. The documentation for resolving the questioned costs was not from the
Tribe's official accounting system and did not reconcile to the costs claimed. Region 8
did not resolve these issues before concluding that the Tribe incurred the costs. Without
sufficient documentation to support resolving questioned costs, the Region cannot ensure
the costs were allowable under the EPA grants.
Region 8 did not agree with our recommendation that the corrective actions needed to be
tracked in the Management Audit Tracking System and believes it took sufficient action
to address questioned costs. In the future, Region 8 needs to ensure costs are fully
supported before making its final determination.
(Report No. 08-P-0213, Oglala Sioux Single Audits - Corrective Actions Taken But
Improvements Needed in Resolving Costs, July 28, 2008 - Report Cost: $82,955)
Better Disclosure of Indirect Costs Needed for National Caucus
and Center on Black Aged
The National Caucus and Center on Black Aged, Inc., which received eight
cooperative agreements from EPA to provide employment to senior individuals,
did not clearly disclose its allocations in indirect cost proposals.
The recipient's Quarterly Financial Status Reports, as of September 30, 2007, presented
fairly, in all material respects, the allowable outlays incurred in accordance with the
terms and conditions of the agreements and applicable laws and regulations. We found,
however, that the recipient did not clearly disclose its allocation methods in its indirect
cost proposals. The recipient also charged employee leave costs to grants
disproportionately to the amount of time employees spent on each assistance agreement.
We recommended that the Center revise its indirect cost proposals to clearly explain the
process used to allocate costs to its agreements, have the revised proposals approved by
its cognizant federal agency, and use a more equitable method for allocating employee
paid absences to agreements. The recipient agreed with our recommendations.
(Report No. 08-1-0277, National Caucus and Center on Black Aged, Inc., Incurred Cost
Audit of Eight EPA Cooperative Agreements, September 25, 2008 - Report Cost: $122,954)
For details on additional grants issues, please refer to:
Page 21, "Reviews of Special Appropriation Act Project Grants Note Potential Savings."
Page 30, "Innovative Techniques Can be Used for State Monitoring of Revolving Funds."
19
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EPA OIG Semiannual Report to Congress
April 1, 2008 - September 30, 2008
Contracts
Improving EPA's use of contracts.
EPA Can Improve Awarding of Noncompetitive Contracts
While EPA's most recent competition report made several recommendations to
strengthen EPA's competition practices, additional measures would help to
further improve compliance with the Federal Acquisition Regulation and EPA
policy.
One of the goals of federal contracting is to promote competition when buying goods and
services. In limited circumstances, however, federal agencies are authorized to award
contracts without providing for full and open competition. The Federal Acquisition
Regulation has established specific procedures for agencies to follow under these
circumstances.
We found Justifications for Other than Full and Open Competition that were not
approved at the appropriate level. Further, 8 of the 15 justifications we reviewed were
not prepared according to federal requirements. These conditions occurred because either
EPA did not have effective internal controls or existing controls were not followed.
We recommended several ways to improve the process, and EPA agreed with our
recommendations and provided adequate corrective action plans.
(Report No. 08-P-0186, EPA Can Improve the Awarding of Noncompetitive Contracts,
June 30, 2008 - Report Cost: $313,813)
=or details on additional contracts issues, please refer to page 22, "Labor and Subcontra
Cost Verification Reviews Conducted."
20
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EPA OIG Semiannual Report to Congress
April 1, 2008 - September 30, 2008
Forensic Audits
Identifying fraud, waste, and abuse in grants and contracts.
Reviews of Special Appropriation Act Project Grants Note
Potential Savings
We initiated reviews of costs claimed under Special Appropriation Act Project
grants, and noted various instances of ineligible costs claimed.
Since 1992, EPA has awarded over 5,000 Special Appropriation Act Project grants,
totaling over $5 billion, based on congressional earmarks. EPA awarded these grants to
State and local governments and quasi-governmental agencies (such as water
improvement districts) to assist in planning, designing, and constructing wastewater and
drinking water facilities.
Starting in FY 2007, we began reviewing selected Special Appropriation Act Project grants
awarded in Regions 2, 3, 4, 5, 8, 9, and 10. To date, we have identified $6,009,967 in
ineligible and questioned costs claimed that can be recovered, including $2,553,690
identified in reports published during the semiannual reporting period ending
September 30, 2008. We identified the following during the latest semiannual reporting
period.
The Village of Wellsville, Ohio, did not meet federal requirements for financial
management. In particular, the grantee did not have support for required
matching costs and received grant funds it never expended. The grantee also
made two improper procurements for engineering services, and did not maintain
acceptable procurement or contract administration systems. We recommended
that EPA Region 5 recover $1,241,591 in questioned costs, require the re-bidding
of two engineering contracts, and classify the Village as a high-risk grantee until
needed improvements are made. (Report No. 08-2-0204, Village of Wellsville,
Ohio - Ineligible Costs Claimed Under EPA Grant XP9 7582801, July 21, 2008 -
Report Cost: $134,457)
Final clarifiers and influent baffles that
increase the capacity of the Passaic Valley
Sewerage Commissioners plant in Newark,
New Jersey (EPA OIG photo).
The Passaic Valley (New Jersey) Sewerage
Commissioners claimed $2,385,634 for pre-award
costs that were incurred prior to the grant award and
thus were unallowable under the grant administrative
conditions and OMB Circular A-87. We
recommended that EPA Region 2 recover the
$1,312,099 federal share of the unallowable pre-award
costs. (Report No. 08-2-0226, Passaic Valley
Sewerage Commissioners - Unallowable Costs
Claimed Under EPA GrantXP98237601, August 6,
2008 - Report Cost: $69,623)
We plan to continue auditing Special Appropriation Act
Project grants and will include Region 6 grants in FY 2009.
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EPA OIG Semiannual Report to Congress April 1, 2008 - September 30, 2008
Labor and Subcontract Cost Verification Reviews Conducted
During this semiannual reporting period, we conducted labor and subcontract
cost verification reviews of small- and medium-sized contractors awarded cost
reimbursable EPA contracts, to ensure that no overbillings for labor occurred.
EPA accomplishes a large part of its mission through contracts. In FY 2007, EPA
obligated over $1.2 billion to contracts. Past audits, such as our audit of Hurricane
Katrina expenditures, have shown that oversight of EPA billings varies from region to
region, office to office, and even contract to contract. Lack of consistent oversight
presents potential risks regarding the costs being billed by contractors.
Details on several of our reviews conducted this semiannual reporting period follow.
Superfund Technical Assistance and Response Team Contractor: Based on
Agency concerns related to questionable labor staffing and charging practices of
one of its Superfund Technical Assistance and Response Team contractors, we
conducted a labor and subcontract cost verification review. We found that:
S The contractor improperly billed for labor costs of employees who did
not meet the minimum contract requirements.
S No subcontractor met the minimum contract requirements for education
and training.
^ The contractor billed for employees who were not approved at the time
the labor costs were incurred.
^ The contractor improperly billed for employees who did not complete
required Basic Incident Command System Level 200 training.
Although our review only covered 1 year of the 5-year contract, we found the
Agency was billed $440,000 in ineligible labor and subcontract costs.
Small-business Set-aside Contract: For a 2005 EPA small-business set-aside
contract, we found that labor charges billed under the contract were in
accordance with federal laws, regulations, and the terms and conditions of the
contract. However, we found that the prime contractor's and subcontractor's
relationship under the contract may have violated the Small Business
Administration's affiliation criteria. As a result, the contract may have been
awarded to a business concern that did not meet the size standard set for the
procurement. We recommended the Agency file a size protest with the Small
Business Administration.
Legal Services Contract: We reviewed 2007 labor costs associated with an
EPA legal services contract that had a history of suspended labor costs. We
found that labor and subcontract charges were adequately supported, and
company policies and procedures for charging labor costs were consistently
followed. However, we found that one employee inappropriately charged an
incorrect labor category, resulting in an overpayment exceeding $2,000. The
contractor issued EPA a credit for the overpaid funds.
22
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EPA OIG Semiannual Report to Congress
April 1, 2008 - September 30, 2008
Financial Management
Improving the Agency's financial management.
Pesticide Funds' 2007 Financial Statements Earn
Unqualified Opinions
We rendered unqualified opinions on the FY 2007 financial statements for two
funds used for managing pesticide fees.
The Pesticides Reregistration and Expedited Processing Fund (known as the FIFRA fund)
is used to deposit fees collected to expedite pesticide reregistration. The Pesticide
Registration Fund (known as the PRIA fund) was created in March 2004 to expedite new
registrations for certain pesticides in exchange for registration fees.
In addition to providing a clean opinion for both funds, we did not identify any material
internal control weaknesses. However, we noted one significant deficiency in internal
controls for the FIFRA fund. The Office of Pesticide Programs was unable to provide
reliable information on accomplishments for reregistration and amendment actions under
FIFRA Performance Measure Two because it did not have effective controls to ensure
data accuracy. EPA is required to annually report on its pesticide performance measures
and goals.
We recommended that EPA review the entire universe of reregistration and amendment
actions claimed in FY 2007. Further, we recommended strengthening internal controls
over entering, reviewing, and correcting information in the Office of Pesticide Programs
Information Network to reduce the risk of data entry errors. We also recommended that
EPA disclose in the Federal Register Notice that the FY 2007 accomplishments are
inaccurate if they have not been corrected. Officials agreed with our recommendations
and began corrective actions.
We did not identify any noncompliances that would result in a material misstatement to
the audited financial statements.
(Report No. 08-1-0194, Fiscal Year 2007 and 2006 Financial Statements for the
Pesticides Reregistration and Expedited Processing Fund, July 8, 2008 - Report Cost:
$225,239; and Report No. 08-1-0149, Fiscal Year 2007 and 2006 Financial Statements
for the Pesticide Registration Fund, May 5, 2008 - Report Cost: $163,278)
Corrective Actions Not Complete for Undistributed Superfund
Site Costs
EPA initiated some corrective actions in response to our prior report on
undistributed Superfund site costs, but did not complete them. Also, EPA did not
maintain accurate information in the Management Audit Tracking System.
Our July 2006 report noted that EPA did not timely redistribute Superfund payments
from a general site identifier to specific sites. When Superfund costs are not redistributed
appropriately from a general site identifier to a specific site identifier, these costs may not
23
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EPA OIG Semiannual Report to Congress April 1, 2008 - September 30, 2008
be considered in settlement negotiations and oversight billings, and thus may not be
recovered from responsible parties for other uses.
Management control weaknesses contributed to a breakdown in the audit follow-up
process. EPA did not document formal work assignments for audit follow-up and
maintain accountability. EPA did not consistently monitor audit follow-up activities,
communicate follow-up status among program offices and obtain follow-up agreements,
and document work completion. Because EPA did not complete the corrective actions,
its financial management and environmental protection efforts could be impacted.
We recommended that EPA make formal work assignments, document the assignments,
hold assignees accountable, and monitor audit follow-up activity. Also, EPA should
redistribute $1.8 million in additional interagency agreement costs recorded after May 12,
2006, and redistribute $2.8 million of cooperative agreement costs to the correct general
and site-specific identifiers. EPA agreed with all our recommendations.
(Report No. 08-P-0236, Follow-up on Audit of Undistributed Site Costs Finds Corrective
Actions Not Complete, August 25, 2008 - Report Cost: $107,088)
24
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EPA OIG Semiannual Report to Congress
April 1, 2008 - September 30, 2008
Information Resources
Management
Helping the Agency maintain its
systems and data.
EPASS Would Benefit from Improved Project Management
EPA has processes to adequately justify costs of projects identified in its
information technology investments portfolio. However, the lack of key project
management practices prevents it from achieving many projected milestone and
budget estimates.
In particular, EPA did not require the EPA Personnel Access and Security System
(EPASS) contractor to follow Agency procedures for system development. EPASS did
not have a Project Manager authorized to oversee the contractor's work. EPA also paid
for invoices that contained contractor labor overcharges.
Had EPA implemented processes to mitigate many of the identified system development
weaknesses, it would have been better able to anticipate and possibly avoid most of the
additional $983,216 in EPASS costs. Further, had EPA implemented formal review
procedures for contractor invoices, it would have prevented paying an estimated $75,276
in over-billed contractor labor charges.
We recommended that EPA develop and maintain an EPASS System Management Plan
that includes the required Change Management and required information security
documents, appoint a certified EPASS Project Manager with authority to oversee
contractor work, and ensure EPA collects overpaid amounts from the contractor. The
Agency indicated that it has taken actions to address many of our recommendations, but
we believe the actions taken do not adequately address our concerns.
(Report No. 08-P-0271, EPA Personnel Access and Security System Would Benefit from
Improved Project Management to Control Costs and the Timeliness of Deliver able s,
September 22, 2008 - Report Cost: $391,452)
Procedures Needed for Smartcard Program
Although EPA developed detailed procedures to guide the EPASS staff's
issuance of new Smartcard identification (ID) badges, an employee error in using
the new ID card system resulted in an EPA employee having ID documents and
other identifying information incorrectly associated with another EPA employee.
An EPASS employee incorrectly accessed the wrong employee's computer record,
scanned the ID documents for the employee requesting the Smartcard, then associated the
scanned documents with the incorrectly accessed computer record. Although we did not
discover more than one incident, we found that EPA lacks procedures to ensure that
employees take steps to correct similar incidents when they occur, and also lacks
procedures for handling and disposing of defective Smartcard badges. Authenticating an
individual's identity is critical for controlling access to EPA resources.
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EPA OIG Semiannual Report to Congress April 1, 2008 - September 30, 2008
We recommended that EPA update existing ID card issuing procedures, create incident-
handling procedures for when errors occur, and implement procedures for proper
handling and disposing of defective badges. The Agency agreed to implement our
recommendations.
(Report No. 08-P-0267, Identification Proofing, Incident Handling, and Badge Disposal
Procedures Needed for EPA 's Smartcard Program, September 16, 2008 - Report Cost:
$120,287)
Managing Internet Protocol Addresses Need Improvement
Processes used to assign and track Internet Protocol addresses within EPA
Headquarters in Washington, DC, need strengthening to enforce accountability.
This was noted during the 2008 Federal Information Security Management Act
(FISMA) audit.
On behalf of the OIG, a contractor conducted the annual FISMA audit of EPA.
Vulnerability testing of the EPA Headquarters network identified 391 Internet Protocol
addresses with high-risk and/or medium-risk vulnerabilities. However, EPA's Enterprise
Desktop Solutions Division could not identify the offices responsible for 273 of the
addresses. EPA needs a process to track the assignment of Internet Protocol addresses
and to identify all active and assigned addresses. Various recommendations to address
these issues were made to EPA in an early warning report. (Report No. 08-P-0273,
Management of EPA Headquarters Internet Protocol Addresses Needs Improvement,
September 23, 2008 - Report cost part of overall report)
Subsequently, we provided the Agency with the FISMA Reporting Template, as
prescribed by OMB. (Report No. 08-P-0280, Fiscal Year 2008 Federal Information
Security Management Act Report: Status of EPA 's Computer Security Program,
September 26, 2008 - Report Cost, including contract cost and OIG contract
management oversight: $388,135)
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EPA OIG Semiannual Report to Congress
April 1, 2008 - September 30, 2008
Investigations
Investigating laboratory fraud, financial fraud,
and computer crimes.
Investigative Actions
Company President Found Guilty of Defrauding Investors and
U.S. Government
On May 28, 2008, in U.S. District Court for the District of Colorado, a Federal jury found
William C. Orr guilty of mail fraud, wire fraud, false statements, and failure to file tax
return charges. These charges were related to defrauding investors and the U.S.
Government concerning Orr's proposed alternative fuel additive. Orr, of Parker,
Colorado, is the founder, President, and a member of the Board of Directors for Octane
International, Ltd. Sentencing is pending in this matter.
Through Octane, Orr was raising money for and purportedly developing an alternative
fuel additive called "vapor phase combustion (VPC)." Orr solicited money from
investors, making a variety of claims regarding the proven efficacy of VPC. As part of
his scheme, Orr also prepared and sent periodic newsletters to past and potential investors
in which he falsely represented the results of scientific testing regarding VPC, and falsely
represented that major oil companies were interested in making substantial investments in
VPC. From January 1998 through December 2004, more than 43 people invested
approximately $559,200 in Octane, based on the fraudulent pretenses, representations,
and promises made by Orr. Orr used this money to pay for personal expenses and some
business expenses.
Orr also successfully lobbied members of Congress and obtained a $3.6-million earmark
grant for further testing of VPC. Orr created the National Alternative Fuels Foundation
as a non-profit entity to obtain and use the money. Orr submitted a grant proposal and
other documents to EPA, which he knew contained material falsities, including the false
scientific test results for VPC. The National Alternative Fuels Foundation actually
received approximately $2 million of the earmarked grant money from EPA.
Subsequent to Orr's conviction, Scott Shires, the National Alternative Fuels Foundation's
Treasurer, agreed to plead guilty to three counts of knowingly failing to file tax returns for
Octane for 1999, 2000, and 2001. Shires was involved with Octane, acting at various times
as its registered agent, bookkeeper, Chief of Staff, Corporate Secretary, and Treasurer. On
June 23, 2008, Shires was sentenced to 12 months probation, a $3,450 fine, and a $75
special assessment.
This case is being conducted with the Internal Revenue Service Criminal Investigation
Division and the U.S. Postal Inspection Service. (Case Cost: $673,426)
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EPA OIG Semiannual Report to Congress April 1, 2008 - September 30, 2008
Pleas Entered in Bid Rigging Case
On July 23, 2008, in U.S. District Court for the District of New Jersey, JMJ
Environmental, Inc., of Laurel Springs, New Jersey, as well as its owner and a former
employee of a prime contractor, were charged and pled guilty in a bid-rigging scheme in
connection with subcontracts for wastewater treatment supplies and services at two
Superfund sites in New Jersey. On July 31, 2008, Bennett Environmental, Inc. (BEI), a
Canadian company, was also charged and pled guilty for its role in the scheme.
Sentences are pending.
JMJ and John Drimak, Jr., the firm's owner, pled guilty to rigging bids at the Federal
Creosote Superfund site in Manville, New Jersey, from approximately October 2002 to
February 2006. Drimak also pled guilty to one count of conspiracy to defraud EPA at the
Federal Creosote site and to defraud Tierra Solutions, Inc., at the Diamond Alkali
Superfund site in Newark, New Jersey. As part of the conspiracy, Drimak participated in
a false invoicing and kickback scheme from January 2002 until April 2007. He also pled
guilty to filing false income tax returns for 2002 through 2005.
Norman Stoerr, a former employee of a prime contractor, pled guilty to rigging bids at
the Federal Creosote site from approximately October 2002 to October 2003. In addition,
Stoerr pled guilty to one count of conspiracy to defraud EPA at the Federal Creosote site
and to defraud Tierra Solutions at the Diamond Alkali Superfund site by participating in a
false invoicing and kickback scheme from the fall 2000 until spring 2004. Stoerr also
pled guilty to one count of aiding Drimak in filing a false income tax return.
Drimak, Stoerr, and other co-conspirators thwarted the competitive bidding process and
defrauded EPA. Drimak provided more than $26,000 in kickbacks to Stoerr and more
than $385,000 to Stoerr's former supervisor in exchange for their assistance in allocating
certain subcontracts to JMJ. The kickbacks were in the form of checks, cash, cruises,
home renovations, boat trailers, and airline tickets. In addition, Stoerr and a former
supervisor inflated invoices and accepted kickbacks from three other subcontractors at
the Superfund sites.
BEI pled guilty to conspiracy to defraud EPA at the Federal Creosote site by inflating the
prices it charged to a prime contractor and paying kickbacks to employees of that
contractor from approximately May 2002 until spring 2004. BEI was given confidential
bid information that it used to inflate invoices to cover almost $1.3 million in kickbacks
to employees of the prime contractor in exchange for their assistance in steering
subcontracts to BEI. The kickbacks were in the form of money wire transfers, cruises for
senior officials, various entertainment tickets, and home entertainment electronics. As
part of the fraudulent scheme, BEI and its co-conspirators also included amounts they
kept for themselves in the inflated invoices.
This case is being conducted with the Internal Revenue Service Criminal Investigation
Division. (Case Cost: $216,979)
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EPA OIG Semiannual Report to Congress April 1, 2008 - September 30, 2008
Two Given Prison Terms in $1.4 Million Bribery and Kickback Scheme
On August 14, 2008, two U.S. Virgin Island government officials were sentenced to
prison in U.S. District Court for the District of the Virgin Islands for their roles in a
$1.4 million bribery and kickback scheme. Both were found guilty on February 27, 2008,
following a 2-week jury trial.
Dean C. Plaskett, the former commissioner of the U.S. Virgin Islands Department of
Planning and Natural Resources, was sentenced to 9 years in prison to be followed by
3 years of probation. He was also ordered to pay a $300 special assessment and will be
held liable, along with several other defendants, for a monetary judgment in the amount
of$l,086,237.
Marc A. Biggs, the former commissioner of the U.S. Virgin Islands Department of
Property and Procurement, was sentenced to 7 years in prison to be followed by 3 years
of probation. He was also ordered to pay a $100 special assessment and will be held
liable, along with several other defendants, for a monetary judgment in the amount of
$960,482.
Plaskett and Biggs were found guilty of demanding and accepting bribes and kickbacks
in connection with the award of a $650,000 government contract to a shell company.
Plaskett was also convicted of obstruction of justice stemming from his efforts to conceal
the scheme from federal and local investigators, as well as a grand jury.
The bribery and kickback scheme began in early 2000 and continued through early 2004
and involved at least three government agencies and the award of more than $1.4 million
in government contracts for environmental and other government work. Despite little or
no work having been performed on any of those contracts, Plaskett, Biggs, and other
government officials authorized more than $1 million in progress payments. The parties
would then split the illicit contract proceeds. When the scheme became part of a joint
multi-agency investigation, Plaskett led a second illicit scheme designed to obstruct
justice by attempting to have fictitious documents created and backdated to falsely
document work never done by the same shell company on a different government
contract.
To date, four other individuals have pled guilty to felony charges as a result of this
investigation.
This investigation is being conducted with the Federal Bureau of Investigation, the
Internal Revenue Service Criminal Investigation Division, the U.S. Postal Inspection
Service, and the Virgin Islands Office of Inspector General. (Case Cost: $234,736)
Former EPA Intern Pleads Guilty to Submitting False Timesheets
On September 4, 2008, Stephanie Jackson, of Arlington, Texas, pled guilty in U.S.
District Court for the District of Massachusetts to 10 counts of making false statements.
Jackson was previously charged in June 2008.
Jackson was employed with The Environmental Careers Organization, Inc. (ECO). ECO
placed Jackson in an internship position with EPA in March 2006; however, EPA
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EPA OIG Semiannual Report to Congress April 1, 2008 - September 30, 2008
contacted ECO within 2 weeks and requested that Jackson be replaced with another
intern. After she left her internship at EPA, Jackson submitted forged timesheets to
ECO, which subsequently continued to pay Jackson a salary for approximately 1 year
after her internship had been terminated. Her salary was paid from funds provided to
ECO through an EPA grant.
Jackson is scheduled to be sentenced on December 3, 2008.
(Case Cost: $26,124)
Suspect Sentenced in Identity Fraud Scheme
On June 9, 2008, Stephen Francis, of Lanham, Maryland, was convicted of theft and
sentenced in the District Court of Maryland for Montgomery County, Maryland. Francis
was sentenced to 18 months in jail, which the judge suspended to an 18-month supervised
probation. Francis was also ordered to pay a $300 fine and a $58 special assessment.
Francis used the stolen identity of an EPA employee to establish cellular telephone
service for five cell phone accounts. During the investigation, the original cellular
service agreement was obtained and forwarded to the U.S. Secret Service Forensics
Laboratory for latent fingerprint analysis. The fingerprints identified on the document
were used to identify Francis as the suspect in this case.
(Case Cost: $644,155)
Audit Report
Innovative Techniques Can be Used for State Monitoring of
Revolving Funds
In general, the States we reviewed complied with subrecipient monitoring
requirements for State revolving loan funds. Further, we noted innovative
techniques as part of our special review.
EPA had awarded about $1.5 billion in State Revolving Funds in 2008, and subrecipient
monitoring of projects awarded funds is needed to ensure projects meet performance
goals and borrowers spend federal funds properly. We noted innovative techniques used
by two States that take advantage of technology, such as e-mail and the Internet, to
reduce the number of onsite inspections while still tracking construction activity. Two
other States analyze subrecipient audit reports not only to track financial condition but
also to make trend and ratio analyses to project on a subrecipient's ability to repay a loan.
We did not make any recommendations, although we noted EPA's Annual Performance
Evaluation and annual review procedures could be more detailed regarding subrecipient
monitoring.
(Report No. 08-P-0290, Innovative Techniques for State Monitoring of Revolving Funds
Noted, September 29, 2008 - Report Cost: $95,076).
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EPA OIG Semiannual Report to Congress
April 1, 2008 - September 30, 2008
Testimony
Providing testimony before congressional committees.
Assistant Inspector General Testifies on EPA's Role in Restoring
the Chesapeake Bay
On July 30, 2008, Wade Najjum, Assistant Inspector General for Program
Evaluation, testified before the House Transportation and Infrastructure
Subcommittee on Water Resources and Environment during a hearing on
protecting and restoring the Chesapeake Bay.
In response to a request from a U.S. Senator from Maryland, the OIG issued four major
reports on the Chesapeake Bay Program's efforts in reducing excess nutrients and
sediments into the Bay. The OIG focused on the key sources of nutrients and sediments:
agriculture, air deposition, developing land, and wastewater treatment facilities.
"In each area we found that the Bay partners had accomplished some noteworthy
achievements, but achieving the Chesapeake Bay water quality goals is in serious
jeopardy," Mr. Najjum testified. Moreover, he said, "the Bay remains degraded and at
the current rate of progress, the Bay will remain impaired for decades."
In the individual reports, the OIG concluded that significant challenges the Bay partners
faced in meeting their clean-up goals were: increasing implementation of agricultural
conservation practices, managing land development, seeking greater reductions in air
emissions, and upgrading wastewater treatment facilities. Surmounting these challenges
requires action by States, local governments, watershed organizations, and federal
agencies. "In this case," Mr. Najjum said, "we believe EPA lacks authorities, resources,
and tools needed to address the challenges posed by agricultural runoff, new
development, air pollution, and wastewater treatment upgrades."
EPA's principal role is to facilitate and motivate other key Bay stakeholders to take the
necessary steps, many of which will be expensive and difficult. "A key task for EPA will
be to provide Congress and Bay citizens with a realistic picture of what it will take to
clean the Bay, challenges and obstacles, and a realistic timeframe for when the water
quality goals will be achieved," said Mr. Najjum.
Meeting the various challenges facing the Bay will require a fundamental reexamination
of current approaches and strategies used by EPA and its partners at the federal, State,
and local levels. "Given its limited financial resources and regulatory authority, EPA's
greatest role will be in facilitating and motivating States and local governments and
watershed groups to address the challenges and consider the sacrifices that will be
required," said Mr. Najjum.
Since the Chesapeake Bay Program is at the forefront of watershed restoration, finding
successful solutions to clean up the Chesapeake Bay is important to other estuaries across
the country experiencing similar challenges, concluded Mr. Najjum.
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EPA OIG Semiannual Report to Congress April 1, 2008 - September 30, 2008
Assistant Inspector General Testifies on Investigation of EPA's
Clean-up of Libby, Montana, Superfund Site
On September 25, 2008, Stephen Nesbitt, Assistant Inspector General for
Investigations, testified before the Senate Environment and Public Works
Committee on the OIG's investigation of EPA clean-up actions at the Libby,
Montana, Superfund site.
The OIG initiated an investigation in March 2006 in response to a misconduct allegation
raised by a former EPA toxicologist against a contractor working in Libby. "While we
determined this allegation did not merit prosecution, witnesses and EPA employees
raised other allegations regarding EPA's clean-up actions in Libby that we believed
warranted our attention," said Mr. Nesbitt.
One allegation was that EPA proceeded to clean up Zonolite insulation in attics and walls
within homes in Libby under an emergency response removal action that was
questionable under the Comprehensive Environmental Response, Compensation, and
Liability Act (CERCLA), also know as Superfund. "EPA's On-Scene Coordinator
believed that this insulation had to be removed from homes in Libby because it could re-
contaminate the area if left in attics and walls and somehow became airborne," Mr.
Nesbitt testified. However, CERCLA specifically prohibits the use of Superfund money
to clean up products unless a public health emergency is declared. In a draft action
memorandum from November 2001, the On-Scene Coordinator proposed that a public
health emergency be declared and that authorization be granted to remove insulation in
800 Libby homes.
Over the next several months, this draft memorandum was reviewed and revised by
numerous officials within both Region 8 and EPA's Office of Solid Waste and
Emergency Response. "E-mails show that officials mostly supported a public health
declaration until February 2002, when OMB staff raised questions and began to express
doubts that such a declaration was necessary," said Mr. Nesbitt. EPA's Office of
Prevention, Pesticides, and Toxic Substances voiced concerns as well over the
declaration of a public health emergency.
Legal alternatives to declaring a public health emergency were provided by EPA's Office
of General Counsel. An EPA attorney opined that if the insulation was viewed as a "non-
product" then it would be legal to use CERCLA funds for the clean-up in Libby. In May
2002, a new draft action memorandum was circulated for review within EPA
Headquarters that removed all references to a public health emergency declaration and to
the commercial name Zonolite.
"Despite Region 8's recommendation, EPA Headquarters determined that Region 8
should proceed to clean up the Zonolite asbestos in Libby homes without declaring a
public health emergency," said Mr. Nesbitt. The final action memorandum was signed
on May 9, 2002, by the Assistant Administrator for Solid Waste and Emergency
Response, at that time the approving official. "It allowed for the clean-up of homes and
yards at a cost of $54 million without declaring a public health emergency," said Mr.
Nesbitt.
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EPA OIG Semiannual Report to Congress April 1, 2008 - September 30, 2008
Another allegation was that EPA made remediation decisions without adequate science
because a baseline risk assessment, which is required under the National Contingency
Plan, was not done, possibly placing Libby residents at risk. In September 2002, the
Remedial Project Manager for Libby requested funds to conduct both the remediation and
the required risk assessment. Specifically, the Remedial Project Manager requested a
total of $21 million - $17 million of which would go to clean-up activities and $4 million
for a risk assessment. However, EPA Headquarters proposed only $17 million for clean-
up activities and no funding for a risk assessment. At that funding level, the Remedial
Project Manager was forced to stop all additional risk assessment work, Mr. Nesbitt
testified.
The OIG briefed attorneys from the Department of Justice's Public Integrity Section on
the investigation. In a letter dated June 6, 2008, the Chief of the Department of Justice's
Public Integrity Section notified the OIG "of its determination that the initiation of
criminal proceedings in this matter was not warranted, and therefore declined
prosecution," Mr. Nesbitt concluded.
After the hearing, a joint report was issued by the Senate Committee on Environment and
Public Works majority staff and Sen. Max Baucus' staff entitled "EPA's Failure to
Declare a Public Health Emergency in Libby, Montana," that detailed their own findings
and conclusions regarding EPA's decision not to declare a public health emergency in
Libby.
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EPA OIG Semiannual Report to Congress
April 1, 2008 - September 30, 2008
Chemical Safety and Hazard Investigation Board
The U.S. Chemical Safety and Hazard Investigation Board (CSB) was created by the
Clean Air Act Amendments. The Board's mission is to investigate accidental chemical
releases at facilities, to report to the public on the root causes, and to recommend
measures to prevent future occurrences.
In FY 2004, Congress designated the EPA OIG to serve as the Inspector General for the
CSB. As a result, the EPA OIG has the responsibility to audit, evaluate, inspect, and
investigate CSB's programs, and to review proposed laws and regulations to determine
their potential impact on CSB's programs and operations.
CSB Improved Security of Information System Resources
During both FYs 2007 and 2008, CSB continued to make progress in improving the
security of its information system resources, according to reviews conducted by a
contracted consulting firm.
2007: CSB assigned a risk categorization to CSB's General Support System,
developed policies mandating using and updating security configuration
checklists, and conducted contingency plan testing and an e-authentication risk
assessment. CSB also aligned the organization's security program with required
Personally Identifiable Information changes. CSB completed all but one of the
planned actions in response to weaknesses identified during FY 2006. (Report
No. 08-P-0134, Evaluation of U.S. Chemical Safety and Hazard Investigation
Board's Compliance with the Federal Information Security Management Act and
Efforts to Protect Sensitive Agency Information (Fiscal Year 2007), April 21,
2008 - Cost of OIG contract oversight: $3,235; actual contract funded by CSB)
2008: CSB expanded security training to include specialized, role-based
training; implemented incident response training and testing; and issued a Breach
Policy. CSB also benchmarked and utilized industry best practices and templates
in updating the CSB Certification and Accreditation documentation. The
contractor found areas for improvement. CSB needed to insert the approved
security "banner" within all CSB database applications. Further, CSB needed to
continue updating the CSB Configuration Management policy and associated
procedures for non-standard security configurations, and to continue to update
other security documentation. (Report No. 08-P-0295, Evaluation of U.S.
Chemical Safety and Hazard Investigation Board's Compliance with the Federal
Information Security Management Act and Efforts to Protect Sensitive Agency
Information (Fiscal Year 2008), September 29, 2008 - Cost of OIG contract
oversight: $6,224; actual contract funded by CSB)
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EPA OIG Semiannual Report to Congress
April 1, 2008 - September 30, 2008
Other Activities
OIG FY 2009 Annual Plan Designed to Address Agency Risks
During this 6-month period, the OIG executed a planning process based upon the
Enterprise Risk Management Integrated Framework Model developed by the Committee
of Sponsoring Organizations of the Treadway Commission (see diagram). This resulted
in the development of an FY 2009 strategy and work plan that addresses EPA's most
significant environmental and management risks, priorities, and challenges. The Plan is
available at http://www.epa.gov/oig/planning.htm.
The planning process included developing
and updating a comprehensive compendium
of risks, challenges, and opportunities for
each Agency management and media area,
as well as regional cross-goal and
management issues. Data was collected,
categorized, and summarized to reflect a
broad perspective from multiple sources,
including EPA's managers, Agency
planning research and performance reporting
results, previous OIG work, and a risk
assessment by the Government
Accountability Office.
Source: Committee of Sponsoring Organizations
of the Treadway Commission
We used the compendiums of risks and
challenges, largely reported by the Agency
itself, to formulate customer-driven strategic
themes and develop and select assignments.
The plan lists assignments in progress from FY 2008 for completion in FY 2009, along
with required assignments and those selected to start during the first half of FY 2009, by
product line. This plan, which also provides a summary update on the OIG Strategic
Plan, is designed to adjust for new priorities and conditions while pursuing a program of
work that leverages the greatest return on investment in terms of Agency improvements,
performance, and risk reduction.
Legislation and Regulations Reviewed
Section 4(a) of the Inspector General Act requires the Inspector General to review
existing and proposed legislation and regulations relating to the program and operation of
EPA and to make recommendations concerning their impact. The primary basis for our
comments are the audit, evaluation, investigation, and legislative experiences of the
Office of Inspector General, as well as our participation on the President's Council on
Integrity and Efficiency (PCIE). During the reporting period, we reviewed 31 proposed
changes to legislation, regulations, policy, and procedures that could affect EPA and
provided comments on 18 of those reviewed. We also reviewed drafts of OMB circulars,
program operations manual, directives, and reorganizations. Details on several items
follow.
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EPA OIG Semiannual Report to Congress April 1, 2008 - September 30, 2008
S. 3077, "Strengthening Transparency and Accountability in Federal Spending Act
of 2008." This bill would expand the information available on www.USASpending.gov.
a public database containing information on federal grants, contracts, and other financial
assistance, to ensure greater openness and accuracy. The OIG provided comments to the
PCIE Legislation Committee that noted the potentially burdensome audit requirement
that each agency Inspector General review a statistically representative sample of agency
federal awards every 6 months to verify their accuracy. Other Inspectors General
expressed similar concerns, which were forwarded by the PCIE Legislation Committee to
the Senate Homeland Security and Governmental Affairs Committee on behalf of the
Inspector General community.
Proposed EPA Order, Intelligence Operations. EPA's Office of Homeland Security
proposed a new EPA Order describing the Intelligence Operations function at EPA.
Through this new EPA Order, the Office of Homeland Security established a formal
framework for its role in leading EPA on all matters related to national security and
intelligence. We commented that the Office of Homeland Security omitted OIG's
statutory law enforcement duties, responsibilities, and authorities as they relate to
intelligence operations. Additionally, we provided specific wording for the Office of
Homeland Security to use in explicitly stating the OIG has oversight of EPA intelligence
operations and for investigating, or referring for investigation, reports of questionable
intelligence activities.
Proposed Revision to EPA Order 1000.24, Management's Responsibility for Internal
Controls. EPA's Office of the Chief Financial Officer proposed a revision to EPA Order
1000.24, Management Responsibility of Internal Controls. The Order serves as EPA's
strategy to assess the effectiveness of internal controls; identify, correct, and report
vulnerabilities; and ensure compliance with applicable federal rules and regulations. We
made a number of comments to strengthen and clarify the proposed revision, including:
Overall, Section 8 did not provide enough detail and guidance on internal
controls. We commented that this section should be expanded and reorganized to
include a model and discussion about the management control process; a
discussion about internal control objectives; and characteristics and logical
linkage between Strategic, Structural, Operational, and Financial Controls.
We suggested adding information on the responsibilities of lead regions in
assessing the potential for cross-regional problems. For example, if it is an issue in
one region, other regions should be canvassed to see if the problem is systemic.
The wording is included in Office of the Chief Financial Officer annual guidance
but was not mentioned in the Order.
The Inspector General is included as a member of the Senior Assessment Team.
We commented that the Order must note that the Inspector General's role is
limited to basically a consulting capacity. The Inspector General does not
approve the Agency's approach for internal controls over financial reporting
reviews; does not determine the design, scope, methodology, and cost of the
assessment; and does not designate a Management Integrity Advisor and, if
applicable, a Coordinator for overseeing internal control reviews over financial
reporting in organizations.
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EPA OIG Semiannual Report to Congress April 1, 2008 - September 30, 2008
Proposed Resource Management Directives System Chapter 2540-11, Property, Plant,
& Equipment (PP&E) Policy Standard and Technical Interpretation. EPA's Office of
the Chief Financial Officer proposed the addition of Chapter 2540-11, Property, Plant, &
Equipment Policy Standard and Technical Interpretation, to the Resource Management
Directives System. The chapter summarizes EPA's accounting policy for capitalizing
PP&E and how all PP&E transactions will be processed, reconciled, and resolved in
accordance with the Statement of Federal Financial Accounting Standards (SFFAS) set
forth by the Federal Accounting Standards and Advisory Board. We provided a number of
comments, including:
EPA 's Capitalization Summary needs to be clarified on the capitalization
threshold for "Plumbing, Heating, and Sanitation." It is not clear how plumbing
and water and sewage are considered EPA property unless they are
improvements, which are noted in another category.
EPA 's Capitalization Summary does not address the threshold for capitalized
software in production. It only addresses information technology investments.
It is not clear why there are thresholds for software investments. Normally,
software in development is expensed and when it is placed in production it is
capitalized within specified limits.
The references to SFFAS No. 1, Accounting for Selected Assets and Liabilities,
should be removed from Sections II.A.2 and V.A.I. SFFAS No. 1 addresses six
assets: Cash, Fund Balance with Treasury, Accounts Receivable, Interest
Receivable, Advances and Prepayments, and Investments in Treasury Securities;
and three liabilities: Accounts Payable, Interest Payable, and Other Current
Liabilities. SFFAS No. 1 does not address property, plant, and equipment.
OIG Audit Follow-up Strategy Demonstrating Results
The OIG continued implementing a new audit follow-up strategy for strengthening both
the OIG's and Agency's attention to the process for closing-out (reaching agreement on
actions to be taken) and completing agreed-to actions on OIG recommendations.
According to the Institute of Internal Auditors, follow-up is a process by which "internal
auditors determine the adequacy, effectiveness, and timeliness of actions taken by
management on all reported audit findings." OMB Circular A-50 notes that audit
follow-up is a "shared responsibility" between the audited and auditor entities.
To comply with Inspector General Act reporting requirements and to help EPA managers
gain greater awareness of outstanding commitments for action, we have developed a
"Compendium of Unimplemented Recommendations." OIG identification of
unimplemented recommendations has already yielded significant results. During the first
half of FY 2008, based upon a congressional request and a subsequent report to Agency
management, the OIG identified 65 unimplemented recommendations. Of those 65
identified requiring action, 32 have since been implemented. Since that initial report,
21 additional unimplemented recommendations have been reported in the compendium,
for a total of 86 unimplemented recommendations identified during the fiscal year with
several others identified and pending further review.
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EPA OIG Semiannual Report to Congress April 1, 2008 - September 30, 2008
In addition to the OIG identification of unimplemented recommendations, performed
independently but in coordination with the Office of the Chief Financial Officer, EPA's
designated Agency Follow-up Official, the OIG has also trained its own staff on
improved close-out processes, revised its internal operational and reporting procedures,
and redesigned its audit management data base to address individual recommendations to
specific Agency action officials for greater awareness of commitments and accountability
for action.
The OIG has recommended that a review of follow-up commitments be required as part
of the Agency's Federal Managers' Financial Integrity Act (FMFIA) assessment process.
The OIG is also planning to work with the Office of the Chief Financial Officer to revise
the Agency directive on audit follow-up, and train senior managers on their
responsibilities for audit management. Based on this early implementation phase of the
OIG's follow-up strategy, significant progress has been made in the attention given to
resolving OIG recommendations. The OIG hopes this will be further enhanced by the
"Compendium of Unimplemented Recommendations."
OIG Performs Internal Funds Control Review
The OIG performed a comprehensive internal review of its funds control program
processes, to ensure that: (1) funds are used only for authorized purposes, (2) funds are
economically and efficiently used, and (3) obligations and expenditures do not exceed the
amounts authorized and available. Our review of FY 2007 travel and non-purchase card
requisitions greater than $500 indicated that 100 percent of the sampled transactions are
properly recorded and accounted.
The review was performed using the revised OMB Circular A-123 checklist, which we
have advocated for use within the Agency through our review comments on Agency
Policy Directives. Although no problems were found in the sampled OIG transactions,
the review recommended that the OIG's Financial Management Policy be updated to
account for the current management and oversight structure, processes, and information
regarding approvals; the application of the purchase card program; and electronic
processing of training requests and non-purchase card procurements.
The OIG also reviewed the control over billing of Working Capital Fund services and
hand-held electronic devices. As a result, the OIG implemented additional back-up
controls to save potentially tens of thousands of dollars by identifying when the Agency
Working Capital Fund continues billing for services after notification that staff members
have left the OIG.
38
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EPA OIG Semiannual Report to Congress
April 1, 2008 - September 30, 2008
Statistical Data
Profile of Activities and Results
Audit, Inspection, and Evaluation
Operations
Office of Inspector General Reviews
April 1, 2008, to
September 30, 2008 FY
($ in millions) 2008
Questioned Costs *
Total $6.0 $8.4
Federal $6.2 $8.3
Recommended Efficiencies *
Federal $53.4 $76.2
Costs Disallowed to be Recovered
Federal $4.0 $10.2
Costs Disallowed as Cost Efficiency
Federal $4.7 $21.3
Reports Issued - Office of 39 57
Inspector General Reviews
Reports Resolved 93 103
(Agreement by Agency officials
to take satisfactory corrective
actions) **
Audit, Inspection, and Evaluation
Operations
Other Reviews
(Reviews Performed by Another Federal Agency
or Single Audit Act Auditors)
April 1, 2008, to
September 30, 2008 FY
($ in millions) 2008
Questioned Costs *
Total $36.0 $105.6
Federal $4.0 $5.6
Recommended Efficiencies *
Federal $2.2 $2.2
Costs Disallowed to be Recovered
Federal $0.5 $6.0
Costs Disallowed as Cost Efficiency
Federal $0 $0
Reports Issued - Other Reviews
EPA Reviews Performed by
Another Federal Agency 107 163
Single Audit Act Reviews 40 84
Total 147 247
Agency Recoveries
Recoveries from Audit, Inspection,
and Evaluation Resolutions
of Current and Prior Periods
(cash collections or offsets to $0.2 $8.9
future payments) ***
Investigative Operations
April 1 , 2008, to
September 30, 2008
($ in millions)
Fines and Recoveries $0.284
(including civil) ****
Cost Savings $0
Cases Open During Period 23
Cases Closed During Period 25
Indictments/Informations of Persons 8
or Firms
Convictions of Persons or Firms 4
Civil Judgments/Settlements/Filings 0
FY
2008
$3.733
$0
49
65
20
18
3
Questioned Costs and Recommended Efficiencies
are subject to change pending further review in the
audit, inspection, and evaluation resolution process.
Total Questioned Costs include contracts of other
federal agencies.
Reports Resolved are subject to change pending
further review.
Information on Recoveries from Audit, Inspection,
and Evaluation Resolutions is provided by EPA's
Office of Financial Management and is unaudited.
Total includes actions resulting from joint
investigations.
39
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EPA OIG Semiannual Report to Congress
April 1, 2008 - September 30, 2008
Audit, Inspection, and Evaluation Report Resolution
Status Report on Perpetual Inventory of Reports in Resolution Process
for Semiannual Period Ending September 30, 2008
Report Category
A. For which no management
decision was made by
April 1,2008*
B. Which were issued during the
reporting period
C. Which were issued during the
reporting period that required
no resolution
Subtotals (A + B - C)
D. For which a management
decision was made during the
reporting period
E. For which no management
decision was made by
September 30, 2008
F. Reports for which no
management decision was
made within 6 months of
issuance
No. of
Reports
116
186
83
219
93
126
48
Report Issuance
($ in thousands)
Questioned
Costs
$44,297
$10,038
$0
$54,335
$35,508
$18,827
$13,367
Recommended
Efficiencies
$16,038
$55,693
$0
$71,731
$18,449
$53,282
$1,500
Report Resolution Costs
Sustained
($ in thousands)
To Be
Recovered
$4,255
$224
$0
$4,479
$4,479
$0
$0
As
Efficiencies
$5
$4,673
$0
$4,678
$4,678
$0
$0
Any difference in number of reports and amounts of questioned costs or recommended efficiencies between this
report and our previous semiannual report results from corrections made to data in our audit tracking system.
Status of Management Decisions on Inspector General Reports
This section presents statistical information as required by the Inspector General Act of 1978, as
amended, on the status of EPA management decisions on reports issued by the OIG involving monetary
recommendations. As presented, information in Tables 1 and 2 cannot be used to assess results of
reviews performed or controlled by this office. Many of the reports were prepared by other federal
auditors or independent public accountants. EPA OIG staff do not manage or control such assignments.
Auditees frequently provide additional documentation to support the allowability of such costs
subsequent to report issuance.
40
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EPA OIG Semiannual Report to Congress
April 1, 2008 - September 30, 2008
Table 1 - Inspector General-Issued Reports with Questioned Costs for Semiannual Period Ending
September 30, 2008 (dollars in thousands)
Report Category
A. For which no management decision was made by
April 1,2008**
B. New reports issued during period
Subtotals (A + B)
C. For which a management decision was made during the
reporting period
(i) Dollar value of disallowed costs
(ii) Dollar value of costs not disallowed
D. For which no management decision was made by
September 30, 2008
Reports for which no management decision was made
within 6 months of issuance
No. of
Reports
49
35
84
38
24
14
46
18
Questioned
Costs *
$44,297
$10,038
$54,335
$35,508
$4,479
$31,029
$18,827
$16,367
Unsupported
Costs
$29,475
$5,724
$35,199
$23,695
$1,620
$22,075
$11,504
$8,913
Questioned costs include the unsupported costs.
Any difference in number of reports and amounts of questioned costs between this report and our previous
semiannual report results from corrections made to data in our audit, inspection, and evaluation tracking system.
Table 2 - Inspector General-Issued Reports with Recommendations that Funds Be Put to Better Use
for Semiannual Period Ending September 30, 2008 (dollars in thousands)
Report Category
A. For which no management decision was made by April 1 , 2008 *
B. Which were issued during the reporting period
Subtotals (A + B)
C. For which a management decision was made during the reporting period
(i) Dollar value of recommendations from reports that were
agreed to by management
(ii) Dollar value of recommendations from reports that were
not agreed to by management
(ii) Dollar value of non-awards or unsuccessful bidders
D. For which no management decision was made by September 30, 2008
Reports for which no management decision was made
within 6 months of issuance
No. of
Reports
4
4
8
3
2
1
0
5
1
Dollar
Value
$16,038
$55,693
$71,731
$18,449
$4,678
$13,771
$0
$53,282
$1,500
Any difference in number of reports and amounts of funds put to better use between this report and our previous
semiannual report results from corrections made to data in our audit, inspection, and evaluation tracking system.
Audits, Inspections, and Evaluations with No Final Action as of September 30, 2008, Which Are Over 365 Days
Past the Date of the Accepted Management Decision (including Audits, Inspections, and Evaluations in Appeal)
Audits, Inspections, and Evaluations
Program
Assistance Agreements
Contract Audits
Single Audits
Financial Statement Audits
Total
Total
34
23
0
16
1
74
Percentage
46%
31%
0%
22%
1%
100.0%
41
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EPA OIG Semiannual Report to Congress
April 1, 2008 - September 30, 2008
Hotline Activity
The following table shows EPA OIG Hotline activity regarding complaints of fraud, waste, and abuse in
EPA programs and operations that occurred during the past semiannual and annual periods.
Semiannual Period
(April 1,2008 -
September 30, 2008)
Inquiries and Complaints Received During Period
Issues Handled by EPA OIG
Inquiries Addressed Without Opening a Complaint
Complaints Opened
Complaints Closed
Complaints Open - Beginning of Period
Complaints Open - End of Period
Issues Referred to Others
EPA Program Offices
EPA Office of Enforcement & Compliance Assurance
Other Federal Agencies
State/Local Agencies
412
81
74
0
2
6
4
331
75
12
36
208
Annual Period
(October 1 , 2007 -
September 30, 2008
838
191
182
2
8
12
4
647
155
29
78
385
42
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EPA OIG Semiannual Report to Congress
April 1, 2008 - September 30, 2008
Summary of Investigative Results
Summary of Investigative Activity during Period
Cases open as of April 1, 2008
Cases opened during period
Cases closed during period
Cases pending as of September 30, 2008
97
23
25
95
Investigations Pending by Type as of September 30, 2008
Contract
Assistance Agreement
Employee Integrity
Program Integrity
Computer Crime
Laboratory Fraud
Other
Total
Superfund
7
0
1
2
0
1
1
12
Management
6
26
17
6
4
14
3
76
Split Funded
2
2
0
1
0
0
2
7
Total
15
28
18
9
4
15
6
95
Results of Prosecutive Actions
Criminal Indictments / Informations / Complaints
Convictions
Civil Judgments / Settlements / Filings
Fines and Recoveries (including Civil)
Prison Time
Prison Time Suspended
Probation
Community Service
EPA OIG Only
2
2
0
$358
18 months
18 months
18 months
0 hours
Joint*
6
2
0
$3,925
192 months
0 months
84 months
0 hours
Total
8
4
0
$4,283
210 months
18 months
102 months
0 months
Administrative Actions
Suspensions
Debarments
Compliance Agreements
Other Administrative Actions
Total
Administrative Recoveries
EPA OIG Only
1
3
3
1
8
$280,000
Joint*
0
1
1
0
2
$0
Total
1
4
4
1
10
$280,000
With another federal agency.
43
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EPA OIG Semiannual Report to Congress
April 1, 2008 - September 30, 2008
Scoreboard of Results
Scoreboard of OIG FY 2008 Performance Results Compared to
FY 2008 Annual Performance Goal Targets
All results reported in FY 2008, from current and prior years' work, are as reported in OIG
Performance Measurement and Results System, Inspector General Operations Reporting System,
and Inspector General Enterprise Management System.
OIG FY 2008 Government Performance and Results Act
Annual Performance Targets Compared to FY 2008
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: 334; Reported: 463 (139%)
1 Legislative/regulatory change/decision
0 Examples of environmental improvement
0 Environmental best practices implemented
0 Management best practices implemented
11 Environmental policy, process, practice, control
changes
164 Mgmt. policy, process, practice, control changes
251 Certifications/validations/verifications/corrections
4 Environmental/mgt. risks reduced/eliminated
32 Recommendations reported as implemented
previously identified unimplemented by follow-up '
Environmental and Business Recommendations,
Challenges, Best Practices, and Risks Identified
Target: 971; Reported: 616 (63%)
11 Environmental recommendations
(for Agency/stakeholder action)
476 Management recommendations
(for Agency/stakeholder action)
11 Critical cong./public mgmt. concerns addressed
2 Best environmental practices identified
0 Best management practices identified
9 Referrals for Agency action
20 NewFMFIA/A-123/mgt. challenges/risks identified
1 Environmental risk identified
86 Unimplemented recommendations identified
Return on Investment: Potential Dollar Return
as Percentage (150%) of OIG Budget ($52.3 million)
Target: $78.5 M; Reported: $97.3 M (EPA) (185%)
(Dollars in Millions)
$13.9 Questioned costs (net EPA)
$79.7 Recommended efficiencies, costs saved (EPA)
$ 3.7 Fines, recoveries, settlements
Criminal, Civil, and Administrative Actions
Reducing Risk of Loss/Operational Integrity
Target: 80; Reported: 84 (105%)
18 Criminal convictions
21 Indictments/informations/complaints
3 Civil judgments/settlements/filings
42 Administrative actions
Sustained Monetary Recommendations and Savings
Achieved from Current and Prior Periods: $38.2 M
Sustained Environmental and Management
Recommendations for Resolution Action: 221
Reports Issued: 304
(Dollars in Millions)
$15.7 Questioned costs sustained
$22.5 Cost efficiencies sustained or realized **
219 Sustained management recommendations
2 Sustained environmental recommendations
57 OIG-produced reports
247 Reports by other audited entities w/OIG oversight
Reported by Agency as implemented of those reported by OIG in Report No. 08-P-0200 as unimplemented.
Includes $1.3 million efficiency identified and sustained prior to completion of audit, not in resolution process.
44
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EPA OIG Semiannual Report to Congress
April 1, 2008 - September 30, 2008
Appendices
Appendix 1 - Reports Issued
The Inspector General Act requires a listing, subdivided according to subject matter, of each report issued
by the OIG during the reporting period. For each report, where applicable, the Inspector General Act also
requires a listing of the dollar value of questioned costs and the dollar value of recommendations that
funds be put to better use.
Report No.
Title
Date
Questioned Costs
Ineligible
Costs
Unsupported
Costs
Unreasonable
Costs
Federal
Recommended
Efficiencies
PERFORMANCE REPORTS
08-P-0134 FY 2007 FISMA Review of Chemical Safety Board 21-Apr-08
08-P-0141 Tracking Compliance with Superfund Clean-up Requirements 28-Apr-08
08-P-0169 Management of the National Priorities List 2-Jun-08
08-P-0174 Efforts to Address Indoor Risks from Radon 3-Jun-08
08-P-0184 Assistance Agreements - Colonias Water Grants Region 6 23-Jun-08
08-P-0186 Award of Noncompetitive Contracts 30-Jun-08
08-P-0196 Making Better Use of Stringfellow Superfund Special Accounts 9-Jul-08
08-P-0199 EPA Needs to Better Report Chesapeake Bay Challenges 14-Jul-08
08-P-0200 Follow-up at Escambia Treating Company Superfund Site 14-Jul-08
08-P-0206 Voluntary Greenhouse Gas Reduction Programs 23-Jul-08
08-P-0213 Oglala Sioux Single Audits 28-Jul-08
08-P-0235 EPA Decisions to Delete Superfund Sites 20-Aug-08
08-P-0236 Follow-up on Audit of Undistributed Site 25-Aug-08
08-P-0245 Border 2012 Program 3-Sep-08
08-P-0264 Follow-up at Stauffer Chemical Company Superfund Site 16-Sep-08
08-P-0265 Unliquidated Obligations in Brownfields Pilot Grants 16-Sep-08
08-P-0266 Assisting Tribal Water Systems 16-Sep-08
08-P-0267 Procedures for EPA's Smartcard Program 16-Sep-08
08-P-0271 EPA Personnel Access and Security System 22-Sep-08
08-P-0273 Management of EPA Headquarters Internet Protocol 23-Sep-08
08-P-0276 EPA Actions Should Lead to Improved Grants Accountability 24-Sep-08
08-P-0278 Strategic Planning for Priority Enforcement Areas 25-Sep-08
08-P-0280 Fiscal Year 2008 FISMA Report 26-Sep-08
08-P-0290 Techniques for State Monitoring of Revolving Funds 29-Sep-08
08-P-0291 Region 5 Penalty Reduction 29-Sep-08
08-P-0295 FY 2008 FISMA Review of Chemical Safety Board 29-Sep-08
TOTAL PERFORMANCE REPORTS = 26
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
$0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
$0
0
0
0
0
0
0
$47,800,000
0
0
0
0
0
$4,673,000
0
0
0
0
0
$977,718
0
0
0
0
0
0
0
$53,450,718
ASSISTANCE AGREEMENT REPORTS
08-1-0277 National Caucus and Center on Black Aged Incurred Costs 25-Sep-08 0 0
08-2-0204 Village of Wellsville, Ohio-Grant XP97582801 21-Jul-08 $15,513 $1,226,078
08-2-0226 Passaic Valley Sewerage Commissioners-Grant XP98237601 6-Aug-08 $1,312,099 0
08-4-0156 Assistance Agreements - Canaan Valley Institute 19-May-08 $102,120 $3,133,807
TOTAL ASSISTANCE AGREEMENT REPORTS = 4 $1,429,732 $4,359,885
0
0
0
0
$0
SINGLE AUDIT REPORTS
08-3-0126 Puerto Rico Environmental Quality Board - FY 2005
08-3-0127 Puerto Rico Environmental Quality Board - FY 2006
08-3-0128 Alliance for the Chesapeake Bay Inc - FY 2006
08-3-0161 Boyd Village of FY 2006
08-3-0162 Texas State of FY 2006
08-3-0163 Marshfield Clinic FY 2006
08-3-0164 Madison, Town of FY 2006
08-3-0165 Saginaw City of FY 2006
8-Apr-08
8-Apr-08
9-Apr-08
20-May-08
20-May-08
20-May-08
22-May-08
22-May-08
45
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EPA OIG Semiannual Report to Congress
April 1, 2008 - September 30, 2008
Questioned Costs
Report No.
08-3-0181
08-3-0182
08-3-0183
08-3-021 1
08-3-0227
08-3-0229
08-3-0231
08-3-0237
08-3-0238
08-3-0239
08-3-0240
08-3-0242
08-3-0243
08-3-0247
08-3-0248
08-3-0249
08-3-0250
08-3-0252
08-3-0253
08-3-0254
08-3-0256
08-3-0257
08-3-0281
08-3-0283
08-3-0285
08-3-0286
08-3-0296
08-3-0297
08-3-0298
08-3-0299
08-3-0304
08-3-0307
Title
Massachusetts Water Pollution Abatement Trust FY 2005
Massachusetts Water Pollution Abatement Trust FY 2006
Pennsylvania Commonwealth of FY 2006
Smithsonian Institution - FY2005
Sac & Fox Nation of Missouri - FY 2007
Syracuse City of 2006
Rural Community Partnership Inc and Safe Water Trust 2006
Wyoming State of FY 2006
Louisiana State of FY 2005
Wayne Charter County of FY 2006
Northeast States for Coordinated Air Use Mgmt. - FY 2005
Southern California University of FY 2007
Albuquerque City of FY 2005
North Dakota State of FY 2006
Alliance to Save Energy 2006
Indian Township Tribal Government FY 2005
Indian Township Tribal Government FY 2006
Illinois Institute of Technology FY 2006
Lawrence Technological University - FY 2006
California State of FY 2006
Athabascan Tribal Governments - Council of - FY 2006
Northeast States for Coordinated Air Use Mgmt. - FY 2006
Te-Moak Tribe of Western Shoshone, FY 2004
Te-Moak Tribe of Western Shoshone, FY2006
Augusta Richmond County 2006
Concurrent Technologies Corporation - FY 2006
Kitsap County WA FY 2006
Jersey City Municipal Utilities Authority, FY 2006
NADO Research Foundation, FY2005
Northeast States for Coordinated Air Use Mgmt. - FY 2007
Suquamish Tribe, FY 2006
Oglala Sioux Tribe FY 2004
TOTAL SINGLE AUDIT REPORTS = 40
Date
16-Jun-08
16-Jun-08
17-Jun-08
24-Jul-08
7-Aug-08
7-Aug-08
7-Aug-08
25-Aug-08
25-Aug-08
25-Aug-08
27-Aug-08
2-Sep-08
2-Sep-08
4-Sep-08
4-Sep-08
5-Sep-08
5-Sep-08
8-Sep-08
8-Sep-08
8-Sep-08
9-Sep-08
9-Sep-08
26-Sep-08
26-Sep-08
26-Sep-08
26-Sep-08
29-Sep-08
29-Sep-08
29-Sep-08
29-Sep-08
30-Sep-08
30-Sep-08
Ineligible
Costs
0
0
0
0
0
0
0
0
0
0
0
0
$213,668
0
0
0
0
0
0
0
$4,185
0
0
0
0
0
0
0
0
0
0
0
$217,853
Unsupported
Costs
0
0
0
0
0
0
0
0
0
$308
0
0
$128,710
0
$11,345
0
$26,134
0
0
0
0
$29,429
$5,069
$4,141
0
0
0
0
0
0
0
$1,158,903
$1,364,039
Unreasonable
Costs
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
$0
Federal
Recommended
Efficiencies
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
$0
DEFENSE CONTRACT AUDIT AGENCY (DCAA) CONTRACT REPORTS
08-1-0124
08-1-0125
08-1-0129
08-1-0130
08-1-0131
08-1-0132
08-1-0133
08-1-0136
08-1-0137
08-1-0138
08-1-0139
08-1-0140
08-1-0148
08-1-0177
08-1-0178
08-1-0179
08-1-0180
08-1-0185
08-1-0187
08-1-0188
08-1-0189
08-1-0190
08-1-0191
08-1-0197
IBM Global Services - Federal - FY 2005 Incurred Cost
Tetra Tech, Inc. - FY 2005 Incurred Cost
National Academy of Science - FY 2005 Incurred Costs
Morrison Knudsen Corporation-FY 1999 Incurred Cost
Washington Group International, lnc.-FY2001 Incurred Cost
IIT Research Institute - FY 2002 Incurred Cost
Alion Science & Tech (formerly IITRIJ-FY 2004 Incurred Cost
Dynamac Corporation - FY 12/31/2004 Incurred Cost
Planners Collaborative, Inc. - FY 12/31/2003 Incurred Cost
Hagler Bailly-FY1998 Incurred Cost
Resource Management Concepts, lnc.-FY2000 Incurred Cost
Resource Management Concepts, Inc.-FY 2003 Incurred Cost
Dynamac Corporation - FY 2005 Incurred Cost
Guardian Environmental Services.lnc. - FY2005 Incurred Cost
COM Federal Program Corporation - FY 2006 Incurred Cost
Perrin Quarles Associates - FY2006 Incurred Cost
Scientific Consulting Group, Inc. - FY2005 Incurred Cost
Herrera Environmental Consultants - FY2005 Incurred Cost
Industrial Economics, Inc. - FY 2005 I/C
EC/R Incorporated - FY 2005 I/C
Systems Research & Applications - FY 06/30/2006 I/C
TN & Associates - FY 2005 Incurred Cost
HydroGeoLogic, Inc. - FY 2005 Incurred Cost
Zedek Corporation- FY 10/31/2005 I/C
3-Apr-08
8-Apr-08
10-Apr-08
15-Apr-08
15-Apr-08
28-Apr-08
28-Apr-08
24-Apr-08
24-Apr-08
28-Apr-08
28-Apr-08
28-Apr-08
1-May-08
9-Jun-08
17-Jun-08
17-Jun-08
17-Jun-08
26-Jun-08
1-Jul-08
30-Jun-08
1-Jul-08
1-Jul-08
1-Jul-08
9-Jul-08
0
0
$45,280
$57,369
$44,648
$8,144
$52,793
$17,291
$40
$3,161
0
0
0
0
0
$195
$212,106
$262
0
$230,351
$54,840
$15,229
0
$2,419
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
46
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EPA OIG Semiannual Report to Congress
April 1, 2008 - September 30, 2008
Questioned Costs
Report No.
08-1-0198
08-1-0201
08-1-0205
08-1-0212
08-1-0214
08-1-0216
08-1-0217
08-1-0218
08-1-0219
08-1-0220
08-1-0233
08-1-0255
08-1-0260
08-1-0263
08-1-0268
08-1-0269
08-1-0301
08-1-0302
08-1-0306
08-2-0192
08-2-0209
08-2-0210
08-2-0232
08-2-0246
08-2-0251
08-4-0135
08-4-0144
08-4-0145
08-4-0147
08-4-0150
08-4-0151
08-4-0152
08-4-0153
08-4-0155
08-4-0157
08-4-0158
08-4-0159
08-4-0160
08-4-0166
08-4-0167
08-4-0168
08-4-0170
08-4-0171
08-4-0172
08-4-0173
08-4-0175
08-4-0176
08-4-0193
08-4-0195
08-4-0202
08-4-0203
08-4-0207
08-4-0208
08-4-0215
08-4-0221
08-4-0222
08-4-0223
08-4-0224
08-4-0225
Title
Metcalf & Eddy Inc. - FY 2006 Incurred Cost
DCT, Incorporated - FY2005 Incurred Cost
Planners Collaborative, Inc. - FY 12/31/2004 Incurred Cost
Tetra Tech EC, Inc. - FY 2006 Incurred Cost
CH2M Hill, Inc. - FY2006 Incurred Cost
Versar, Inc. - FY 2006 Incurred Cost
CH2M Hill, Group FY 2006 Incurred Cost
CH2M Hill, CCI - FY 2006 Incurred Cost
CH2M Hill, LTD (Home Office) - FY 2006 Incurred Cost
Project Resources, Inc. - FYE 12/31/2005 Incurred Cost
ABT Associates, Inc - FYE 3/31/2004 Incurred Cost Audit
URS Group, Inc. - FY2004 Incurred Cost
Environmental Health & Engineering, Inc.-FY 2005 I/C
Industrial Economics, Inc. - FY2006 Incurred Cost
Perrin Quarles Associates, Inc. - FY2007 Incurred Cost
Wilson Environmental - FY 2006 Incurred Cost
URS Group Inc. - FY 2005 Incurred Cost
Syracuse Research Corporation - FY 2007 Incurred Cost
DPRA, Inc. - FY 03/31/2007 Incurred Cost
URS Corp.-FY2001 RAG Close-out 68-W-98-228
URS Corp.-FY 2002 RAG Annual Close-out 68-W-98-228
SAIC-CAC#68-W 1-0055
Aqua Terra Consultants - FY 2006 Incurred Cost
Tetra Tech EM, Inc. - FY 2004 RAG 68-W6-0037
Kemron Environmental Services - FY 05/31/2005 I/C
PARS Environmental, LLC- Post Award Provisional Bill Rate
Syracuse Research Corporation - Mod. Financial Capability
Cadmus Group, Inc. - Floorcheck
Battelle Memorial Institute - CAS 416
Syracuse Research Corporation - CAS 404
Battelle Memorial Institute - ICAPS Purchasing Follow-Up
Battelle Memorial Institute - ICAPS Compensation
Battelle Memorial Institute - OCEO CAS 412 & CAS 413
Applikon Analyzers, Inc. - Proposal
EG&G - FY 2006 Accounting System Audit
EG&G - FY 2006 CAS 409
EG&G -FY 2006 CAS 411
EG&G - FY2006 Estimating System
Syracuse Research Corporation - CAS 409
Eastern Research Group - CAS 404
Eastern Research Group - CAS 409
Arcadis Geraghty & Miller- Provisional Billing Rate
Syracuse Research Corporation - CAS 408
Syracuse Research Corporation - CAS 411
CH2M Hill, Inc. (INC)- FY2006 Billing System
Applikon Analyzers, Inc. - Pre-Award Accounting System
Applikon Analyzers, Inc. - Financial Capability
Eisenstein Malanchuk LLP - Preaward Acctg Sys Follow-up
Mactec Engineering & Consulting, Inc. - CAS 409
Mactec Engineering & Consulting, Inc. - CAS 418
Tetra Tech EC, Inc. - Compensation Audit
Metcalf & Eddy, Inc. - Floorcheck
MACTEC Engineering & Consulting, Inc - CAS 409
Syracuse Research Corporation - Voucher Exam
Booz Allen Hamilton - CAS 404
Booz Allen Hamilton - CAS 408
Booz Allen Hamilton -CAS 420
Booz Allen Hamilton - Estimating System
Booz Allen Hamilton - FY 2009-2013 Forward Price Rates
Date
10-Jul-08
16-Jul-08
22-Jul-08
28-Jul-08
5-Aug-08
4-Aug-08
5-Aug-08
5-Aug-08
5-Aug-08
5-Aug-08
22-Aug-08
9-Sep-08
12-Sep-08
12-Sep-08
17-Sep-08
17-Sep-08
29-Sep-08
29-Sep-08
30-Sep-08
1-Jul-08
24-Jul-08
24-Jul-08
12-Aug-08
4-Sep-08
8-Sep-08
21-Apr-08
29-Apr-08
30-Apr-08
1-May-08
8-May-08
9-May-08
9-May-08
9-May-08
20-May-08
20-May-08
20-May-08
20-May-08
20-May-08
27-May-08
27-May-08
28-May-08
30-May-08
30-May-08
30-May-08
2-Jun-08
4-Jun-08
4-Jun-08
3-Jul-08
9-Jul-08
17-Jul-08
17-Jul-08
24-Jul-08
24-Jul-08
4-Aug-08
5-Aug-08
5-Aug-08
5-Aug-08
5-Aug-08
5-Aug-08
Federal
Ineligible Unsupported Unreasonable Recommended
Costs Costs Costs Efficiencies
$14,453
0
0
0
$833,683
$4,000
0
0
0
0
0
0
0
0
$85,958
0
0
0
0
0
$108,758
$433,036
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
$2,240,000
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
47
-------
EPA OIG Semiannual Report to Congress
April 1, 2008 - September 30, 2008
Questioned Costs
Report No.
08-4-0228
08-4-0230
08-4-0234
08-4-0244
08-4-0258
08-4-0259
08-4-0261
08-4-0262
08-4-0272
08-4-0274
08-4-0275
08-4-0279
08-4-0282
08-4-0284
08-4-0287
08-4-0288
08-4-0289
08-4-0292
08-4-0293
08-4-0294
08-4-0300
08-4-0303
08-4-0305
08-4-0308
Title
Weston Solutions, Inc. - Financial Control Risk Assess.
Pacific Western Technologies, LTD. - FY 07 Prov Billing Rate
Pacific Western Technologies, LTD. - Floor Check
Mactec Engineering & Consulting, Inc. - CAS 420
Pacific Western Technologies, LTD. - Accounting System
Mactec Engineering & Consulting, Inc. - MAAR 6
Cadmus Group, Inc. - CAS 420
Battelle Memorial Institute - Estimating System Surveys
Pegasus Technical Services - Floor Check
Sonoma Technology, Inc. - Floorcheck
Weston Solutions, Inc. - FY 2006 CAS 413
Eastern Research Group - CAS 420
Pegasus Technical Services - Paid Voucher Review
Pegasus Technical Services - Accounting System
The McConnell Group, Inc. - Preaward Accounting System
Sonoma Technology, Inc. - Financial Capability
Tetra Tech EC, Inc. - CAS 420
Mactec Engineering & Consulting, Inc. - CAS 410
Mactec Engineering & Consulting, Inc. - CAS 408
Mactec Engineering & Consulting, Inc. - CAS 404
Environmental Quality Management - Floor Check
E2, Inc. - Accounting System Follow-up
Environmental Quality Management - Financial Capability
Tetra Tech EC, Inc. - EDP General Controls
TOTAL DCAA CONTRACT REPORTS = 107
Date
7-Aug-08
7-Aug-08
20-Aug-08
3-Sep-08
12-Sep-08
12-Sep-08
12-Sep-08
12-Sep-08
22-Sep-08
24-Sep-08
25-Sep-08
25-Sep-08
26-Sep-08
26-Sep-08
26-Sep-08
26-Sep-08
26-Sep-08
29-Sep-08
29-Sep-08
29-Sep-08
29-Sep-08
29-Sep-08
30-Sep-08
30-Sep-08
Federal
Ineligible Unsupported Unreasonable Recommended
Costs Costs Costs Efficiencies
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
$2,224,016
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
$0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
$0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
$2,240,000
OIG CONTRACT REPORTS
08-4-0143
08-4-0146
08-4-0154
08-4-0270
Tech Law Labor Charges
Cambridge Labor Charging Verification Review
Tetra Tech Labor Charging Verification Review
Final Mixed Funding Claim for Old Southington Superfund Site
TOTAL OIG CONTRACT REPORTS = 4
29-Apr-08
30-Apr-08
19-May-08
18-Sep-08
$2,054
0
$440,358
0
$442,412
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
FINANCIAL STATEMENT REPORTS
08-1-0149
08-1-0194
08-2-0142
08-2-0241
08-2-0309
2007 PRIA Financial Statements
2007 FIFRA Financial Statements
Agreed Upon Procedures-FY 2008 1st Qtr Fin. Statements
Agreed Upon Procedures-FY 2008 2nd Qtr Fin. Statements
Agreed Upon Procedures-FY 2008 3rd Qtr Fin. Statements
TOTAL FINANCIAL STATEMENT REPORTS = 5
5-May-08
8-Jul-08
28-Apr-08
27-Aug-08
30-Sep-08
0
0
0
0
0
$0
0
0
0
0
0
$0
0
0
0
0
0
$0
0
0
0
0
0
$0
TOTAL REPORTS ISSUED = 186
$4,314,013
$5,723,924
$0
$55,690,718
48
-------
EPA OIG Semiannual Report to Congress
April 1, 2008 - September 30, 2008
Appendix 2 - Reports Issued Without Management Decisions
For Reporting Period Ending September 30, 2008
The Inspector General Act requires a summary of each audit report issued before the commencement of the
reporting period for which no management decision has been made by the end of the reporting period, an explanation
of the reasons such management decision has not been made, and a statement concerning the desired timetable for
achieving a management decision on each such report. In the summaries below, we note the Agency's explanation
of the reasons management decision has not been made, the Agency's desired timetable for achieving a
management decision, and the OIG follow-up status as of September 30, 2008.
Office of Air and Radiation
Report No. 2004-P-00033, Effectiveness of Strategies to Reduce Ozone Precursors, September 29, 2004
Summary: Our analysis of EPA emissions data for "serious," "severe," and "extreme" ozone nonattainment areas
indicated that some major metropolitan areas may not have achieved the required 3-percent annual emission
reductions in ozone precursor emissions. While EPA air trend reports have emphasized that ozone levels are
declining nationally and regionally, only 5 of 25 nonattainment areas designated serious to extreme had substantial
downward trends. We continue to believe EPA should issue a Milestone Compliance Demonstration rule for serious,
severe, and extreme ozone nonattainment areas.
Agency Explanation: EPA recently issued a lower ozone standard and expects to finalize the associated
implementation rule in fall 2009. Based on the resulting classifications of ozone attainment and non-attainment
areas, the EPA will revisit the effectiveness of the OIG's recommendation for Milestone Compliance Demonstration
guidance. Expect resolution by December 2009.
OIG Follow-up Status: Resolution pending receipt of additional information.
Report No. 2005-P-00003, Development of the Proposed MACT for Utility Units, February 3, 2005
Summary: Evidence indicated that EPA senior management instructed EPA staff to develop a Maximum
Achievable Control Technology (MACT) standard for mercury that would result in national emissions of 34 tons
annually, instead of basing the standard on an unbiased determination of what the top performing coal-fired units
were achieving in practice. The Clean Air Act requires that a MACT standard should, at a minimum, be based on the
emissions levels achieved by the top performing 12 percent of units - not a targeted national emissions result. We
believed it was likely that the standard understated the average amount of mercury emissions reductions achieved by
the top performing 12 percent of power units. Thus, the MACT standard, if adopted, would not achieve the maximum
emission reductions achievable. Shortly after we issued our final report, EPA de-listed mercury as an air toxic subject
to MACT standards and issued the Clean Air Mercury Rule that established a trading program for mercury emissions.
This action meant our recommendations regarding the development of a mercury MACT were no longer applicable.
However, 16 States challenged EPA's decision in a lawsuit, and we agreed to hold the recommendations in
abeyance until the court case is resolved. The DC Court of Appeals vacated EPA's Clean Air Mercury Rule on
February 8, 2008. On October 17, 2008, EPA filed a "writ of certiorari"with the Supreme Court to have the DC
Appeals court ruling overturned.
Agency Explanation: Per OIG, resolution on hold, beyond Agency control. EPA received ruling on Clean Air Mercury
Rule and is determining the next action. Expected resolution by March 2009.
OIG Follow-up Status: Resolution pending receipt of additional information.
Report No. 08-P-0020, MACT Implementation Progress and Challenges, October 31, 2007
Summary: EPA plans to use National Emissions Inventory data to assess the public health risk remaining from
MACT sources of air toxics emissions, but the reliability of National Emissions Inventory data for site-specific
emissions varies considerably. The Agency has not agreed to establish the recommended State reporting
requirements, and we consider the issue unresolved.
49
-------
EPA OIG Semiannual Report to Congress April 1, 2008 - September 30, 2008
Agency Explanation: The Agency is working with the OIG to resolve one of the recommendations. Expect resolution
by January 2009.
OIG Follow-up Status: Resolution under negotiation in Headquarters.
Report No. 2007-P-00011, Review of Interagency Contracts, March 27, 2007
Summary: We sought to determine whether EPA effectively follows interagency contracting requirements by
ensuring products and services meet quality, cost, and timeliness requirements. We also looked into opportunities to
improve the process. We recommended that EPA provide guidance to project officers for developing Independent
Government Costs Estimates or other appropriate cost information, as well as cost reasonableness assessments.
Agency Explanation: The interim procedures to implement the guidance have been sent to the OIG for review. The
Agency is waiting for the OIG's response and expects final action by October 30, 2008.
OIG Follow-up Status: Incomplete response received.
Report No. 2004-1-00099, Lockheed Martin Services Group - FYE 12/31/2002 Incurred Cost, August 23, 2004
Summary: DCAA questioned indirect costs of $3,595,399, of which $2,128 is applicable to EPA contracts. DCAA
qualified the audit results pending receipt of assist audit reports.
Agency Explanation: Audit resolution on hold due to other cognizant federal agency (Department of Defense).
OIG Follow-up Status: Resolution pending receipt of additional information.
Report No. 2006-4-00120, National Academy of Sciences - FY2006 Info Tech System, July 20, 2006
Summary: DCAA determined that the contractor's information technology system general internal controls are
inadequate in part.
Agency Explanation: Audit on hold due to other cognizant federal agency (Office of Naval Research).
OIG Follow-up Status: Resolution pending receipt of additional information.
Report No. 2006-4-00165, National Academy of Sciences - FY2006 Indirect/ODC System, September 27, 2006
Summary: In DCAA's opinion, the contractor service centers cost system and related internal control policies and
procedures are inadequate in part. DCAA's examination noted certain significant deficiencies in the design or
operation of the Indirect/Other Direct Costs system process.
Agency Explanation: Audit on hold due to other cognizant federal agency (Office of Naval Research).
OIG Follow-up Status: Resolution pending receipt of additional information.
Report No. 2006-4-00169, National Academy of Sciences - FY2006 Labor System, September 29, 2006
Summary: In DCAA's opinion, the contractor's labor system and related internal control policies and procedures are
inadequate in part. DCAA's examination noted certain significant deficiencies in the design or operation of the
internal control structure.
Agency Explanation: Audit on hold due to other cognizant federal agency (Office of Naval Research).
OIG Follow-up Status: Resolution pending receipt of additional information.
50
-------
EPA OIG Semiannual Report to Congress April 1, 2008 - September 30, 2008
Report No. 2007-4-00011, National Academy of Sciences - FY2006 Electronic Time System, October 24, 2006
Summary: DCAA determined contractor's Electronic Timekeeping System internal controls to be inadequate in part.
Agency Explanation: Audit resolution on hold due to other cognizant federal agency (Office of Naval Research).
OIG Follow-up Status: Resolution pending receipt of additional information.
Report No. 2007-1-00016, URS Corporation (c/o URS Greiner, Inc.) - FY2001 Incurred Cost, November 13, 2006
Summary: DCAA questioned a total of $188,772,784 in direct and indirect costs. Of these, $5,585,929 are claimed
direct costs, of which $1,328,189 are from EPA Contract No. 68-W9-8225. The questioned indirect expenses,
impacted all eight fringe, overhead, and General and Administrative rates. Of the questioned indirect costs, EPA's
share is $401,412, for a total of $1,729,601 in questioned direct and indirect costs. We note that the contractor did
not agree with the questioned costs, so the Cumulative Allowable Cost Work Sheet files provided by the contractor
are not adjusted for the questioned costs.
Agency Explanation: Audit resolution on hold due to other cognizant federal agency (Department of Defense).
OIG Follow-up Status: Resolution pending receipt of additional information.
Report No. 2007-4-00038, Weston Solutions - FY2006 Floor Checks, January 8, 2007
Summary: DCAA expressed no opinion on the adequacy of the contractor's labor accounting system taken as a
whole, as it had determined that certain labor practices required corrective action to improve the reliability of the labor
accounting system. The conditions are detailed in the "Statement of Conditions and Recommendations" section of
the report.
Agency Explanation: This audit will be held open pending the results of the follow-up audit in 6 months.
OIG Follow-up Status: Resolution pending receipt of additional information.
Report No. 2007-1 -00059, National Academy of Sciences - FY12/31/2004 Incurred, April 5, 2007
Summary: In DCAA's opinion the claimed direct costs are acceptable, however there are $787,774 in questioned
indirect costs of which $70,900 are applicable to EPA contracts.
Agency Explanation: This audit is on hold awaiting information on the resolution of the questioned costs by the
cognizant federal agency (Office of Naval Research).
OIG Follow-up Status: Resolution pending receipt of additional information.
Report No. 2007-1-00061, Lockheed Martin Services Group - FY 12/31/20041/C, April 10, 2007
Summary: DCAA questioned $34,708,911 in claimed direct costs and proposed indirect costs. Further, DCAA set
aside $338,864,655 in claimed direct and indirect costs pending receipt of assist audits and/or calculation of the
impact of intercompany allocations on the various indirect cost pools. Additionally, DCAA upwardly adjusted
($48,224,805) in claimed base costs.
Questioned Costs - Direct $21,581,464
Questioned Costs - Indirect 13.127.447
Total Questioned Costs $34,708,911
EPA ADV Percentage .02
EPA Share of Questioned Costs $694,178
DCAA did not provide any Cumulative Allowable Cost Work Sheet or Schedule of Allowable Costs by Cost Element
by Contract because the most current year with negotiated indirect rates is calendar year 1998. DCAA will issue a
supplemental audit report upon completion of its analysis of the assist audit results, and as the outstanding fiscal
years indirect rates are negotiated, the requested Cumulative Allowable Cost Work Sheet and Schedule of Allowable
Costs by Cost Element by Contract will be provided.
51
-------
EPA OIG Semiannual Report to Congress April 1, 2008 - September 30, 2008
Agency Explanation: This audit is on hold awaiting information on the resolution of the questioned costs by the
cognizant federal agency (Department of Defense).
OIG Follow-up Status: Resolution pending receipt of additional information.
Report No. 2007-4-00058, SAIC - Companies 1, 6, and 9-FY 2006 Floorchecks, April 30, 2007
Summary: DCAA determined that certain labor practices require corrective action to improve the reliability of the
contractor's labor accounting system. DCAA did not express an opinion on the adequacy of the contractor's labor
accounting system taken as a whole.
Agency Explanation: This audit is on hold waiting on the resolution of the identified deficiency by the cognizant
federal agency (Defense Contract Management Agency).
OIG Follow-up Status: Resolution pending receipt of additional information.
Report No. 2007-1-00079, Science Applications Intl. Corporation - FYE1/31/20051/C, July 18, 2007
Summary: DCAA submitted three audit reports under this assignment: SAIC Corporate Home Office (Company 9)
Report # 2005A101001, SAIC Research & Development (Company 1) Report # 2005B10100001, and SAIC Pacific
Technology Service (Company 6) Report #2005C10100001. DCAA questioned proposed indirect costs and rates at
Companies 1, 6, and 9. DCAA questioned a total of $17,224,585 of Company 9 claimed indirect expenses
($9,938,874) and Fringe Benefits costs and rates ($7,285,711), of which $7,762,651 was allocated to other
companies which do not perform government work. Questioned indirect costs of $3,525,230 and $4,552,250 were
allocated to and questioned in the claimed General and Administrative costs and rates of Companies 1 and 6,
respectively. The questioned Fringe Benefits rates in Company 9 resulted in questioned fringe benefits costs of
$865,365 and $519,089 for Companies 1 and 6, respectively. DCAA questioned an additional $1,995,869 of
Company 1 claimed indirect expenses, and an additional $511,822 of Company 6 claimed indirect expenses.
Total questioned costs in Companies 1 and 6 are $11,969,625, of which $119,696 are applicable to EPA contracts.
Agency Explanation: This audit is on hold waiting on the resolution of the identified deficiency by the cognizant
federal agency (Defense Contract Management Agency).
OIG Follow-up Status: Resolution pending receipt of additional information.
Report No. 2007-1-00080, Lockheed Martin Services, Inc. - FY 2005 Incurred Cost, August 6, 2007
Summary: DCAA questioned $595,792,539 in claimed direct costs and $10,982,460 in proposed indirect costs and
rates. None of the questioned direct costs are chargeable to any of the EPA contracts. A number of the EPA
contracts have indirect ceiling rates which are lower than the contractor's proposed indirect rates, and are not
impacted by the questioned indirect expenses and rates. However, there are EPA contracts/subcontracts which
do not have indirect ceiling rates and are impacted by the questioned indirect rates.
Questioned Costs EPA's Share
Indirect Costs $17,623,213 1.21% $213,531
Adjustment to G&G Base Costs ( 6.640.753) 1.21% ( 80.462)
Total Questioned Indirect Costs $10,982,460 $133,069
Agency Explanation: This audit is on hold waiting on the resolution of the identified deficiency by the cognizant
federal agency (Defense Contract Management Agency).
OIG Follow-up Status: Resolution pending receipt of additional information.
Report No. 2007-1-00090, ABT Associates Inc. - FY2002 Incurred Cost, August 29, 2007
Summary: DCAA questioned a total of $2,206,870 in questioned costs, $5,363 of proposed direct costs, and
$2,201,507 of proposed indirect costs and rates. EPA's share of the questioned indirect costs is $123,686. None of
the questioned direct costs impact an EPA contract.
52
-------
EPA OIG Semiannual Report to Congress April 1, 2008 - September 30, 2008
Agency Explanation: This audit is on hold awaiting information on the resolution of the questioned indirect costs and
rates by the cognizant federal agency (U.S. Agency for International Development).
OIG Follow-up Status: Resolution pending receipt of additional information.
Report No. 2007-1-00097, National Academy of Sciences FYE12/31/2003 Incurred Cost, September 20, 2007
Summary: In DCAA's opinion, the contractor's questioned costs increased to $300,645, of which EPA's portion is
$27,058 (9 percent)
Agency Explanation: On hold due to other federal agency (Office of Naval Research).
OIG Follow-up Status: Resolution pending receipt of additional information.
Report No. 2007-4-00079, Weston Solutions, Inc. - FY 2006 Billing System, September 25, 2007
Summary. In DCAA's opinion, the contractor's billing system and related internal control policies and procedures are
inadequate in part. DCAA's examination noted certain significant deficiencies in the design or operation of the
internal control structure, which in its judgment could adversely affect the contractor's ability to record, process,
summarize, and report billings in a manner that is consistent with applicable Government contract laws and
regulations. DCAA identified nine deficiencies during the course of the examination. The contractor has agreed to
have the corrective action for all listed deficiencies implemented by September 30, 2007.
Agency Explanation: On hold due to other federal agency (Defense Contract Management Agency).
OIG Follow-up Status: Resolution pending receipt of additional information.
Report No. 2007-4-00080, National Academy of Sciences - FY2006 Budget System, September 26, 2007
Summary: In DCAA's opinion, the budget and planning system and related internal control policies and procedures
are inadequate in part.
Agency Explanation: This audit is on hold awaiting information on the resolution of the cited inadequacies by the
cognizant federal agency (Office of Naval Research).
OIG Follow-up Status: Resolution pending receipt of additional information.
Report No. 08-4-0002, SAIC- Company 1 - Compensation Follow-Up, October 2, 2007
Summary: In DCAA's opinion, the contractor's compensation system and related internal control policies and
procedures are inadequate in part. DCAA's examination noted certain significant deficiencies in the design or
operation of the internal control structure, which could adversely affect the contractor's ability to record, process,
summarize, and report compensation in a manner that is consistent with applicable government contract laws and
regulations.
Agency Explanation: This audit is on hold awaiting information on the resolution of the questioned costs from the
cognizant federal agency (Defense Contract Management Agency).
OIG Follow-up Status: Resolution pending receipt of additional information.
Report No. 08-1-0114, Weston Solutions Inc. - FY 12/31/2004 Incurred Cost, March 24, 2008
Summary: DCAA determined that the contractor's claimed direct costs are acceptable, however, DCAA questioned
$2,082,837 in proposed indirect costs and rates. Of these questioned costs are $1,600,000 in questioned proposed
overhead costs which the contractor does not concur with. Further, DCAA applied penalties in accordance with
Federal Acquisition Regulation 42.709, and identified expressly unallowable costs subject to penalty that had been
allocated to various contracts specified in Federal Acquisition Regulation 42.709(b), including 11 EPA contracts. Of
the questioned costs, EPA's total share of questioned costs is $197,869, of which $152,000 is questioned overhead
costs, $12,163 is the remaining questioned overhead costs, and $33,706 is the questioned General and
Administrative costs. DCAA did mot include the Schedule of Allowable Costs by Cost Element by Contract or the
Cumulative Allowable Costs by Contract Worksheet as requested.
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EPA OIG Semiannual Report to Congress April 1, 2008 - September 30, 2008
Agency Explanation: This audit is on hold awaiting resolution of the questioned indirect costs and rates by the
cognizant federal agency (Defense Contract Management Agency).
OIG Follow-up Status: Resolution pending receipt of additional information.
Grants and Interagency Agreements Management Division (GIAMD) -formerly Grants Administration Division
Report No. 2002-2-00008, MBI International Assistance Agreement, January 29, 2002
Summary: MBI did not have adequate justification to support the award of sole source contracts.
Also, MBI's procurement practices did not meet federal requirements. As a result, $1,301,365, consisting of
$1,201,857 in contract costs and $99,508 in consultant costs, is not eligible for federal reimbursement. Further, there
were apparent conflicts of interest between MBI, its subsidiary (CRT), and companies created by CRT.
Agency Explanation: Office of Grants and Debarment and Office of General Counsel met to discuss the status of the
MBI audit and the drafted final decision letter. Also, the dispute arguments presented by MBI and possible future
steps and resolutions were considered. Agency expects resolution by January 2009.
OIG Follow-up Status: Report reactivated/awaiting response.
Report No. 2003-S-00001, Region 7 Grants Proactive, May 29, 2002
Summary: We questioned over $2 million because the Coordinating Committee on Automotive Repair (CCAR) did
not account for the funds in accordance with federal rules, regulations, and terms of the agreement.
Agency Explanation: OIG questioned all costs claimed ($2,026,837) on three projects between 1995-2001. CCAR
has submitted the required indirect cost rate information for the audit period and has provided documentation that its
financial management system and time distribution system meet the requirements of EPA's assistance regulations
and OMB Circular A-122. However, reconstructed accounting records CCAR submitted in December 2005 for FYs
1996 and 1997 do not substantiate the costs they charged to the project. EPA requested additional information to
substantiate the costs, but CCAR has not responded. EPA will follow up with CCAR and issue the final determination
disallowing costs by November 2008.
OIG Follow-up Status: Incomplete Response Received.
Report No. 2003-3-00113, American Indian Science & Engineering Society 2000, April 23, 2003
Summary: Costs were not approved or were not supported. Questioned costs for this report totaled $104,760.
Agency Explanation: There are two reports under review for the years 2000 and 2001. The reports include findings
of inadequate internal controls and questioned costs totaling $163,125. These reports have been reviewed and the
recipient has submitted responses to the findings indicating that procedures have been implemented and the
conditions no longer exist. However, GIAMD has received a subsequently issued audit report for audit period 2002.
Although this latest report does not question any costs, it contains findings that some of the pre-existing internal
control issues still exist. GIAMD is working on a combined resolution addressing the findings in all of the audit
reports. Final determination is expected October 31, 2008.
OIG Follow-up Status: Report reactivated/awaiting response.
Report No. 2003-3-00114, American Indian Science & Engineering Society 2001, April 23, 2003
Summary: Costs were not approved and not properly supported. Questioned costs for this report totaled $58,365.
Agency Explanation: There are two reports under review for the years 2000 and 2001. The reports include findings
of inadequate internal controls and questioned costs totaling $163,125. These reports have been reviewed and the
recipient has submitted responses to the findings indicating that procedures have been implemented and the
conditions no longer exist. However, GIAMD has received a subsequently issued audit report for audit period 2002.
Although this latest report does not question any costs, it contains findings that some of the pre-existing internal
control issues still exist. GIAMD is working on a combined resolution addressing the findings in all of the audit
reports. Final determination is expected October 31, 2008.
OIG Follow-up Status: Report reactivated/awaiting response.
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EPA OIG Semiannual Report to Congress April 1, 2008 - September 30, 2008
Report No. 2003-4-00120, Geothermal Heat Pump Consortium, Inc. - Costs Claimed, September 30, 2003
Summary: Questioned $1,153,472 due to material financial management deficiencies. The Consortium's financial
management system was inadequate in that the Consortium did not (1) separately identify and accumulate costs for
all direct activities, such as membership support and lobbying; (2) account for program income generated by the
activities funded by the EPA agreements; (3) prepare or negotiate indirect cost rates; (4) prepare written procedures
for allocating costs to final cost objectives; (5) maintain an adequate labor distribution system; and (6) provide
adequate support for direct cost allocations. The Consortium also did not (1) competitively procure contractual
services or perform any of the required cost and price analyses; and (2) comply with all report requirements.
Agency Explanation: Office of Grants and Debarment is reviewing the financial statements and the lobbying
disclosure statements to identify allowable costs. Grants Specialist and new Branch Chief are working to resolve the
issues of this audit. Resolution is expected in January 2009.
OIG Follow-up Status: No response.
Report No. 2005-3-00036, National Indian Health Board, FY2002, December 30, 2004
Summary: The Board was allocating salary costs to grants based on pre-determined formulas. No support, in the
form of time sheets, was located for those allocations. Also, amounts charged to various grants were not always
supported by original documentation. Therefore, we questioned $31,960 as unsupported.
Agency Explanation: The information that the Board sent to the Office of Grants and Debarment did not address the
issues in the audit. GIAMD requested additional information from the Board to provide actual documents to support
the issues in the audit. Agency expects a Final Determination Letter by December 2008.
OIG Follow-up Status: No response.
Report No. 2006-3-00006, Alfred University, FY2004, October 13, 2005
Summary: The University's accounting system provided certified payroll information on an individual grant basis.
However, the payroll distribution system did not provide a proportionate break down of each employee's total time
between each sponsored program he/she was working on and other non-sponsored activities. The auditor
questioned costs of $649,506, but could not determine the direct impact upon EPA's program.
Agency Explanation: We received a second Alfred University audit with precisely the same type of findings and
decided to combine the two audits. We had received requested information for the first audit and are now requesting
more information to document support needed for the additional findings. This support requires recreating
documentation, which includes finding and contacting professors to obtain certification of time and work performed by
students who no longer work there; and student identification numbers, account numbers used, etc. Documentation
received to date has been sufficient to substantiate the support needed in the first audit. Based upon previous
documentation submitted and sameness of findings, we anticipate all documentation, when received, will be sufficient
to support payments made to the students and that costs questioned will be supported through such documentation.
A Final Determination Letter is anticipated by October 30, 2008.
OIG Follow-up Status: No response.
Report No. 2006-4-00122, Association of State and Interstate Water Pollution Control Administrators,
July 31, 2006
Summary: The Association did not comply with the financial and program management standards and the
procurement standards promulgated in Title 40 Code of Federal Regulations, Subchapter B, Part 30. The
Association (1) could not provide support for any of its general journal entries; (2) included duplicate recorded costs in
its accounting system; (3) could not always trace grant draws to the accounting records; (4) could not always support
labor charged to the EPA grants; (5) could not support the recorded indirect costs; (6) did not record all of its program
income; (7) did not have adequate written procedures for determining reasonable, allocable, and allowable costs;
(8) drew EPA grant funds in excess of the funds needed; and (9) did not complete the required single audits for fiscal
years ended June 30, 2004, and June 30, 2005. As a result, we questioned as unsupported a total of $1,883,590 in
EPA grant payments for seven grants.
Agency Explanation: GIAMD has instructed the Association to submit indirect cost rate proposals for the fiscal years
covered in the audit but lacking an indirect cost rate. The Association has provided an October 2008 deadline for this
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EPA OIG Semiannual Report to Congress April 1, 2008 - September 30, 2008
request. Pending the outcome of the indirect cost rates, GIAMD will issue a Final Determination Letter. Expect
resolution by November 5, 2008.
OIG Follow-up Status: No response.
Report No. 2006-3-00199, Howard University, FY2005, September 7, 2006
Summary: The University had numerous program noncompliances related to timekeeping, funds matching,
subrecipient monitoring, financial reporting and equipment disposal.
Agency Explanation: The Office of Grants and Debarment is working with the University and requested additional
information needed to review the corrective actions. The Office of Grants and Debarment expects the Final
Determination Letter in January 2009.
OIG Follow-up Status: No response.
Report No. 2007-4-00026, International City County Management Association, November 28, 2006
Summary: Questioned costs due to (a) lack of competition for contracts, (b) lack of oversight for sub-awards, (c) lack
of documentation on sub-grants, and (d) illegal indirect costs.
Agency Explanation: The last action being completed is to parse out what costs will be allowable and unallowable for
each of the several grants in the audit, including figuring out what additional costs would be unallowable if the
National Policy Training and Compliance Division approves of requested deviations. The GIAMD will be working with
the National Policy Training and Compliance Division to request one deviation from procurement regulations for one
of the questioned contracts and another deviation from in-kind donation documentation standards for much of the
Association's proposed cost sharing. Office of Grants and Debarment expects the Final Determination Letter on
October 31, 2008.
OIG Follow-up Status: No response.
Report No. 2007-4-00027, National Rural Water Association - Congressional, November 30, 2006
Summary: The Association's method of allocating indirect costs over total direct costs is contrary to the requirements
of OMB Circular A-122. Currently, the Association does not exclude subcontracts or subawards from its indirect cost
allocation base. As a result, the EPA grants are bearing a disproportionate amount of indirect costs. For the period
from March 1, 1999, to February 29, 2004, EPA grants may have been over-allocated by $2,021,821 in indirect costs.
The exact amount of the indirect over-allocation will be determined during negotiating the indirect cost rate.
Agency Explanation: Office of Grants and Debarment staff is working with the National Rural Water Association
regarding indirect cost rates and how the Association allocated the costs. The Association provided insufficient
support and GIAMD is following up. Resolution is expected in January 2009.
OIG Follow-up Status: No response.
Report No. 2007-3-00037, Alfred University - FY 2005, December 11, 2006
Summary: The University's accounting system provided certified payroll information on an individual grant basis.
However, the payroll distribution system did not provide a proportionate break down of each employee's total time
between each sponsored program he/she may be working on and other non-sponsored activities. The auditor
questioned costs of $649,506, but could not determine the direct impact upon EPA's program.
Agency Explanation: This is the second Alfred University audit with precisely the same type of findings as the first
audit for FY 2004 and we decided to combine the two audits. We had received requested information for the first
audit and are now requesting more information to document support needed for the additional findings. This support
requires recreating documentation which includes finding and contacting professors to obtain certification of time and
work performed by students who no longer work there; and student identification numbers, account numbers used,
etc. A Final Determination Letter is anticipated by October 30, 2008.
OIG Follow-up Status: No response.
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EPA OIG Semiannual Report to Congress
April 1, 2008 - September 30, 2008
Office of Prevention, Pesticides, and Toxic Substances
Report No. 2007-P-00040, Strategic Agricultural Initiative, September 25, 2007
Summary: The Strategic Agricultural Initiative program has not demonstrated how it fulfills its unique role of helping
growers transition away from high-risk pesticides as identified by the Food Quality Protection Act. Specifically, the
program does not have a strategic plan or similar documents that link project mission and associated goals, logic
model, performance measures, and data the program collected. Headquarters and the regions have inconsistent
priorities for implementing the program. We recommended that EPA develop a needs assessment for the Strategic
Agricultural Initiative program to demonstrate how it fulfills its role in meeting Food Quality Protection Act
requirements. If the need is demonstrated, EPA should create a strategic plan that sets clear priorities for program
direction. EPA agreed to reassess the need for the program and develop a strategic plan if determined to be needed.
These recommendations should result in approximately $1.5 million in annual grant funds put to better use because
either the grants will no longer be needed or their effectiveness will be enhanced.
Agency Explanation: Resolution on hold by the OIG.
OIG Follow-up Status: Resolution pending receipt of additional information.
Office of Solid Waste and Emergency Response
Report No. 2007-P-00029, Resource Conservation and Recovery Act Referrals to Superfund, August 1, 2007
Summary: In April 2004, EPA released a study, Superfund: Building on the Past, Looking to the Future (the 120-Day
Study). We evaluated EPA's progress in responding to three recommendations from the 120 Day Study.
Specifically, the study made several recommendations to determine if Resource Conservation and Recovery Act
facilities were causing a burden on the Superfund program. We found that some of EPA's planned actions to
address its study recommendations were different than the actions recommended. We recommend that EPA review
a sample of the implemented study recommendations to confirm that the actions taken were complete and
responsive to the original study recommendation(s). In October 2007, EPA proposed actions to address this
recommendation. However, these actions were not responsive to the OIG's recommendation. In March 2008, OIG
requested a meeting with EPA to discuss our recommendation and work to reach agreement on Agency actions to
address it.
Agency Explanation: The Office of Solid Waste and Emergency Response's response to the final audit report and
follow-up information requested by the OIG is currently being evaluated by the OIG. Unable to determine completion
of OIG evaluation.
OIG Follow-up Status: Proposed response received awaiting final determination.
Office of Water
Report No. 2007-P-00012, Assistance Agreements - State Revolving Fund Policy Review, March 28, 2007
Summary: EPA regulations and policies allowing States to use bonds repaid from State Revolving Fund interest to
meet State Revolving Fund match requirements are resulting in fewer dollars being available for water projects.
Twenty States have used the Clean Water State Revolving Fund to repay bonds issued to meet the required fund
match, and 16 of those States also did so for the Drinking Water State Revolving Fund. Current practices have
resulted in an estimated $937 million less available for loans since the inception of the State Revolving Fund
programs.
Agency Explanation: The Office of Water remains in disagreement with OIG's recommendation relating to the State
Revolving Fund bond issue. As of August 18, 2007, Office of Water has been waiting on OIG's formal decision as to
whether this matter will be referred to the Audit Resolution Board to be resolved. Office of Water sent an e-mail on
September 23, 2008, to the OIG; waiting for response.
OIG Follow-up Status: Resolution under negotiation in Headquarters.
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EPA OIG Semiannual Report to Congress April 1, 2008 - September 30, 2008
Report No. 2006-3-00203, Indian Township Tribal Government, FY 2002, September 18, 2006
Summary: OMB Circular A-133, Compliance Supplement, requires that all federal funds in tribal custody are to be
invested in only securities of the Federal Government, but the Tribe invested in non-governmental investments. OMB
Circular A-133, Compliance Supplement, requires that all recipients of federal funds have written policies and
procedures, but the recipient has virtually no written investment policies and procedures. The Tribe did not have an
adequate accounting system to record, process, and summarize accounting transactions. The Tribe continually
posted transactions and adjusted its internal financial statements for periods up to a year after the fiscal year had
closed. The Tribe maintained numerous bank accounts within its internal accounting system, which had not been
timely reconciled. The Tribe had a chronic problem of late financial statement audits and had been recently as far as
2 years behind in submission of audit reports. The Tribe maintained manual general ledger and bookkeeping
systems decentralized from the Tribe books. While testing transactions for federal programs, specifically
environmental, supporting receipts were not attached and could not be found for payments of various transactions by
the Tribe.
Agency Explanation: Resolution on hold by OIG.
OIG Follow-up Status: Resolution pending receipt of additional information.
Report No. 2006-3-00204, Indian Township Tribal Government, FY 2003, September 18, 2006
Summary: All of the conditions noted in the FY 2002 audit (Report No. 2006-3-00203) continued to exist in FY 2003
and thus represent repeat findings. Also, tribal and federal program requirements over fiscal spending require
approved budgets. For the year audited, the Tribe exceeded various budget line items for tribal government. This
was due largely in part with the Tribe reorganizing its operating budget. Further, the Tribe has numerous bank
accounts with financial institutions, but approximately $557,000 was uninsured or uncollateralized cash as of
September 30, 2003.
Agency Explanation: Resolution on hold by OIG.
OIG Follow-up Status: Resolution pending receipt of additional information.
Report No. 2006-3-00205, Indian Township Tribal Government, FY 2004, September 19, 2006
Summary: All of the conditions noted in the FY 2003 audit (Report No. 2006-3-00204) continued to exist in FY 2004
and thus represent repeat findings. Many of those conditions were also noted in the FY 2002 audit (Report No.
2006-3-00203) and those have been repeat findings for 2 years. Also, the Tribe did not timely submit quarterly
federal reports for September 30, 2004.
Agency Explanation: Resolution on hold by OIG.
OIG Follow-up Status: Resolution pending receipt of additional information.
Report No. 2007-3-00139, New York, State of- FY2006, July 26, 2007
Summary: The Department of Environmental Conservation did not issue a formal management decision on the audit
finding contained in the single audit report for the New York Environmental Facilities Corporation within the required
6-month time frame.
Agency Explanation: The grantee needs to address one minor issue on the plan for this finding. Region 2 awaits the
grantee's written confirmation of its plan. Once that plan is received, the audit resolution will be issued, estimated to
be by December 31, 2008.
OIG Follow-up Status: No response.
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EPA OIG Semiannual Report to Congress April 1, 2008 - September 30, 2008
Report No. 2007-3-00003, Blackfeet Tribe of the Blackfeet Indian Reservation, FY2004, October 2, 2006
Summary: The fixed asset records did not support the amounts reported on the financial statements. The auditor
noted that salary advances were increasing substantially each year, and the Tribe was not enforcing the policies and
procedures on the use of advances, and repayments of advances, and is not approving all advances before payment
is made. There was a severe deficiency noted during internal control testing -time cards were being accepted
without employee signatures or the supervisor's signature for authorization of work done during the time period, W-4's
were missing, and current pay rates did not agree with the personnel file. A physical inventory of the Tribe's assets
had not been taken and reconciled with underlying property records and the general ledger. The Tribe did not have
the resources available to fund the deferred revenue amount reported on the statement of net assets. Six purchases
did not have supporting documentation. The total amount of transactions not in compliance was $6,596. The Tribe
loaned and expended a portion of the Tribal Worker's Compensation Program reserves.
Agency Explanation: The Agency is obtaining additional information from the Tribe's Environmental Office, Finance
Office, Treasurer's Office, and Human Resources Office, and will work out a corrective action plan specific to EPA-
related programs, with emphasis on (1) reconciliations with the tribal accounting system, (2) improvements in the
payroll system, (3) proper procurement and cost allocation of equipment, and (4) improvements in the disbursement
and accounting for travel related costs. The need for improved internal controls and adherence to OMB Circular A-87
and Title 40 Code of Federal Regulations Part 31 were noted. Expected resolution of questioned costs by October
31, 2008. Expected resolution of EPA specific corrective action plan by December 31, 2008.
OIG Follow-up Status: No response.
Report No. 2007-4-00078, Assistance Agreement- Cheyenne River Sioux Tribe, September 24, 2007
Summary: The Tribe did not comply with the financial and program management standards under Title 40 Code of
Federal Regulations Parts 31 and 35, and OMB Circular A-87. We questioned $3,101,827 of the $3,736,560 outlays
reported. The Tribe's internal controls were not sufficient to ensure that outlays reported complied with federal cost
principles, regulations, and grant conditions. In some instances, the Tribe also was not able to demonstrate that it
has completed all work under the agreements and has achieved the intended results of the agreements.
Agency Explanation: The Agency is actively working with Tribe to correct issues identified by the OIG. While the
cost standards were not fully met, the Agency believes most of the costs questioned are fair and reasonable charges
to the grants and were used to support work completed. The Agency is working with the Tribe to help them
implement improved administrative systems and related controls. The Agency plans on providing the OIG with its
proposal for resolution by October 31, 2008.
OIG Follow-up Status: No response.
Report No. 08-3-0019, Chippewa Cree Tribe FY 2005, October 25, 2007
Summary: The auditor noted that certain general ledger accounts had not been adjusted to supporting
documentation. Account balances requiring audit scrutiny and adjustments included grants receivable, deferred
revenue, capital assets, interfund payables and receivables, long-term debt, transfers, and fund balances. These
accounts were reconciled and adjusted during the course of the audit. This is a repeat finding from the prior year.
Also, the Tribe's detailed capital asset records were not reconciled to the general ledger on a timely basis, but were
reconciled in preparation for the audit. A partial inventory was performed in 2005, however, it was not reconciled to
the amounts reported in the general ledger. Further, the auditor noted an unusually large number of accounting
adjustments recorded in the general ledger. A significant number of these were recorded by the Tribe's accounting
consultants. Adequate supporting documentation for many of the adjusting entries could not be located. Although
rationale for the adjustments could be deduced, it was difficult to verify that they had been accurately prepared and
properly authorized by responsible officers of the Tribe. In addition, the Tribe's self-insurance fund for workers'
compensation and unemployment has accumulated a significant reserve balance of $2,367,979, because collected
premiums, based on State of Montana workers compensation fund rates have consistently exceeded the Tribe's
actual claims expenses. As a result, the Tribe may have overcharged federal programs for workers compensation
insurance premiums.
Agency Explanation: The Agency received the Tribe's Corrective Action Plan for the audit findings in this and
subsequent audits along with a progress update on September 23, 2008. Continued progress on action items is
needed. The Agency plans on visiting the Tribe during the first quarter of FY 2009 to evaluate the progress related to
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EPA OIG Semiannual Report to Congress April 1, 2008 - September 30, 2008
EPA-funded programs, and work with the Tribe to develop an EPA-specific corrective action plan where needed.
Progress on action items will be monitored until the Tribe demonstrates implementation and continued adherence to
corrections. Expect resolution by June 30, 2009.
OIG Follow-up Status: No response.
Report No. 08-3-0109, Chippewa Cree Tribe FY2006, March 20, 2008
Summary: The Tribe's self-insurance fund for workers' compensation and unemployment has accumulated a
significant reserve balance of $2,736,231, which is equivalent to over 2.9 years of annualized historical self-insurance
expenses, based on 2005 and 2006 data. By collecting premiums in excess of actual claims, the Tribe may be
overcharging federal programs for these premiums. This is a repeat finding from the prior year. The auditor was
unable to obtain any evidence that the Tribe performed procedures to verify that contracts or sub-awards were made
only to parties that were not suspended or debarred.
Agency Explanation: The Agency received the Tribe's Corrective Action Plan for the audit findings in this and
subsequent audits along with a progress update on September 23, 2008. Continued progress on action items is
needed. The Agency plans on visiting the Tribe during the first quarter of FY 2009 to evaluate progress as it relates
to EPA-funded programs, and to work with the Tribe to develop an EPA-specific corrective action plan where needed.
Progress on action items will be monitored until the Tribe demonstrates implementation and continued adherence to
corrections. The Agency also hopes to get involved with the Tribe's cognizant agency to develop a coordinated plan
to help the Tribe overcome these issues on a tribal-wide basis to reduce the likelihood of these findings in the future.
Resolution expected by June 30, 2009.
OIG Follow-up Status: No response.
Report No. 08-3-0112, Wyoming, University of - FY2006, March 20, 2008
Summary: The auditor noted that performance or special reports specified by the grant agreement were not
submitted. For EPA's grant the mid-year progress report was not filed because the principal investigator was
unaware of the grant requirement
Agency Explanation: Due to regional audit priority work, the documentation for this audit was not sent to the OIG
timely. Audit resolution expected October 2008.
OIG Follow-up Status: No response.
Report No. 08-3-0111, Blackfeet Tribe of the Blackfeet Indian Reservation - FY2005, March 20, 2008
Summary: During the audit, the Tribe made vigilant attempts to take a physical inventory of fixed assets, but it was
not adequately completed and reconciled with underlying property records and the general ledger. During the year,
the Tribe loaned and expended a portion of the program's reserves in violation of program policies, as funds were
loaned to other programs without repayment terms or interest. Also, the Tribe has significantly depleted the funds in
the Worker's Compensation Program to the extent that funding may not be available in sufficient amounts to cover
future claims. During the test of controls for payroll, the auditor noted that estimates are used to charge salaries to
multiple programs. Quarterly reconciliations of actual hours worked are not being performed. A review of time cards
for the employees charged to multiple programs indicated that not enough information was being documented to
determine the hours worked by its employees. Of 55 EPA samples reviewed (for grant number BG-988853205:
Performance Partnership Grant), 4 were noncompliant for travel expenses. The noncompliant samples did include a
trip summary report by the participant to substantiate their travel or receipts to substantiate incurred expenses related
to travel. The auditor questioned $1,554.
Agency Explanation: The Agency conducted an onsite visit to the Tribe in September 2008. The Tribe has not yet
completed significant portions of its corrective action plans to address findings from the FY 2004 and FY 2005 Single
Audits. The Agency will work with the Tribe to prepare an EPA-specific corrective action plan and monitor progress
until the Tribe demonstrates ongoing implementation of action items. The Agency will seek to work with the federal
cognizant agency (Department of Health and Human Services) to assist in the implementation of the tribal-wide
corrective action plan. Issues regarding the workman's compensation plan and equipment records are tribal-wide
issues that will need tribal-wide measures to be taken. The Agency is awaiting documentation supporting the
questioned costs. If documentation is not received reimbursement will be sought. The Environmental Director, the
Payroll Department, and the Finance Director have agreed to begin using appropriate timesheets that allow for
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EPA OIG Semiannual Report to Congress April 1, 2008 - September 30, 2008
tracking of work activities and programs; to ensure that time is charged to the appropriate programs based on work
performed and documented on the timesheets; and, for staff working solely on one program, to have employees and
supervisors sign certifications stating that the employee is working 100 percent on one program. The Agency will
continue to monitor the progress towards addressing the issues identified until the Tribe has demonstrated adequate
implementation and continued use of the corrective measures and controls. Resolution expected by June 30, 2009.
OIG Follow-up Status: No response.
Report No. 08-3-0113, Lower Brule Sioux Tribe - FY2006, March 24, 2008
Summary: The September 30, 2005, audited financial statements of the Tribe were not filed within the time period
required by OMB Circular A-133.
Agency Explanation: The Agency first met the Tribe's new Controller in November 2007, at an Indirect Cost Training
the Agency participated in with the Indian Health Service. At that time, the Controller noted a number of actions
being taken to help get the audit back on track. It should be noted that the Lower Brule Sioux Tribe has been
designated as a high risk grantee and EPA reviews financial support for requests before disbursements are made;
the Agency therefore believes EPA funds are being used for the intended purpose. The Agency will be following up
with an onsite visit to the Tribe in October 2008 to gauge current year progress. Expect resolution by October 31,
2008.
OIG Follow-up Status: No response.
Total reports issued before reporting period for which
no management decision has been made as of September 30, 2008 = 48
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EPA OIG Semiannual Report to Congress
April 1, 2008 - September 30, 2008
Appendix 3 - Reports with Corrective Action Not Completed
In compliance with reporting requirements in the Inspector General Act, Section 5(a)(3), "Identification
of Reports Containing Significant Recommendations Described in Previous Semiannual Reports on
Which Corrective Action Has Not Been Completed," and to help EPA managers gain greater awareness
of outstanding commitments for action, we have developed a "Compendium of Unimplemented
Recommendations." This separate document provides the information required in Appendix 3 to this
Semiannual Report to Congress. This compendium (available upon request or at
htto://www.epa.gov/oig/reports/2009/2008103 l-09-P-0014.pdf) will be produced semiannually for
Agency leadership and Congress based upon Agency reports on the status of action taken on OIG
recommendations and OIG selective verification of that reported status.
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EPA OIG Semiannual Report to Congress
April 1, 2008 - September 30, 2008
OIG Mailing Addresses and Telephone Numbers
Headquarters
U.S. Environmental Protection Agency
Office of Inspector General
1200 Pennsylvania Ave., NW (2410T)
Washington, DC 20460
(202) 566-0847
Atlanta
U.S. Environmental Protection Agency
Office of Inspector General
61 Forsyth Street, SW
Atlanta, GA 30303
Audit/Evaluation: (404) 562-9830
Investigations: (404) 562-9857
Boston
U.S. Environmental Protection Agency
Office of Inspector General
One Congress Street, Suite 1100
Boston, MA 02114-2023
Audit/Evaluation: (617) 918-1470
Investigations: (617) 918-1468
Chicago
U.S. Environmental Protection Agency
Office of Inspector General
77 West Jackson Boulevard
13th Floor (IA-13J)
Chicago, IL 60604
Audit/Evaluation: (312) 353-2486
Investigations: (312) 353-2507
Cincinnati
U.S. Environmental Protection Agency
Office of Inspector General
26 West Martin Luther King Drive
Cincinnati, OH 45268-7001
Audit/Evaluation: (513)487-2360
Investigations: (513)487-2364
Dallas
U.S. Environmental Protection Agency
Office of Inspector General (6OIG)
1445 Ross Avenue, Suite 1200
Dallas, TX 75202-2733
Audit/Evaluation: (214)665-6621
Investigations: (214)665-2790
Offices
Denver
U.S. Environmental Protection Agency
Office of Inspector General
1595 Wynkoop Street, 4th Floor
Denver, CO 80202
Audit/Evaluation: (303) 312-6969
Investigations: (303) 312-6868
Kansas City
U.S. Environmental Protection Agency
Office of Inspector General
901 N. 5th Street
Kansas City, KS 66101
Audit/Evaluation: (913) 551-7878
Investigations: (913) 551-7875
New York
U.S. Environmental Protection Agency
Office of Inspector General
290 Broadway, Room 1520
New York, NY 10007
Audit/Evaluation: (212)637-3080
Investigations: (212)637-3041
Philadelphia
U.S. Environmental Protection Agency
Office of Inspector General
1650 Arch Street, 3rd Floor
Philadelphia, PA 19103-2029
Audit/Evaluation: (215) 814-5800
Investigations: (215) 814-5820
Research Triangle Park
U.S. Environmental Protection Agency
Office of Inspector General
Mail Drop N283-01
Research Triangle Park, NC 27711
Audit/Evaluation: (919) 541-2204
Investigations: (919) 541-1027
San Francisco
U.S. Environmental Protection Agency
Office of Inspector General
75 Hawthorne St. (IGA-1)
7th Floor
San Francisco, CA 94105
Audit/Evaluation: (415) 947-4521
Investigations: (415) 947-4500
Seattle
U.S. Environmental Protection Agency
Office of Inspector General
1200 6th Avenue, 19th Floor
Suite 1920, M/SOIG-195
Seattle, WA 98101
Audit/Evaluation: (206) 553-4033
Investigations: (206) 553-1273
Winchester
U.S. Environmental Protection Agency
Office of Inspector General
200 S. Jefferson Street, Room 314
P.O. Box 497
Winchester, TN 37398
Investigations: (423) 240-7735
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It's your money
It's your environment
Report fraud, waste or abuse
e-mail: OIG_Hotline@epa.gov
write: EPA Inspector General Hotline 2491 T
1200 Pennsylvania Avenue NW
V Washington DC 20460
fax: 202-566-2549
phone: 1-888-546-8740
www.epa.gov/oig/ombudsman-hotline/how2file.htm
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