EPA-350-R-05-005
 /  OFFICE OF INSPECTOR GENERAL
                 Catalyst for Improving the Environment
Annual Performance Report
              Fiscal Year 2004
            A Statistical Summary and Compendium of OIG
            Performance Results and Accountability Information

-------
 Summary of OIG Results for FY 2004 - Highlights
Performance
Results
(highlights)
Goal 1. Contribute to Improved Human Health and Environmental Quality
*• 49 Agency/delegated entity actions/decisions/changes/improvements/best practices
     implemented or certified/validated influencing environmental impacts
>  45 Environmental risks reduced or eliminated, or certification of integrity
> 116 Environmental recommendations, risks, best practices identified
Goal 2. Improve EPA's Management and Program Operations
*• $24 million in potential costs, savings, fines and recoveries
*• 108 Criminal, civil, or administrative actions
*• 133 Management practice/policy changes/best practices implemented or certification for action
*• 390 Management recommendations, best practices, challenges or weaknesses identified
Goal 3. Produce Timely. Cost Effective Products & Services
> 36  Products with collaborative partners
+ 73% OIG work is required or requested
+ 34  Requests to testify/formal external presentations
Operational
Activity
   57 Reviews performed by the OIG
  159 Audits performed by another Federal Agency (e.g. DCAA of EPA contracts)
  181 Single Audit Act Reviews
  142 Reports resolved
  125 Audits with no final action by EPA, over 365 days past due
   39 Reports for which no management decision was made within 6 months (as of 9/30)
  166 Investigations opened/134 Investigations closed
   56  Legislative/regulatory/policy items reviewed for comment & recommendations
Customer Service
  79% Combined OIG customer service/quality rating (excluding investigations)
    *• 75% OIG products/services rating
    *• 86% OIG staff service rating
    * Highest and lowest rated areas  84% Professional Courteous
                               87% Encouraging Constructive Relationships
                               68% Timeliness
                               71% Recommendations are practical/Contributes to Agency Goals
Use of Resources
>• $37,758,134 Total IG Appropriation Expenditures
*• $14,754,728 Superfund Expenditures
> 259.5 IG Appropriation FTE used
*• 101 Superfund Transfer Appropriation FTE used
EPA
Management
Challenges
Reported by OIG
 Linking mission and management (incl working
 relations with partners & outcome based measures)
 Information resource management & data quality
 Employee competencies
 Oversight/use of assistance agreements
 Protecting critical infrastructure from attacks
Air toxics program phase I & II
Information systems security
Backlog of NPDES permits
Management of biosolids
Superfund Evaluation and Policy Identification
OIG FMFIA
Management
Challenges
 Follow-up (new)
  Information technology (IT) strategy (updated)
Product Timeliness and Quality (updated)
Data Quality (updated)

-------
                  UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
                                 WASHINGTON, DC 20460
        01
        C3
                                                                 THE INSPECTOR GENERAL
FOREWORD

I am pleased to present the EPA-OIG's fourth Annual Performance Report. This Report presents
summaries of statistical, financial, activity and performance results compared to our FY 2004
Performance Targets. It compares FY 2004 results with those of FY 2001  through FY 2003, and
presents cumulative progress as of FY 2004 toward our FY 2005 Strategic Performance Targets.

The net result of this report is to present an Executive Summary Analysis and "Balanced
Scorecard" of performance and investment, progress, results, activities, investments and
challenges that tell a complete story of OIG performance, accountability and opportunities for
improvement. The Balanced Scorecard approach demonstrates a combination of measures,
including outputs, activities, outcomes, financial, resource use and customer service arrayed for
comparison of relative return on investment.

Based on the performance measures and results from this and prior OIG Annual Performance
Reports, we made significant improvements in the definitions and application performance
measurements for FY 2005. In addition to the accountability and performance measures presented
in this Report, the OIG is aggressively developing internal measures of activities and efficiency.

We continue to apply a logic model approach to planning and measuring our return on our
investment of resources in attaining our goals. We recognize that there is a significant time lag in
recognizing our influence on most environmental and human health impacts and behaviors, and
accounting for these results will require a dedicated follow-up effort.

 We are continuing to research better ways to measure, collect, and report data on the results of our
operations. The information in this report will be used to help direct and plan future applications
of resources for greater results. We are currently working to better integrate our resource, activity
and performance information through technology as a model of performance accountability.
                                              Nikki L. Tinsley

-------
                EPA OIG STRATEGIC PLAN FISCAL 2004 - 2008
                         	Vision	
                        ^	
                        We are catalysts for improving the quality of the
                        Environment and Government through problem
                        prevention and identification, and cooperative solutions
                                             Mission
     Add Value by promoting economy, efficiency, and effectiveness within EPA and the delivery
     of environmental programs. Inspire Public Confidence by preventing and detecting fraud,
     waste and abuse in agency operations and protecting the integrity of EPA programs.
                                             Goals
  1. Contribute to improved
  Human Health and
  Environmental Quality
• 'Influence programmatic and
systemic changes and actions that
improve environmental quality and
human health.

• 'Add to and apply knowledge that
contributes to reducing or eliminating
environmental and infrastructure
security risks.

* Identify recommendations, best
practices, risks, and opportunities to
leverage results in EPA, and amongst
its partners.
 2. Contribute to improved
 Business Practices and
 Accountability
V	

       Objectives
           •  •Influence actions that improve
           business systems, process changes,
           operational efficiency, accountability,
           resolve public concerns &
           management challenges.

           •  'Improve operational integrity and
           reduce risk of loss by detecting and
           preventing vulnerabilities for fraud,
           abuse, or breach of security.

           •  'Identify recommendations, best
           practices, risks, weaknesses,
           opportunities for savings, and
           operational improvements.
                                             3. Continuously Improve
                                             OIG Products and Services
                                  • Improve timely delivery of products and
                                  services, responsive and valuable to our
                                  clients and stakeholders.

                                  • 'Apply technology, innovation, leadership,
                                  skill proficiency and diversity for highly
                                  regarded products and motivated staff.

                                  • 'Align organization plans, performance,
                                  measurement, processes and followup for a
                                  cost accountable results culture.

                                  • Maximize use of available resources

                                  • "Develop constructive relationships to
                                  effectively leverage resources and foster
                                  collaborative solutions.
         OIG Product and Service Lines for Strategic Areas of Performance
Performance Audits
and Evaluations
Air
Water
Land
Cross Media
Fin an cial/Sy stems
Audits
Business Systems
Financial Statements
Contracts
Assistance Agreements
Computer Security
                Investigations

                Financial Fraud
                Program Integrity
                Employee Integrity
                Laboratory Fraud
                Computer Crimes
Public Liaison/
A dvisory/A n alysis
Legislation/Regulation Review
Control Assessments
Public Inquiry/Outreach
President's Council on Integrity
   and Efficiency	

-------
 EPA Office of Inspector General Annual Performance Report, Fiscal 2004
Table of Contents
  Linking Our Work to Outcomes and Impacts 	     1

  Results Compared to Annual Performance Goal Targets                          2

  Balanced Scorecard "Dashboard" of OIG Results for FY 2004                     3

  Goal 1 FY 2004 and Cumulative Results Compared to Targets by Objective	     4
         Examples of Results by Objective 	     5

  Goal 2 FY 2004 and Cumulative Results Compared to Targets by Objective	     7
         Examples of Results by Objective 	     8

  Goal 3 FY 2004 and Cumulative Results Compared to Targets by Objective	     11
         Examples of Results by Objective 	     12

  OIG Operational Activity and Audit Resolution	     13

  Customer Value Survey Results                                              14

  Financial and Resource Management	     15

  Distribution of OIG Staff Time                                               16

  OIG Skill Gap Progress and Plans for FY 2005                                  17

  OIG Staff Diversity Parity with the Civilian Labor Force                         17


  Appendix 1 - FY 2004 Report on Management Controls Summary  	     18
  Appendix 2 - Historical Perspective & Summary of FY 2004 EPA Management Challenges      19
  Appendix 3 - Looking to the Future: New FY 2004 -2008 Annual Targets	       20

-------
Linking Our Work to Outcomes and Impacts
All of our work is planned based on the anticipated value toward influencing resolution of the
Agency's major management challenges, reducing risk, improving practices, program operations
and saving taxpayer dollars, leading to positive environmental impacts and the attainment of
EPA's Strategic Goals.
                    Planning Starts  With the End In Mind
Resources Products/Services    Outputs
                               Intermediate Outcomes   Impact Outcomes
  Contracts
  Technology
  Training
  Travel
  Leadership
Audits
Evaluations
Investigations
Special Analysis
Consulting
Legislation/
Regulation
Reviews
Recommendations
Referrals to DOJ
Best Practices
Risks Identified
Management
Challenges
Identified
  ocess/Policy
L-nange
Indictment/Conviction
Certifications
Practice Change
Civil Judgments
Legislative Change
Environmental Risk
Reduced
Improved Efficiency
Examples of Environmental
Improvement
Examples of Health
Improvement
Operational Risks Reduced
 We Measure the Return on our Investment by How Efficiently our Resources are
    Converted into Products, and How Effectively our Products Drive Outcomes
Performance Presented In A Hierarchy of Related Measures

The Performance Results in this report are presented in a hierarchy, starting with several
summaries and a Balanced Scorecard, followed by detailed measures and examples of results by
Goal for fiscal 2004, and as cumulative totals fiscal 2001- 2004, toward the accomplishment of the
OIG Strategic Goals.  The Balanced Scorecard displays results by Goal as leading, current and
lagging indicators or measures.  It also presents related performance information on customer
survey results, financial accountability, human capital, product timeliness, innovation and other
OIG operational activity, together providing a balanced picture of OIG investments, performance
and results.
The information presented in this report was collected from the OIG's Performance Measurement
and Results System (PMRS), and the Inspector General Operational Reporting System (IGOR)
both dependent upon input by OIG staff; and from EPA's Financial Management System, EPA's
Reports Resolution System.  Customer survey results came directly from OIG customer input.

-------
Scoreboard of Results Compared to

Fiscal 2004 Annual Performance Goal (APG) Targets

All results reported in Fiscal 2004, from current and prior year's work, in OIG Performance Measurement and
Results System. (Except where noted, information verified and subject to OIG Data Quality Policy.)
Strategic Goal; With Government Performance
and Results Act Annual Performance Goals
Compared to Fiscal 2004 Results Reported Supporting Measures
Goal 1. Contribute to Human Health and Environmental Quality
Environmental Improvements/Actions/Changes
• •
Target: 42; Reported: 49 (1 1 7%)
Environmental Risks Reduced or Eliminated
• •
Target: 18; Reported: 45 (250%)
Environmental Recommendations, Best Practices
* *Risks Identified
Target: 80; Reported: 116 (145%)
0 Legislative changes/decisions
3 Regulatory changes/decisions
46 EPA policy, process, practices changes
0 Examples of environmental improvement
0 Best environmental practices implemented
25 Environmental risks reduced/eliminated
1 1 Certifications/validations/verifications
9 Critical Congressional/public issues addressed
70 Environmental recommendations
1 Environmental best practice identified
45 Environmental risks identified
Goal 2. Improve EPA's Management, Accountability, and Program Operations
Return on Investment: Potential dollar return as
percentage of OIG budget ($48 million)
Target: $72 million (150%); Reported: $24 million (33%)
Criminal, Civil, and Administrative Actions
Deducing Risk of Loss/Operational Integrity
Target: 80; Reported: 108; (135%)
Improvements in Business/Systems/Efficiency
• •
Target: 100; Reported: 133 (133%)
Recommendations, Best Practices, Challenges
• Identified
Target: 240; Reported: 390 (162%)
(Dollars in Millions)
$ 22.0 Questioned costs
$ 0.6 Recommended efficiencies, costs saved
$ 1.3 Fines, recoveries, settlements
30 Criminal convictions
13 Indictments/informations/complaints
4 Civil judgments/settlements/filings
61 Administrative actions
55 Policy process, practice, control changes
2 Corrective actions on FMFIA/mgt. challenge
17 Best practices implemented
49 Certifications/validations/verifications/
allegations disproved
10 Critical Congressional or public mgt. concerns
addressed
358 Recommendations
17 Best practices identified
10 FMFIA/management challenges identified
5 Referrals for OIG or Agency Action
Goal 3. Continuously Improve OIG Products and Services (Internally Reported - Not Audited)
• Product/services in collaboration with partners 36
• Requests to testify at hearings/presentations 34
• Management innovations implemented 30
• Assignments performed by request/mandate 73%
• Peer review opinion on OIG quality Unqualified
• Overall Customer Value Rating 79%
• Savings from mgt. improvements $100,000
• Products electronically accessible * 75+%
• PCIE projects/activities led 15
• Legs/regs/policies reviewed/timely 56/100%
• Expiring funds used 99.9%
• OIG Staff Parity with Civilian Labor Force 92%
 *For issued products not containing confidential or restricted information.

-------
OIG BALANCED SCORECARD "Dashboard" OF FY 2004 PERFORMANCE AND OPERATIONS
GOAL 1: Contribute To Human Health and Improved Environmental Quality


70 Recommendations for Environmental Improvement
1 Environmental Best Practice Identified
45 Environmental Risks Identified
9 Critical Congressional/Public Issues Addressed


3 Legislative/Regulatory Environmental
Changes
46 EPA Environmental Policy, Directive,
Practice/ Process Change or Action
Implemented

0 Examples of Environmental or Health
Improvements or Behavior Changes
25 Environmental Risks Reduced or Eliminated
1 1 Certifications, Verifications, Validations
GOAL 2: Improve EPA's Management, Accountability and Program Operations
Leading Measures/Indicators: Outputs
358 Recommendations for Management Improvement
17 Best Management Practices Identified
10 Management Challenges/FMFIA
Weaknesses Identified
5 Referrals for OIG or Agency Action
10 Critical Congressional/Public Mgmt. Concerns
Addressed
Current Measures: Intermediate Outcomes Lagging Measures: Outcomes
$22.0M Questioned Costs
$ 0.6M Cost Efficiencies/Savings
$ 1.3M Fines, Penalties, Recoveries, Settlements
108 Criminal, Civil, Admin Actions
27% Questioned costs/Savings Acted on by EPA
17 Best Management Practices Implemented
50% $ Return on FY04 Investment in OIG
2 Actions Taken (by EPA) Correcting
Management Challenges/ FMFIA Weaknesses
55 Practice, Process, Policy Actions Implemented
Improving Economy, Efficiency or Reducing
Risks of Loss or Vulnerability
49 Certifications, Verifications, Validations/
Allegations Disproved
GOAL 3: Continuously Improve OIG Products and Services
Customer, Partner, Stakeholder
75% Customer Value/Quality Rating of Products
86% Customer Value/Quality Rating of Service
36 Products/Assignments done with partners
34 Requests to Testify /External Presentations
73% Work Requested/Required
15 PCIE/Other Collaborative Projects/Events Led
Staffing and Development
92% IG Staff in Parity with Civilian Labor Force
100% Staff Meeting Professional CPE Standard
360.4 FTE Used/ 97% FTE Used
Timeliness
340 Average Staff Days per Completed Audit
11.8 Average Months per Completed Audit/Eval
76% Total Time on Applied to Product Lines
24% Total Time General and Administrative
100% Milestones Met in Responses to External
Requests for Review; Policy, Legislation, Regs
Innovation
30 Innovations Implemented by/within OIG
67% Work Electronically Accessible
15 PCIE Proj ects Led/Developed
Financial/Resources
$46 M Total Funds Used 2003 & 2004 Appropriations
99.9% 03 Funds Used
76 % 04 Funds Used
Operational Activity
57 Reviews Performed by EPA OIG
159 Audits Performed by DCAA / 181Single Audits
142 Reports Resolved
166 Investigation Cases Opened
147 Investigation Cases Closed
927 Hotline Complaints Received/26 Closed
56 Legislative/regulatory/policy items reviewed

-------
FY 2004 Results By OIG Strategic Goals and Objectives
 GOAL 1: Contribute to improved human health and environmental quality
 This section displays the results for Goal 1 against the OIG fiscal 2004 and cumulative performance
 targets. On the following pages are selected examples of OIG performance results under Goal 1.
Objectives, Annual Results, and Four Year (FY 2001 - 2004) Cumulative Results

• •  Influence significant programmatic changes to legislation, regulations, policy, processes and
    practices that have a positive impact on human health and the environment.

      Measures: # Environmental program policy, process, practices, changes/actions impacts
FY 2004 Target = 42
Cumulative Target = 177
FY 2004 Results = 49
Cumulative Results = 171
FY 2004 % Target Met = 117%
% Cumulative Tar get Met = 97%
    Identify and recommend solutions for reducing the highest environmental risks.

       Measures: # Environmental risks reduced, eliminated, certification/validation of or for action
FY 2004 Target = 18
Cumulative Target = 68
FY 2004 Results = 45
Cumulative Results = 97
FY 2004 % Target Met = 250%
% Cumulative Target Met = 143%
    Identify recommendations, best practices and risks (including outside EPA) that can
    directly contribute to improved environmental quality and human health.

      Measures: # Recommendations, best practices, risks identified
FY 2004 Target = 80
Cumulative Target = 300
FY 2004 Results = 116
Cumulative Results = 379
FY 2004 % Target Met = 145%
% Cumulative Tar get Met = 126 %
                OIG  Goal 1: Contribute to Improved Human Health and
                                 Environmental Quality

                             Cumulative Results 2001-2004
         350
               Ta rg ets  R e s u Its
                E n viro nm ental
            Improvements, Actions,
                  Changes
   T a rg ets  R e s u Its
    E n viro nm ental or
Infrastructure Risks Reduced
      o r E Mm in ated
  T a rg e ts  R e s u Its
    E nvironm ental
Recommendations, Best
Practices, Risks Identified

-------
Examples of Selected Results Demonstrating Progress On Goal  1
 Objective: Influence significant programmatic changes to legislation, regulations, policy,
 processes and practices that have a positive impact on human health and the environment
  •An OIG report described the serious environmental effects on ground and surface waters, soils, and air from
   hardrock mining and the billions in potential clean-up costs to EPA and States.  The Agency will implement
   OIG recommendations to enhance the effectiveness of its decision-making at hardrock mining sites.  EPA will
   analyze remediation technologies and capture the capital and long-term costs and period required to meet
   cleanup standards at these sites.  EPA will work to identify innovative or new remediation technologies for
   addressing these sites and assess technical or other guidance needs on hardrock mining management issues.
   (Land)

  •As a result of the OIG evaluation of the Fort Worth asbestos demolition method, EPA and Fort Worth agreed
   not to pursue this project as a Project XL method. This decision effectively nullified any precedent-setting for
   the proposed method. Instead, Fort Worth must perform a full asbestos NESHAP demolition in accordance
   with EPA regulations. EPA agreed that the demolition project for the old hotel in Fort Worth must address
   "each of the recommendations made by the OIG." (Air)

  •The OIG made several important contributions to improving environmental data, which are crucial for EPA's
   progress in protecting human health and the environment and achieving public confidence in the Agency's
   programs. OIG investigations resulted in significant improvements in the integrity of laboratory data used for
   EPA and State program management and decision making. (Laboratory Fraud)

  •Along with quality environmental data, EPA must have meaningful performance measures to gauge
   environmental progress. The OIG reported that,  despite working with the states since 1998, EPA had not
   established measures to assess the environmental impact of the billions in Clean Water State Revolving Funds
   nor did EPA have a comprehensive plan for measuring program results. In response, EPA plans to have a suite
   of indicators by February 2005 and will develop  a comprehensive measurement plan with milestones.
   (Assistance Agreements)

  •The OIG evaluated an October 2003 EPA rule regarding Clean Air Act New Source Review (NSR)
   applications to existing  facilities that  contribute to air pollution. The OIG raised significant concerns about the
   rule's impact on EPA's enforcement policies and procedures and recommended that NSR enforcement against
   coal-fired electric utilities continue in the same manner and to the same extent as before the 2003 rule was
   issued. (Air)

  •In response to citizen's  concerns, the  OIG reviewed EPA's actions at the Marjol Battery Site, a former battery
   processing facility, in Throop, Pennsylvania. The site was also a former coal mine. We recommended that
   additional precautionary measures be taken at the site. EPA agreed to calculate the surface strains to improve
   the final remedy at the site and work with the Borough of Throop to evaluate the potential for mine fires and
   method for addressing this hazard.  (Ombudsman)

  •An OIG review of EPA Region 10's response to a petition seeking withdrawal of authorization for Idaho's
   Hazardous Waste Program determined that the Region supported its positions on most of the allegations. The
   Region did not withdraw authorization from Idaho. However, there  were areas of concern resulting in less
   assurance that hazardous waste was being managed in an environmentally safe manner. We made
   recommendations for Region 10 to require Idaho to timely address and resolve hazardous waste permit
   application deficiencies and evaluate  compliance with emission standards.  In its response, the Region stated it
   had implemented the recommendations.  (Land)

-------
Objective: Identify and recommend solutions for reducing the highest environmental risks
 •An OIG review found that a toxic release at a refinery in Newcastle, Wyoming may have caused adverse
 health effects, such as asthma, chronic bronchitis, and lung fibrosis. As a result of the OIG's finding, the
 Agency for Toxic Substances and Disease Registry will perform a follow-up review. (Air)

 •The Source Water Assessment Program was established under the Safe Drinking Water Act amendments of
 1996 to have States analyze existing and potential threats to public drinking water quality. As of September
 2003, only 40 percent of the States had fully completed their community water system assessments and made
 them publicly available. EPA agreed to take actions recommended by the OIG to improve program measures
 and develop and issue guidance to States. (Water)

 •The impact of EPA's effluent guidelines program in reducing pollutant discharges and meeting Clean Water
 Act goals remains uncertain. In a report on the program, the OIG recommended that EPA collect and monitor
 effluent guidelines data more systematically and develop performance measures based on the data. EPA
 agreed with our recommendations and is planning to perform retrospective analyses and develop better
 performance measures.  (Water)

 •The OIG reviewed hazardous waste site cleanup programs in five States and found that States' abilities to meet
 current and/or future responsibilities for the Superfund program as well as their own cleanup programs are
 limited. EPA and the States reviewed generally agreed with OIG recommendations to help EPA enhance the
 role of States as co-implementers of the Superfund program. (Land)

 •EPA's projects to address the growing problem of electronic waste (E-waste) have not been implemented or
 coordinated in support of a clear set of goals and measures.  Disposal of E-waste raises environmental concerns
 due to its high volume and the quantity of hazardous chemicals associated with this waste stream.  We
 recommended that EPA define the E-waste program, goals, performance measures, and data requirements;
 ensure that future E-waste projects are linked to those  goals and are coordinated; and take action to collect
 needed data.  (Land)

 •The OIG found that EPA needs to fully develop its tribal strategy in relation to Superfund. The OIG report
 made numerous recommendations for improving the tribal Superfund program through developing and
 implementing a thorough strategy; completing important actions (such as modifying risk assessment tools to
 account for unique tribal environmental risks); making policy, procedural and process changes; and improving
 tribal relationships. The Agency concurred with our recommendations.  (Land)

 •Despite national and regional progress, some major metropolitan areas have not achieved the ozone precursor
 reductions required by the 1990 Clean Air Act Amendments. Ground level ozone has been linked to serious
 health problems such as asthma and heart disease.  The OIG report made multiple recommendations to help
 EPA in its efforts to ensure that the most polluted metropolitan areas expeditiously attain ozone standards.
 (Air)

 •The OIG found that EPA, in each of the past 4 years, has incorrectly reported meeting its drinking  water goal
 under the Government Performance and Results Act (GPRA), because it had concurrently reported that the
 data used to draw those conclusions were flawed and incomplete. While this inaccuracy in reporting does not
 necessarily indicate a direct or immediate threat to human health, it is important to provide Congress and the
 public with accurate information. We have made suggestions to EPA that it change how it reports under
 GPRA to compensate for known concerns over the reliability of this measure. (Water)

-------
       GOAL 2:  Improving EPA's Management and Program Operations
       This section displays the results for Goal 2 against the OIG fiscal 2004 and cumulative performance targets. On
       the following pages are selected examples of OIG performance results under Goal 2.
      Objectives, Annual Results, and Four Year (FY 2001 - 2004) Cumulative Results
           Identify opportunities for improved economy, efficiency, and accountability in EPA
           programs and operations

           Measures: Questioned Costs, Efficiencies, Savings, Fines, Recoveries, Settlements ($ are in millions)
FY 2004 Target = $72
Cumulative Target = $206
FY 2004 Results = $24
Cumulative Results = $563
FY 2004 % Target Met = 33%
% Cumulative Target Met = 273%
           Improve efficiency and integrity of EPA business and program operations by reducing
           vulnerabilities for fraud and risk and by influencing better business actions or changes

           Measures: Criminal, civil, admin actions; policy, practice, process actions taken, certifications
FY 2004 Target = 180
Cumulative Target = 540
FY 2004 Results = 241
Cumulative Results =813
FY 2004 % Target Met = 134%
% Cumulative Target Met = 151%
           Identify recommendations, best practices, and management challenges that can directly
           influence and promote actions for improved business operations

           Measures: Recommendations, best practices, management and FMFIA challenges identified
FY 2004 Target = 240
Cumulative Target = 545
FY 2004 Results = 390
Cumulative Results = 1090
FY 2004 % Target Met = 163%
% Cumulative Target Met = 200%
    OIG Goal 2: Improve EPA's Management, Accountability, and
                      Program Operations
             Cumulative Targets Vs Results 2001-2004
1000
 800
                                                        D FY 2004

                                                        • FY 2003

                                                        D FY 2002

                                                        DFY2001
      Targets  Results
       Criminal, Civil,
       Administrative
         Actions
 Targets  Results
 Improvements in
Business Processes,
and Resolve Public
   Concerns
Targets Results
        Recommendations, Best
        Practices, Management
        and FMFIA Challenges
             Identified
  Data obtained from OIG information systems, IGOR and PMRS.
                                                   QGGbn 2 Q •^•M i H lei M*K HnQGrnes S£urcs
                                                            RrEEj RHXBIGS
                                                                                  Targets   Results

-------
Objective: Return on investment from prospective improved business processes, practices, savings
 •The OIG questioned $4.7 million in funds provided to the Consumer Federation of America. The
 Washington-based lobbying group received Federal funds under EPA cooperative agreements in violation of
 the Lobbying Disclosure Act of 1995. The OIG recommended that EPA annul the five subject cooperative
 agreements and recover all funds paid to the recipient. (Assistance Agreements)

 •The government, through its prime contractor, entered into a contractual settlement with Environmental
 Chemical Corporation (ECC), Cincinnati, Ohio, resulting in a savings to the government of $260,605.  ECC
 was a subcontractor that provided laboratory testing services for an EPA-funded U.S. Army Corps of
 Engineers contract to perform cleanup work at the Drake Chemical Superfund Site in Lock Haven,
 Pennsylvania. It was determined that ECC was involved in laboratory testing improprieties. The
 government and ECC, through the prime contractor, agreed that if ECC would close out its subcontract and
 not seek payment of $260,605 of previously billed but unpaid costs, the government would consider that just
 compensation for the potential ECC fraud. (Laboratory Fraud)

 •The OIG questioned unallowable outlays of $681,413 made to the Association of Metropolitan Sewerage
 Agencies. The Association's price analysis for a sole source contract was not sufficient to show that the
 contract costs paid were reasonable and allowable in  accordance with Federal regulations.  We also reported
 on several instances of noncompliance with Federal regulations. The OIG recommended that EPA recover
 the $681,413  and ensure corrective actions are implemented. (Assistance Agreements)

 •On February  13, 2004, Richard B. Schlesinger, professor of environmental medicine, New York University
 School of Medicine, entered into a civil settlement to settle a false claims case. Schlesinger submitted
 numerous fraudulent reimbursement requests to New York University, which were paid from monies
 provided by Federal grants funded by the EPA. In the settlement, Schlesinger agreed to pay the United
 States $17,500. (Financial Fraud)

 •The OIG noted $11,558 in  questioned costs in an  examination of total outlays reported by the New Mexico
 Environment Department under an EPA cooperative agreement related to Superfund efforts. The State did
 not fully match its 10 percent cost sharing requirements for its core program activities under the agreement,
 resulting in an $11,558 overdraw in Federal funds. The State agreed with the OIG recommendation that
 EPA recover that amount. (Assistance Agreements)

 •An OIG review of a technical assistance grant resulted in $50,000 in Federal funds being put to better use
 and the  resolution of an improper award. The grant was inappropriately awarded to the Basin Cleanup
 Coalition in Coeur d'Alene, Idaho.  The OIG found that the Coalition was not a qualified grant recipient
 because of conflicts of interest and because it did  not meet administrative and management capability
 requirements. As a result of the OIG review, Region 10 notified the Coalition that the grant was terminated.
 (Assistance Agreements)

 •The OIG questioned $649,362 of outlays that Idaho made to meet cost sharing requirements for Federally
 funded remedial actions at the Bunker Hill Superfund site. The $649,362 consisted of costs incurred before
 award of the cooperative agreement, unsupported payroll costs, unallowable pre-remedial action costs,
 duplicate costs, and excess costs reported for institutional controls program.  The OIG recommended that
 EPA disallow these questioned costs. (Assistance Agreements)

 •The OIG found that the Missouri Department of Natural Resources (MDNR) had overcharged the Clean
 Water State Revolving Fund $111,717 for lease expenses.  MDNR agreed to repay the overcharges.
 (Assistance Agreements)

-------
Objective: Improve efficiency and integrity of EPA business and program operations by reducin
vulnerabilities for fraud and risk and by influencing better business actions or changes.
   •Steven L. Nagy, owner and operator of Earth Source Environmental Management, admitted to using forged
    credentials to write, sell, and distribute fraudulent Spill Prevention Control and Countermeasure Plans for
    more than 100 customers since 1991. He was sentenced to 46 months in prison, followed by 3 years of
    supervised release, and ordered to pay $218,656 in restitution. (Financial Fraud)

   •Over 10 years, EPA awarded Alaska $232 million in grants to construct water and sewer systems in rural
    Alaskan villages.  The OIG found that EPA grant oversight was insufficient to safeguard the funds and
    ensure effective results. In response to the  audit, Region 10 has improved the grant award process, updated
    performance standards for Project Officers  and Unit Managers, and changed the State's procedures for
    drawing on cash to be in line with Department of Treasury requirements.  Region 10 has committed to
    implementing additional grant management improvements in 2005. (Assistance Agreements)

   •EPA continues to improve its financial management consistent with OIG recommendations. EPA was, for
    the second year, one of the few federal agencies to achieve a green light for financial management under the
    President's Management Agenda. (Business Systems)

   •The OIG issued an unqualified opinion on the financial statements of the State of Missouri Department of
    Natural Resources Clean Water State Revolving Fund for the year ended June 30, 2003, but issued a
    qualified opinion on the compliance requirements.  Missouri recognized the accounting system shortcomings
    and was in the process of developing and implementing a new system.  Missouri also agreed to correct the
    other deficiencies noted. (Assistance Agreements)

   •The OIG Computer Crimes Directorate (CCD) has partnered with the Office of Environmental Information
    (OEI) to identify and investigate instances of computer misuse by EPA network users. The CCD assessed
    incidents involving unauthorized software installations, access to inappropriate internet sites, and other
    actions that exposed the Agency to such dangers as viruses, worms, trojans, and theft of information. The
    CCD Penetration Laboratory, with the assistance of OEI, also provides support to EPA in its efforts to secure
    Agency computer networks  by performing penetration testing of the systems to identify and reduce system
    weaknesses and vulnerabilities. (Computer Crimes)

   •An EPA Environmental Scientist pled guilty to charges of accepting a bribe, conspiracy, and making a false
    statement. In his position as the Federal Technology Transfer Coordinator at the Andrew W. Breidenbach
    Environmental Research Center in Cincinnati, Ohio, Lawrence M. Fradkin oversaw multi-year, multi-million
    dollar cooperative agreements between EPA and outside parties. Fradkin used his position to defraud the
    government.  (Financial Fraud)

   •William C. Murphy, President of Sierra Chemical Corporation, used counterfeit EPA certified labels and
    sold counterfeit insecticides. He was sentenced to 41 months in prison, followed by 3 years probation, and
    ordered to pay $45,305 in restitution and a  $1,525 special assessment.  (Financial Fraud)

   •In a joint proactive effort, the OIG Office of Audit and Office of Investigations assessed various cooperative
    agreements for vulnerabilities. During one of the assessments, it was discovered that Sherman Titens, the
    former President of the Coordinating Committee for Automotive Repair, had submitted approximately 40
    questionable claims for travel reimbursement. In a settlement agreement, Sherman Titens and Titens
    Consulting Group agreed to pay $30,000 to the government and be disbarred for a period of 3 years.
    (Financial Fraud)

   •The OIG noted several impediments to the  effectiveness of EPA's Office of Children's Health Protection. In
    response to the OIG children's health evaluation, EPA implemented several corrective actions including
    establishing Children's Health Advocacy Management Partners. (Cross Media)

-------
Objective: Identify recommendations, best practices, and management challenges that can
directly influence and promote actions for improved business operations
 •In a review of EPA's strategic human capital management activities, the OIG recommended that EPA more
 thoroughly integrate human capital management activities and measures into its core business processes to
 strengthen accountability and to ensure alignment and achievement of strategic human capital and
 environmental goals. The Agency concurred with our recommendations.  (Business Systems)

 •The OIG found a general breakdown in security controls for EPA's Integrated Financial Management
 System (IFMS) that could undermine the integrity of the system's software libraries and financial systems
 data.  The potential for unauthorized or unapproved changes places the Agency at risk that the availability,
 confidentiality,  and integrity of EPA's accounting and financial reporting functions could be compromised.
 Also, EPA was  not properly managing the contract for IFMS software modifications involving the  Change
 Management System.  We made recommendations for improving IFMS controls including performing a risk
 assessment of IFMS's off-the-shelf general support system used to develop, test, and maintain IFMS libraries
 and software. (Business Systems)

 •As a result of an OIG review and recommendations, EPA plans to improve its administration of network
 firewall security to provide greater assurance that the Agency's information resources can remain
 adequately  secured.  (Business Systems)

 •An OIG review disclosed that EPA leadership did not move expeditiously to develop sufficient EPA
 capability and capacity to respond to the consequences of multiple major terrorist attacks or events that may
 exceed the resources of a single EPA Region. The OIG recommended that EPA  develop a plan with
 aggressive milestones and points of accountability for identifying, obtaining, maintaining, and tracking
 counter terrorism/emergency response equipment.  (Contracts)

 •EPA awarded $51 million in grants to help large utilities prepare vulnerability assessments.  The OIG found
 that EPA's  Office of Research and Development had not requested access from the Office of Water to these
 assessments, which may contain valuable information for EPA's research staff in making EPA's Water
 Security Research Action Plan more effective against potential terrorist attacks.  The OIG recommended that
 the Office of Research and Development seek, and the Office of Water grant, access to the water utilities'
 vulnerability assessments.  EPA agreed with our recommendation.  (Cross Media)

 •In response to the OIG's review of EPA's National Toxics Inventory (NTI), EPA agreed to implement the
 OIG's recommendation to add a toxicity-weighted component to the NTI, and the Agency is developing an
 action plan to improve the quality of NTI air toxics data.  OIG recommendations regarding EPA's method
 for calculating air toxics emissions for reporting results should significantly improve the methods and data
 that EPA uses to determine if the program is achieving its goals. (Air)

 •In a review of EPA's national refinery compliance program, the OIG found that EPA's performance
 measurement and reporting approach for the program has not provided useful and reliable information
 necessary to effectively implement, manage, evaluate, and continuously improve program results.  The OIG
 made recommendations to EPA regarding improving goals and improving consent decree implementation
 and tracking.  (Cross Media)
                                               10

-------
 GOAL 3: Continuously Improve OIG Products and Services
 This section displays the results for Goal 3 against the OIG fiscal 2004 and cumulative
 performance targets. On the follow ing page are selected examples of OIG performance results for
 Goal 3.
Objectives

• 'Timely Delivery, Responsive and Valuable Products to our Customers and Stakeholders

   Measures: Customer value/quality survey ratings for OIG products
FY 2004 Target=78% (revised)
Cumulative Avg Target = 81%
FY 2004 Results = 79%
Cumulative Avg Results=78%
FY 2004 % Target Met =101%
% Cumulative Tar get Met = 96%
  •Develop Constructive Relationships, and partnerships to leverage change

   Measures: Collaborative efforts with federal/state partners
FY 2004 Target = 40
Cumulative Avg. Target = 160
FY 2003 Results =36
Cumulative Results =220
F Y 2003 % Target Met =90%
% Cumulative Tar get Met = 138%
 •  •Maximize Use of Resources & Apply Technology, Innovation, Leadership, Skills and Diversity
   for a Highly Regarded Products and Motivated Staff

    Measures: Use of Technology for Better Information Access, Resources Management and
 Diversity
F Y 2004 Target = 80% Work Elect Accessible
FY 2004 Target=95% FTE used/98% bud used
FY 2004 Target = 95% Parity with Civilian LF
FY 2004 Results=75% Work Elect. Access.
FY 2004 Results=97% FTE & 99% bud used
2004 Results = 92% Parity with Civilian LF
FY 2004 % Target Met = 94%
% Target Met 102% & 101% used
FY 2004 % Target Met = 97%
 Goal 3 Results By Measure
Measures of Resuits and Progress
% Customer Value/Quality Satisfaction Ratings Overall
# Requests to Testify* (Congress/judicial)/Presentations
# Collaborative Efforts, States/Feds (number of projects)
% OIG Work Requested/Required
% Engagement Letter/Project/Budget Milestones Met
% Work Electronically Accessible
% Expiring Funds Used
# Management Innovations Implemented
$ Savings from Internal Management Improvements (est)
# Legislative/Regulations/Policies Reviewed -
% of Available FTE Used
# Inter-Agency or PCIE projects Led
% Staff Time on Direct Products (only assignment time)
% Staff In Parity with Civilian Work Force

79%
34
36
73%
N/A
75%
99.9%
30
$100,000
56
97%
15
76%
92%
BHHSI
78%
95
220
51%
66%
66%
99.5%
134
$100,000
172
93.2%
41
51%
94%
                                            11

-------
Examples of Selected Results Demonstrating Progress On Goal 3
 Objectives: Customer satisfaction with OIG products, services and attitudes.  Build
 collaborative relationships to leverage change with federal and state partners.  Develop
 professional image, quality and demand for OIG products and services, maximize, link and
 align resources and skills and apply innovation and technology for accountable results
    The OIG Issued its Strategic Plan for FY 2004 - 2008, and it received many accolades as a "best practice"
    example with the IG community.

    The OIG designed a new two-year assignment plan and planning process using a benefit/risk assessment
    scoring system compared to estimated costs for a proposed cost/benefit rating and comparative ranking
    method. This process creates a transparent and consist approach which also is being emulated by other
    members of the IG community

    The OIG implemented a new "Help Desk" to resolves technology related issues, including training and
    arrangements for new staff in a highly cost efficient manor.

    The OIG performed  a reorganization and restructuring within a very limited period of time to improve
    assignment supervisory relationships and delegation of authority, communications, realignment of staff and
    policies and procedures to better integrate Human Capital planning with the OIG Strategic Plan. Also,
    Realigned the OIG Budget and Operating Plan to account for resources by AIG/Product Line, and created
    the First OIG Staffing/Position report tracking all positions and vacancies by number.

    The OIG instituted a new four tier Employee Performance and Evaluation system to clearly differentiate
    levels of performance, motivate and recognize higher degrees of staff performance.

    The OIG initiated several in-house classes to guide higher and more consistent performance: Project
    Management, based  upon the development of an OIG Project Management Handbook and new policies,
    procedures and definitions for product quality; and, Write to the Point, a class  on writing fundamentals for
    all OIG for clearer and more efficient written products.

    The OIG, across all offices, developed its first set of operational and efficiency measures and metrics
    addressing the quality, quantity and timeliness of activities by major office component.

    The OIG led or coordinated a number of projects and events through the President's Council on Integrity
    and Efficiency. We  presided as Chair of the PCIE Government Performance and Results Roundtable.

    Provided external advise and presentations directly to a number other Federal Offices of Inspector General,
    at national and regional training conferences.  EPA OIG staff were the featured speakers at numerous events
    for the Performance  Institute, Intergovernmental Audit Forums, the Institute of Internal Auditing and the
    Association of Government Accountants, as well as professional environmental associations.

    The OIG received an Unqualified Opinion from the U.S. Department of Agriculture, OIG on it external peer
    review of quality and compliance with the Government Professional Auditing  Standards.  The EPA also
    rendered an Unqualified Opinion to the U.S. Department of Transportation Office of Inspector General,
    along with a management letter containing recommendation for quality improvement.

    Created and improved several OIG Databases to improve operational efficiency, quality and timeliness of
    data, including a new Contract Management Database for creation, tracking and management of contracts.

    The OIG was Recognized by EPA for Exemplary Performance in promoting and using contracts for Small
    and Disadvantages Businesses.
                                                12

-------
         OIG FY 2004 Program Activity
Audit/Evaluation Activity and Agency Actioi
Reports Issued

*•   Reviews Performed by OIG
*   Reviews by Another Federal Agency
>   Single Act Audit Reviews	
              57
              159
              181
    TOTAL Reports

*•   Questioned Costs
*•   Cost Efficiencies
             397

          $ 22.0 M
          $   .6M
    Reports Resolved (from current & prior years)     142
    Agency Recoveries (from current & prior years)   $ 3.7 M
Audit Resolution
   Recommendations as Costs
    Quest'd.   Efficvs
*•  With no management decision start 04     $51.7  3.62 M

>  Issued in FY 2004                       $12.4    .6 M

*  Agreed to by management                $ 2.5    .32 M

*•  Not agreed to by management             $ 8.66   .31M

*  With no management decision, end 03     $52.9   3.6M
 Percent of total agreed to by management 3.9%   7.6%
*•  Audits with no Federal action as of 9/30/04
   which are over 365 days past issuance date
              125
*•  Reports for which no management decision
   was made within six months of issuance at 9/30/04   39

Audit Resolution Reported by EPA
Audits with management decisions but
   without final action beginning FY 04  (83) $106.6 M

Audits for which management decision
   were reached in FY04              (113) $   3.0 M

Total audits pending final action
   during FY 04                    (196) $109.6 M
Final Action taken during FY04
(121)  $35.2M
Audits without final action end of FY 04 (75) $ 74.4 M
(Carried as opening balance in FY 05)

Percent Audit $ Value Final Action Taken FY 04
32.1%
                           restigative
   Investigations Opened
   Investigations Closed
   Pending Investigations as of 9/30
   Indictments of Persons/Firms + (arrests)
   Conviction of Persons/Firms
   Administrative Action EPA Employees/Firms 61
   Civil Judgments                          4
   Allegations Disproved                     32
   Fines and Recoveries (including civil & savings)  $ 1.3 M
  166
  147
  183
  13
  30
 (Dollars in Millions)     Other
   Hotline Complaints Received

   Hotline Complaints Opened

   Hotline Complaints Closed

   Public Inquiries Addressed

   Legislative/Regulatory Items Reviewed
927

 37

 26

 182

  56
                        •   President's Council on Integrity and
                            Efficiency (PCIE) Projects Led/Developed   15
Timeliness of OIG Report Completion - Average
                             Months  Staff Days
Performance Audits/Evaluations -  15.6        608
for 27 reports
                        Financial Related Audits
                        for 13 reports

                        Special Audits
                        for 26 reports
                               10.5
124
                                          184
                                                       13

-------
OIG FY 2004 Customer Service/Value Ratings
From OIG Clients and Stakeholders from Surveys

This is a summary of statistical results of the OIG Customer Surveys. The chart below is a summary
of the overall rating results by question, based on a scale of 100. The results for FY 2004 are
improved over those for FY 2003, and continue to show a long-term trend of improvement from the
base-line in 1998/99 when we identified customer service and product value as one of our strategy
objectives.  The survey questions are based on objective attributes of OIG Products, and Staff Service.
 FY 2004
Target
Actual
Summary Score for all OIG Products and Services
Summary Score for OIG Staff Service
Combined Score for OIG
77%
84%
80%
75%
86%
79%
                  Overall Customer Survey  Results for FY 2004
        Product/Service Is Factually Accurat


               Is Objective and Balanced

              Addresses Relevant Issues

                 Is Useful for Decisions

           Contains Practical Information

                   Is Clear and Logical

                           Is Timely

           Is Responsive to Agency Needs

             Contributes to Agency Goals

                  Staff Are Professional

                    Are Knowledgeable

                  Communicate Clearly

                Seek and Consider Input

        Encourage Good Working Relations
77%
76% |


82%

73%


71%


80%
68%


72%

71%






94%

79%

85%
i
83%

87%






                                 50%
  70%
        90%
                                         14

-------
FY 2004 FINANCIAL SUMMARIES FOR OIG, (Figures From IFMS - Unaudited)
The following is an analysis of the OIG's use of available financial and staff resources by object class,
source and OIG Office/function.

  FY 2003 APPROPRIATION - FINAL UTILIZATION RATE
Appropriation Account
Management
Superfund
TOTAL
FY 2004
SFunds Available
$46,739,267
$17,883,933
$64,623,200
FY 2004
$ Funds Used
$37,758,134
$14,754,728
$52,512,862
                FY 2004 Funds Used by Object Class
                          Dollars in Millions
                            Total: $52.51
          Working Cap Fund   Expenses(Equip/Supplies)
                $2.67     i    r         $1-56
                5.1%                    3.0%
                 Travel   I      Awards
                                 $0.53
                  5.6%  \
           Contracts
             $5.77
             11.0%
                                          Salaries (PC&B)
                                              $39.02
                                               74.3%
                                 15

-------
  FY 2004 FTE (Staff) USAGE by APPROPRIATION and by OFFICE
Approp Account
Management
Superfund
TOTAL
FY 04 FTE Available
277.0
94.0
371.0
FY 04 FTE USED
259.5
100.9
360.4
% FTE Budget USED
93.7%
107.3%
97.1%
                                     Total: 360.5
                                         Human Capital
                                             10.0%
               Imm Cong/Publ
                      6
                    1.7%
lndirOA,OI,OPE,&Gen
         24.1%
                          \Jj
              MissionSystem ^^
                    15.1       J
                    4.2%
                 Immd Prog Eval
                        11
                      3.1%
                Immd Investigations
                         6
                       1.7%
                            Immd Audit
                                4.7%
Direct Investigative Products
            7.9%
     125
                Direct Audit/Eval/OCPL Pro
                           34.7%
\   Immd IG
\-   7.5
    2.1%
IG Counsel
    8.2
   2.3%
  The OIGused 76% of reported staff time on direct business-line assignments, indirect, management
  and technical support (including leave, required training, general administration, and special projects
  by product-line staff).  The OIG used 24% of staff time on leadership, administrative functions and
  management support in compliance with statutory accountability requirements, including: Yellow-
  book quality reviews, FMFIA, GPRA, IG Act, Consolidated Reports Act, GMRA, FISMA, and the
  President's Management Agenda. This staff time also entails leading or participating in projects of
  the President's Council on Integrity and Efficiency, developing and managing OIG information
  systems, organizational human capital, IG Counsel and all Headquarters program supervision.
  (Source IGOR)
                                            16

-------
                OIG Skill Gap Progress and Plans for FY 2005
 *A reassessment of the disciplines and skills was performed between 2004 and 2005 (Source OHC)
 Skill Specialty/Series Title
 Environmental

 Social Scie
 Operations Res

 Program Analyi
 Financial Ai
 FY 03 Gap
      10
      50
      -12
FY 04 Gap
                   8
    17
    47
   -13
FY 03-04 Prog.
                   1
       -7
                                                            -3
FY05 Gap"
                      -2
 Criminal Investigat
      18
    16
                                 87
                   90
                                 26
     FY 2004 (9/30/04) OIG Parity With the Civilian Labor Force

      The OIG is 92.2 Percent in Parity with the Civilian Labor Force
Categories at or Above
Parity with the Civilian
Labor Force
Categories with Minor
Imbalance with the
Civilian Labor force
          Categories with Significant
          Imbalance with the Civilian Labor
          Force (OIG % of CLF Target
          Level)
   White Males
   Black Males
   Black Females
   Asian Males
   Asian Females
   American Indian Males
   American Indian
   Females
            •White Females (79%)
            •Hispanic Males (23%)
            •Hispanic Females (24%)
                                       17

-------
                                                                           Appendix 1
         Summary of the OIG FY 2004 Report on Management Controls

 In compliance with the requirements of OMB Circular A-123, Management and Accountability
 Control, the Federal Managers' Financial Integrity Act (FMFIA) and the internal control requirements
 of OMB Circular A-130, Management of Federal Information Resources, we identified and reported on
 the following office-level weaknesses in FY 2004.
 •  Information Technology (updated)
 •  Data Quality (formerly Inspector General Operations Reporting System - updated)
 •  Product Timeliness and Quality (updated)
 •  Product Follow-up (new)

During FY 2004, the OIG took the following actions to improve management controls

• •  Reviewed administrative and operational issues to clarify and reinforce policies, procedures, and
    management control requirements; and revised policies and procedures, including the OIG
    Procurement Policy; Career Ladder Promotions, Rotational Assignments, Employees Reward
    Program and procedural guidance on Procurement, Data Quality, Strategic Planning, and Student
    Loan Repayment.
 • • Issued a revision to the Project Management Handbook considering staff feedback regarding the
    prior version of the Handbook, Peer Reviews, and Management Accountability Reviews, as well as
    project management, organizational, and other changes in the way we do work.
 • • Integrated OIG budgeting, analysis and reporting requirements under the Government Performance
    and Results Act, FMFIA,  and the Inspector General Act.
 • • Developed the OIG Strategic Plan for Fiscal 2004-2008.
 • • Issued the third annual OIG Annual Performance Report to measure progress in reaching our
    Strategic Goals including a balanced scorecard of financial, customer service, timeliness, and
    effectiveness measures.
 • • Conducted nationwide briefings on OIG Performance Measurement and Annual Performance Report.
 • • Provided advice, presentation and instruction for improving planning, measurement and
    accountability to OIG, EPA and 12 external Government- wide audiences or agency.
 • • Revised position descriptions for the Special Agents in Charge (SAC) and the Directors.
 • • Completed a detailed evaluation and analysis of the daily operations of the Office of Investigations
    (OI) administrative support functions in conjunction with the Office of Human Capital (OHC).
 • • Reviewed and revised OI processes and business rules for case management oversight.
 • • Completed quality assessment reviews of three Resource Centers under the OI Inspection Program.
 • • Developed and refined metrics for various aspects of the investigative process and production. This
    information tool facilitates management analysis in areas such as case trends, vulnerability
    assessments,  and workforce utilization.
 • • Held meetings attended by the Assistant Inspector General for Investigations (AIGI), the Deputy
    AIGI, the PLDs, OI Headquarters Desk Officers and  staff, and the SACs to discuss administrative
    and operational issues; to clarify and reinforce policies, procedures, and management control
    requirements; and to discuss the ongoing implementation of the OIG reorganization plan.
 • • Implemented a reorganization of the OHC.
 • • Conducted an internal review of expectations agreements.
 • • Completed the self-study "Annual Ethics Training- Hatch Act " by staff.
 • • Developed transparent assignment scoring process to prioritize work based on cost to benefit ratio.
                                             18

-------
                                                                              Appendix 2
EPA's Top Management Challenges as Reported by OIG (Historical Perspective)

Below is the list of Top Management Challenges that the OIG has reported to EPA each year since
1997. While EPA is making progress in resolving its Major Management Challenges, several have been
longstanding problems.  The following table shows which challenges have been listed from 1997
through 2004 and their relationship the President's Management Agenda (as numbered).
Management Challenge 19
Emission Factor Development
Year 2000 Modification on Information Systems
Closeout of Construction Grant Program
Inconsistent/Oversight Enforcement Activities
Quality Assurance/Plans
Use of Inefficient Contract Types
Automated Information System Security Plans/Security (2)
Oversight/Use of Assistance Agreements (4)
Agency Relationship with Contractors
Accountability/Managerial Cost Accounting/
Linking Mission and Management (1 & 4)
Backlog; Nation'! Pollutant Discharge Elimin. System Permits
Enhance Employee Competencies/Human Capital (3)
Process for Preparing Financial Statements
Superfund Five-Year Reviews
Great Lakes Program
Environmental Data Information Systems/Information Resources
Management/ Quality of Laboratory Data /Environmental Data
Quality(2)
Working Relationships with States & Other Partners (1)
Results-Based Information Technology Project Management
Protecting Critical Infrastructure from NonTraditional Attacks
Biosolids
Air Toxics Program
Superfund Evaluation and Policy Identification






















00
O)
O)






















0)
O)
O)






















0
O
O
OM






















O
O
OM






















OM
O
O
OM






















CO
O
a






















2004









A






A





                                                              A= Combined
        President's Management Agenda
           1. Budget and Performance Integration
          2. Expanded Electronic Government
           3. Strategic Management of Human Capital
           4. Improving Financial Performance
                                             19

-------
                                                                                Appendix 3
Looking to the Future
FY 2004 OIG PERFORMANCE TARGETS (with targets FY 2004 - 2008)
Crosswalk between OIG Strategic Plan Objectives/Measures & EPA Annual Performance Plan Goals
 F Y 04 OIG GOAL 1: EPA APG 1: Improve human health and environmental quality by
 identifying 80 recommendations, risks or best practices; contributing to reduction or elimination of 18
 environmental risks; and 42 changes or actions influencing positive environmental or health impacts.
 Objective Measures and Targets:
 • • Environmental Improvements/Changes/
   Actions (Legislative, regulatory, policy, directives, best
   practices, Environmental or health improvements):
    Intermediate Outcome & Outcome Measures

 ' ' Environmental Risks Reduced /Eliminated
   Certifications, Verifications, Validations: Outcome
 Measures

 • • Recommendations, Risks or Best Practices Identified:
   Output Measures
42
18
80
45
23
95
50
28
105
55
33
115
58
38
120
 FY 04 OIG GOAL 2: EPA APG 2: Improve EPA's business and program operations by
 identifying 240 recommendations, potential savings &  recoveries for 150% annual investment in
 OIG, 100 actions for better business operations, and  80 criminal, civil or admin actions reducing risk
 of loss/integrity.
 Objective Measures and Targets:
 • •Potential Dollar Return on Savings, Questioned Costs,
   Improved Business Practices, Recoveries, Fines, Settlements:
   Outcome Measures

 • "Criminal, Civil Administrative Actions Reducing or
   Eliminating Risk of Loss & Operational/Data Integrity:
   Intermediate Outcome Measures

 • •Improvements in Business/Systems/Efficiency (Actions
   Taken on Mgt Challenges, Certifications, Best Practices,
   Policies, Regs): Outcome Measures

 *• Recommendations Made or Weakness, Best Practices
   Identified: Output Measures

     * Revised to account for inclusion of Single Audits
150%
ROI
80
100
240
150%
ROI
80
220*
800*
150%
ROI
80
225*
820*
150%
ROI
80
230*
840*
150%
ROI
80
240*
860*
                                             20

-------
04 OIG GOAL 3: Internal Corporate
Continuously Improve OIG Products and Services
Objectives Measures and Targets
> Improve timely delivery of products and services
which are responsive and valuable to our customers
needs:
*• Maintain average external customer value rating of 80%
*• Maintain average internal customer rating of 90%
* Assignments in response to request/required 65%
* Assignment average milestones met 80%
* Cumulative reduction in process cycle time 25%
*• Apply technology, innovation, leadership and skill
proficiency for highly regarded products and
motivated staff:
*• Amount of products available electronically, average 90%
* Staff meeting training standards 100%
* Reduction in "skill gap", cumulatively 75%
> Internal product/process innovations implemented, total 50
* Congressional or public testimony, total 15
*• Align OIG performance, measurement, processes and
followup for a cost accountable results culture:
• Activities covered with cost accounting measures 90%
• Available staff time used on direct assignments 75%
• Direct time on followup of prior OIG recommendations
15%
• OIG Recommendations acted on within four years 75%
> Maximize use of available resources, staff diversity
and savings opportunities:
• Authorized FTE used 95%
• Current year budget used 98%
• Workforce in 100% parity with civilian labor force
• Implement average costs savings 10% of expenditures
*• Develop constructive relationships to leverage
resources & influence collaborative solutions:
• Products done in collaboration with external partner(s)
200

2004





78%
88%
63%
70%
5%



80%
100%
55%
10
3


70%
55%
10%

60%


95%
80%
95%
5%


40

3
2005





79%
89%
64%
75%
10%



85%
100%
60%
10
3


75%
60%
12%

65%


95%
85%
96%
10%


40

3
2006





80%
90%
65%
80%
15%



90%
100%
65%
10
3


80%
65%
14%

70%


95%
90%
97%
10%


40

3
2007





81%
91%
66%
85%
29%



95%
100%
70%
10
3


85%
70%
15%

75%


95%
95%
98%
10%


40

3
2008





82%
92%
67%
90%
25%



100%
100%
75%
10
3


90%
75%
15%

75%


95%
98%
100%
15%


40

3

-------
For questions, comments or to obtain copies of this report, please contact any of the following:

Eileen Me Mahon, Assistant Inspector General for Congressional and Public Liaison
(202) 566-2546
McMahon.Eileen@epa.gov
Michael Binder, Acting Assistant Inspector General for Planning Analysis and Results
(202) 566-2617
Binder.Michael@epa.gov
                            U.S. Environmental Protection Agency
                                 Office of Inspector General
                                 1200 Pennsylvania Ave. NW
                                  Washington, D.C. 20460
                 This report was prepared by the EPA Office of Inspector General
                            Office of Planning, Analysis and Results

-------