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U.S. ENVIRONMENTAL PROTECTION AGENCY
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OFFICE OF INSPECTOR GENERAL
Annual Performance Report
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EPA-350-R-12-001
February 2012
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This report is available in hard copy from:
U.S. Environmental Protection Agency
Office of Inspector General (Room 249IT)
1200 Pennsylvania Avenue, NW
Washington, DC 20460
(202) 566-2391
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.
Abbreviations
ARRA American Recovery and Reinvestment Act of 2009
CSB U.S. Chemical Safety and Hazard Investigation Board
EPA U.S. Environmental Protection Agency
FMFIA Federal Managers' Financial Integrity Act
FY Fiscal year
GPRA Government Performance and Results Act Modernization Act of 2010
NPDES National Pollutant Discharge Elimination System
OIG Office of Inspector General
OMB Office of Management and Budget
WCF Working Capital Fund
Hotline
To report fraud, waste, or abuse, contact us through one of the following methods:
e-mail: OIG Hotline@epa.gov write: EPA Inspector General Hotline
phone: 1-888-546-8740 1200 Pennsylvania Avenue NW
fax: 202-566-2599 Mailcode 2431T
online: http://www.epa.gov/oig/hotline.htm Washington, DC 20460
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EPA Office of Inspector General Annual Performance Report Fiscal Year 2011
Message From the Inspector General
I am pleased to present the 10th Annual Performance Report of
the U.S. Environmental Protection Agency (EPA) Office of
Inspector General (OIG). This report summarizes OIG activity,
performance, results, and challenges, and provides a financial
accounting of resources for fiscal year (FY) 2011 compared to
our FY 2011 annual performance targets. It also presents
cumulative OIG results for FYs 2009-2011 compared to our
annual performance targets. This report supplements, with
greater quantitative and narrative detail, the OIG summary
performance results presented in the Agency's Fiscal Year 2011
Agency Financial Report and Fiscal Year 2011 Annual
Performance Report, available at http://www.epa.gov/ocfopage.
This document details the public benefit and return on
investment provided by the OIG, both in annual increments and
over the long term. Below is a partial list of the OIG's mission-
related and operational performance achievements during FY 2011:
Arthur A. Elkins, Jr.
• Identified over $82.4 million in EPA potential savings and recoveries
• Issued recommendations that resulted in over 77 environmental and business actions for
improvement taken by EPA
• Identified 61 unimplemented OIG recommendations for action to improve Agency
programs and operations
• Made key legislative recommendations to Congress to improve accountability and
oversight of federal contracts
• Prepared semiannual compendiums to the Agency and Congress of unimplemented
recommendations
• Issued reports on Agency major management challenges and internal control weaknesses
for corrective action
• Continued to develop and transfer OIG applications into a common IT infrastructure
• Established the Office of the Chief of Staff in the Immediate Office of the Inspector
General in FY 2011 to promote a strategic approach to OIG planning, resource
management, and accountability
• Developed the OIG strategic planning framework of vision, mission, values, goals, and
objectives for FYs 2012-2016
Based upon requirements of the American Recovery and Reinvestment Act of 2009 and Office
of Management and Budget guidance, the OIG performed audits, evaluations, analyses, and
investigations of EPA Recovery Act activities; provided training to hundreds of Recovery Act
stakeholders on fraud prevention and detection techniques; and actively participated in activities
of the Recovery Accountability and Transparency Board. The OIG reports monthly on Recovery
Act activities, resource use, and plans.
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EPA Office of Inspector General Annual Performance Report Fiscal Year 2011
We rely upon our customers and stakeholders to inform us about the quality of our performance
and help us identify and reduce areas of risk. Please do not hesitate to contact me, as one of my
personal goals is to build constructive relationships that promote the economic, efficient, and
effective delivery of EPA's mission.
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-f
Arthur A. Elkins, Jr.
Inspector General
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EPA Office of Inspector General Annual Performance Report Fiscal Year 2011
Table of Contents
About the U.S. Environmental Protection Agency Office of Inspector General 1
Vision 1
Mission 1
Core Values 1
Goals and Objectives 2
OIG Product and Service Lines for Strategic Areas of Performance 3
Planning Our Work to Achieve OurGoals 3
Scoreboard of OIG FY 2011 Performance Results Compared to
FY 2011 Annual Performance Goal Targets 4
OIG Strategic Cumulative Performance Results, FYs 2009-2011 5
Performance Progress 5
Challenges 5
Summary of FY 2011 Performance Results by Product Line and Other Activities 7
Air/Research and Development 7
Water/Enforcement 8
Superfund/Land 9
Cross Media 11
Special Reviews 13
Contracts and Assistance Agreements 14
Forensic Audits 17
Financial Management 20
Risk Assessment and Program Performance 22
Efficiency 24
Information Resources Management 25
Investigations 27
U.S. Chemical Safety and Hazard Investigation Board 30
Testimony 31
OIG Enabling Support Programs 32
Other Activities 33
OIG-Reported Key Agency Management Challenges 35
OIG Internal Management Challenges 36
Statistical Data 38
OIG FY2011 Profile of Activities and Results 38
OIG FY2011 Audit, Inspection, and Evaluation Report Resolution 39
OIG Reports With Unimplemented Recommendations by Program Office 42
OIG FY 2011 Budget and Resource Analysis Use and Allocation 43
OIG Financial Statement: Analysis of FY 2011 Fund Use 45
OIG Data Verification and Validation 46
Historic Planned Versus Actual Resources and Results, FYs 2009-2012 47
OIG Recovery Act Resources and Performance 48
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EPA Office of Inspector General Annual Performance Report Fiscal Year 2011
About the U.S. Environmental Protection Agency
Office of Inspector General
The Office of Inspector General (OIG) is an independent office of the U.S. Environmental
Protection Agency (EPA) that detects and prevents fraud, waste, and abuse to help the Agency
protect human health and the environment more efficiently and cost effectively. Although we are
part of EPA, Congress provides us with a budget line item separate from the Agency's to ensure
our independence. The EPA OIG was created and is governed by the Inspector General Act of
1978, as amended (5 U.S.C. App. 3). The EPA Inspector General also serves as the inspector
general for the U.S. Chemical Safety and Hazard Investigation Board (CSB).
OIG staff are physically located at headquarters in Washington, DC; at regional headquarters
offices for all 10 EPA regions; and at other EPA locations including Research Triangle Park,
North Carolina, and Cincinnati, Ohio.
The OIG developed the following strategic framework for fiscal years (FYs) 2012-2016 based
upon statutory requirements for the EPA OIG; the statutory mission of EPA; and direct input
from the OIG's stakeholders, managers, and staff.
Vision
Be the best in public service and oversight for a better environment tomorrow.
Mission
Promote economy, efficiency, effectiveness, and prevent and detect fraud, waste, and abuse
through independent oversight of the programs and operations of the Environmental Protection
Agency and Chemical Safety and Hazard Investigation Board.
Core Values
• Customer Service: Everyone deserves to be treated with fairness, respect, and dignity.
• Integrity: Our people and products are trustworthy.
• Accountability: We are individually and collectively responsible for all we do.
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EPA Office of Inspector General Annual Performance Report Fiscal Year 2011
Goals and Objectives
Goal 1: Contribute to improved human health, safety, and environment.
Objectives
> Influence programmatic and systemic changes and actions that contribute to
improved human health, safety, and environmental quality
> Add to and apply knowledge that contributes to reducing or eliminating
environmental and infrastructure security risks and challenges
> Make recommendations to improve EPA and CSB programs
Goal 2: Contribute to improved EPA and CSB business practices and accountability.
Objectives
> Influence actions that improve operational efficiency and accountability, and
achieve monetary savings
> Improve operational integrity and reduce risk of loss by detecting and preventing
fraud, waste, abuse, or breach of security
> Identify best practices, risks, weaknesses, and monetary benefits to make
recommendations for operational improvements
Goal 3: Be responsible stewards of taxpayer dollars.
Objectives
> Promote and maintain an accountable, results-oriented culture
> Ensure our products and services are timely, responsive, relevant, and provide
value to our customers and stakeholders
> Align and apply our resources to maximize return on investment
> Ensure our processes and actions are cost effective and transparent
Goal 4. Be the best in government service.
Objectives
> Maintain the highest ethical standards
> Promote and maintain a diverse workforce that is valued, appreciated, and
respected
> Enhance constructive relationships and foster collaborative solutions
> Provide leadership, training, and technology to develop an innovative and
accomplished workforce
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EPA Office of Inspector General Annual Performance Report Fiscal Year 2011
OIG Product and Service Lines for Strategic Areas of Performance
OIG activities can be divided among four main categories, with specialized product and service
lines in each, through which it carries out its mission:
Program
evaluations
• Air/Research
and Development
• Water/Enforcement
• Superfund/Land
• Cross Media
• Special Reviews
Audits
• Financial Management
• Contracts and Assistance
Agreements
• Information Resources
Management
• Forensic Audits
• Risk Assessment and
Program Performance
• Efficiency
Investigations
• Financial Fraud
• Program Integrity
• Employee Integrity
• Laboratory Fraud
• Computer/Cyber
Crimes
Management and
public affairs
• Legislation/Policy and
Regulation Review
• Audit Follow-Up
• Financial/Performance
Management/Planning
• Human Capital
• Congressional/Public
Affairs
• Publications and Web
Management
Planning Our Work to Achieve Our Goals
We measure the return on our investment by how efficiently our resources are converted into
products and how effectively our products drive outcomes. Desired outcomes include resolution
of the Agency's major management challenges, reducing risk, improving practices and program
operations, and saving taxpayer dollars, leading to positive human health and environmental
impacts and attainment of EPA's strategic goals. The performance results in this report represent
the ways we measure value, both quantitatively and qualitatively, in relation to the resources
expended. The logic model diagram below shows how, starting with the end in mind, we align
our organizational factors of performance to achieve our strategic goals.
Logic Model Example
Resources
• Staff
" Contracts
• Technology
• Training
• Travel
• Leadership
Products/
Services
• Audits
• Evaluations
• Investigations
• Special Analysis
• Consulting
• Legislation/
Regulation
Reviews
Outputs
• Recommendations
• Referrals to DOJ
• Best Practices
• Risks Identified
• Management
Challenges
Identified
Intermediate
Outcomes
• Savings/
Recoveries
• Process/Policy
Changes
• Indictments/
Convictions
• Certifications
• Civil Judgments
• Legislative/
Regulatory
Changes
• Administrative
Action
Impact
Outcomes
• Environmental
Risks Reduced
• Improved
Efficiency
» Examples of
Environmental
Improvement
• Examples of
Health
Improvement
• Operational Risks
Reduced
Efficiency Ratio
Cost/Activity
Effectiveness Ratio
Outputs/Impacts
Our annual performance and progress toward our strategic goals are shown in the next section in
the Scoreboard of results compared to the annual performance goal targets. The charts in the
subsequent section demonstrate our long-term performance progress by comparing our results to
our goal targets for FYs 2009-2011.
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EPA Office of Inspector General Annual Performance Report Fiscal Year 2011
Scoreboard of OIG FY 2011 Performance Results
Compared to FY 2011 Annual Performance Goal Targets
All results reported in FY 2011, from current and prior years' work, are as reported in the OIG Performance
Measurement and Results System, the Inspector General Enterprise Management System, and the Inspector
General Operations and Reporting System.
OIG FY 2011 Government Performance and Results
Act Modernization Act of 2010 annual performance
targets compared to FY 2011 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: 315 (94.3%) •
Environmental & business recommendations, challenges,
best practices, risks identified, and ARRA technical
briefings
Target: 903
Reported: 2,011 (222.8%) •
Return on investment: Potential dollar return as percentage
(120%) of OIG budget $54.7 million
Target: $65.6 million
Reported: $82.4 million (1 50.6%) •
Criminal, civil, and administrative actions reducing risk of
loss/operational integrity
Target: 80
Reported: 160 (200%) •
1 Legislative/regulatory changes/decisions
77 Environmental or management policy, process, practice,
control change actions taken
13 Best practices implemented
2 Environmental/health Improvements
5 Environmental or business risks/challenges eliminated
1 31 Certifications/validations/verifications/corrections
10 Actions taken or resolved prior to report issuance (not
otherwise reported)
76 Recommendations reported as implemented previously
identified unimplemented by OIG follow-up*
525 Recommendations (for Agency/stakeholder action)
22 Critical congressional or public management concerns
addressed
5 Best practices identified
31 Referrals for Agency action
8 New environmental or management operational risks
or challenges identified
61 Unimplemented recommendations identified
1 ,263 Findings without controlled recommendations
96 Awareness briefings/outreach sessions (incl. ARRA)
(in millions)
$10.8 Questioned costs (net EPA)
$67.7 Recommended efficiencies, costs saved (EPA)**
$3.91 Fines, recoveries, settlements
15 Criminal convictions
1 7 Indictments/informations/complaints
1 Civil actions
104 Administrative actions
24 Allegations disproved
Other (no targets established):
Sustained monetary recommendations and savings
achieved from current and prior periods: $55.5 million
Sustained environmental and management
recommendations for resolution action:
American Recovery and Reinvestment Act of 2009 (ARRA)
activity results (cumulative):
Total reports issued: 721
(in millions)
$0.8 Questioned costs sustained
$54.7 Cost efficiencies sustained or realized**
258 Sustained recommendations
1 63 ARRA awareness briefings/outreach sessions
(also counted above)
71 ARRA complaints received
85 OIG-produced reports
636 Reports by other audit entities with OIG oversight
* Reported by Agency as implemented of those previously reported by the OIG as unimplemented.
* Includes $2.2 million in savings from investigative work.
• Target met or exceeded • Target not met
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EPA Office of Inspector General Annual Performance Report Fiscal Year 2011
OIG Strategic Cumulative Performance Results,
FYs 2009-2011
This section demonstrates the EPA OIG annual progress in attaining its strategic performance
goals for FYs 2009-2011 in compliance with the Government Performance and Results Act
Modernization Act of 2010, known as GPRA.
Performance Progress
The OIG exceeded three of its four annual performance goal targets during FY 2011, with
two of the targets significantly exceeded. For the fourth, the OIG achieved over 94 percent
of the goal target. The OIG increased its focus on identifying cost efficiencies through
performance audits and program evaluations. As a result, the OIG identified questioned
costs, efficiencies and fines, settlements, and recoveries totaling over $82.4 million. This
amount represents a greater than 150 percent return on investment in potential monetary
benefits alone when considering the OIG's FY 2011 annual budget. Additionally, EPA
sustained over $54.7 million in OIG monetary recommendations and savings from current
and prior periods. During FY 2011, the OIG improved its overall quality and efficiency of
its products by reducing the production cycle time and resources required to perform OIG
work. The OIG also expanded its follow-up work, resulting in greater implementation of
long-outstanding recommendations.
The OIG has not met all of its annual performance goal targets every year due primarily to
the time delay between outputs and outcomes, which is beyond the OIG's control, and
difficulty in staffing up to authorized levels upon which the targets were established.
However, the charts on the next page demonstrate that the OIG has exceeded its aggregate
cumulative GPRA targets for FYs 2009-2011.
Challenges
The OIG continuously tests its controls and operating procedures to identify potential
vulnerabilities and opportunities for improving product quality and accountability in the
use of its resources. During FY 2011, the OIG identified the following issues as OIG-level
weaknesses: (1) assignment time charging, (2) product timeliness, (3) monitoring Working
Capital Fund (WCF) charges, (4) staffing; (5) policies and procedures, and
(6) investigative case management. The OIG is continuing to improve its integration of
information technology systems and data quality by applying new control tools and
policies. The OIG is making significant progress in improving internal management
weaknesses.
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EPA Office of Inspector General Annual Performance Report Fiscal Year 2011
Annual Performance Goal (GPRA): Environmental and business recommendations and
risks from OIG audits, evaluations, inspections, and investigations
391
400
300
100
0
272
315
Results
Annual Performance Goal (GPRA): Environmental and business actions taken and
risks reduced from OIG audit, evaluation, inspection, and investigation recommendations
2,500
2,000
1,500
1,000
500
0
2011
983
945
Results
Annual Performance Goal (GPRA): OIG questioned costs, efficiencies, savings, fines, and
recoveries from OIG audits, evaluations, and investigations
D Budget
• Results
FY 2009
FY2010
Results
FY2011
Annual Performance Goal (GPRA): Criminal, civil, and administrative actions from
OIG investigations
200
100
o
160
95
Results
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EPA Office of Inspector General Annual Performance Report Fiscal Year 2011
Summary of FY 2011 Performance Results by Product Line
and Other Activities
Air/Research and Development
Air/Research and Development results summary
.eports issued: 5
Environmental and business outcomes
> 1 legislative/regulatory change/decision
> 28 certifications, verifications, validations, or corrections
Environmental and business outputs
> 20 recommendations for improvement
Sustained recommendations
> 6 sustained environmental or business recommendations
Performance Highlights
EPA's Endocrine Disrupter Screening Program Should Establish Management Controls to
Ensure More Timely Results—Fourteen years after passage of the Food Quality Protection Act
and Safe Drinking Water Act amendments, EPA's Endocrine Disrupter Screening Program has
not determined whether any chemical is a potential endocrine disrupter. EPA has not developed
a management plan laying out the program's goals and priorities or established outcome
performance measures. We recommended that the Assistant Administrator for Chemical Safety
and Pollution Prevention define and identify the universe of chemicals for screening and testing,
develop and publish a standardized methodology for prioritizing the universe of chemicals,
finalize criteria to evaluate testing data, and develop performance measures and a comprehensive
management plan, http://www.epa.gov/oig/reports/2011/20110503-1 l-P-0215.pdf
Office of Research and Development Needs to Improve Its Method of Measuring
Administrative Savings—EPA's efforts to reduce its administrative costs are noteworthy, but
EPA needs to improve its measurement mechanism for assessing the effectiveness of its
initiatives to reduce those costs. In addition, we identified some concerns with EPA's mechanism
for assessing its initiatives. We recommended that the Assistant Administrator for Research and
Development establish a more timely and accurate system to measure its effective use of
resources and to allow the office to better manage its initiatives to reduce administrative costs.
http://www.epa.gov/oig/reports/2011/20110714-1 l-P-0333.pdf
Observed Conditions at Five Deleted Superfund Sites—Conditions at two of five sites in EPA
Region 3 that had been remediated and deleted from the National Priorities List may warrant
additional EPA attention. Hyperspectral imaging data, on-site testing, and/or soil samples
revealed issues at the Middletown Road Dump site in Annapolis, Maryland, and the Matthews
Electroplating site in Roanoke County, Virginia. We recommended that Region 3 add the
information in this report to the appropriate site-specific case files and assess whether any
additional action is warranted for these two sites.
http://www.epa.gov/oig/reports/2011/20110803-1 l-P-0433.pdf
Procedural Review of EPA's Greenhouse Gases Endangerment Finding Data Quality
Processes—EPA met statutory requirements for rulemaking and generally followed requirements
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EPA Office of Inspector General Annual Performance Report Fiscal Year 2011
and guidance related to ensuring the quality of the supporting technical information. EPA's
guidance for assessing data generated by other organizations did not include procedures for
conducting such assessments or require EPA to document its assessment. We recommended that
the Assistant Administrator for Research and Development direct the EPA Science Policy
Council to revise its Peer Review Handbook to accurately reflect Office and Management and
Budget (OMB) requirements for peer review of highly influential scientific assessments, instruct
program offices to state in proposed and final rules whether the action is supported by influential
scientific information or a highly influential scientific assessment, and revise its assessment
factors guidance, http://www.epa.gov/oig/reports/2011/20110926-1 l-P-0702.pdf
EPA Should Improve Guidance and Oversight to Ensure Effective Recovery Act-Funded
Diesel Emissions Reduction Act Activities—Documentation of grant activities did not always
demonstrate that funded Diesel Emissions Reduction Act work achieved the desired emissions
reductions. Documentation errors could result in EPA overestimating emissions reductions. We
recommended that the Assistant Administrator for Air and Radiation take action to develop
oversight procedures for grantee progress reports, require that Diesel Emissions Reduction Act
grant and subgrant agreements specify the emissions certification level or year of new engines
installed, issue guidance defining eligible costs for early replacements of vehicles and engines
for state grants, and recoup unsupported expenditures.
http://www.epa.gov/oig/reports/2011/20110301-ll-R-0141.pdf
Water/Enforcement
Water/Enforcement results summary
Reports issued: 4
Environmental and business outcomes
> 1 EPA policy, directive, practice, or process change/decision
> 1 action taken or resolved prior to report issuance (not reported)
Environmental and business outputs
> 13 recommendations for improvement
> 4 environmental or business operational/control risks or challenges identified
(including noncompliance)
Performance Highlights
EPA Lacks Internal Controls to Prevent Misuse of Emergency Drinking Water Facilities—
EPA cannot accurately assess the risk of public water systems delivering contaminated
drinking water from emergency facilities because of limitations in Safe Drinking Water
Information System data management. We could find no federal regulatory requirement for
EPA or states to oversee or monitor emergency facilities. As a result, neither EPA nor the
states know the amount of risk that public water system customers may face. We
recommended that the Assistant Administrator for Water develop standard code definitions,
develop standard operating procedures for states for entering data into databases, and assess
the risk associated with unauthorized use of emergency facilities and develop controls to
mitigate that risk if necessary, http://www.epa.gov/oig/reports/2011/20101012-11-P-OOOl.pdf
Oversight of North Carolina's Renewals of Thermal Variances—Region 4 has not adequately
implemented management controls in its memorandum of agreement with North Carolina.
Properly implemented controls would assure EPA that National Pollutant Discharge Elimination
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EPA Office of Inspector General Annual Performance Report Fiscal Year 2011
System (NPDES) permits would comply with the Clean Water Act and applicable federal
regulations. We recommended that Region 4 enforce the management controls of the NPDES
memorandum of agreement; verify that thermal variances are protective of a balanced,
indigenous population; and verify that permit fact sheets and public notices comply with federal
regulations, http://www.epa.gov/oig/reports/2011/20110509-1 l-P-0221.pdf
Region 4 Should Strengthen Oversight of Georgia's Concentrated Animal Feeding Operation
Program—We found significant deficiencies in the Georgia Environmental Protection
Division's management and Region 4's oversight of the Concentrated Animal Feeding Operation
program. In addition, we identified a number of deficiencies for 34 of the 48 Georgia
Concentrated Animal Feeding Operations inspected. We recommended that Region 4 implement
controls to require enforcement data tracking, assure inspections are accurate and complete, and
assure that the Georgia Environmental Protection Division takes timely and appropriate
enforcement actions, http://www.epa.gov/oig/reports/2011/20110623-1 l-P-0274.pdf
Leaking Underground Storage Tank Recovery Act Grants Contained Requirements but
Priority Lists Need More Oversight—Although the American Recovery and Reinvestment Act
of 2009 (ARRA) grants we reviewed contained most of the requirements specified in Agency
regulations and guidance, we noted that EPA (1) had not clarified to states whether municipally
owned Leaking Underground Storage Tank sites would be eligible for ARRA funds, (2) had no
plan to deobligate unspent ARRA funds from grant recipients, and (3) in many instances did not
use state data to ensure that grants comply with site priority requirements. EPA corrected the first
two deficiencies by spring 2010, and we recommended that the Assistant Administrator for Solid
Waste and Emergency Response ensure that the Solid Waste Disposal Act site priority
requirement is consistently incorporated into future Leaking Underground Storage Tank Trust
Fund grant agreements, http://www.epa.gov/oig/reports/2011/20101122-1 l-R-0018.pdf
Superfund/Land
Superfund/Land results summary
eports issued: 7
Environmental and business outcomes
> 2 EPA policy, directive, practice, or process changes/decisions
> 1 best practice implemented
> 4 certifications, verifications, validations, or corrections
Environmental and business outputs
> 2 critical congressional or public management concerns addressed
> 21 recommendations for improvement
> 3 referrals for Agency action
Return on investments
> $2.1 million questioned costs
> $32.0 million recommended efficiencies, costs saved or avoided
Sustained recommendations
1 sustained environmental or business recommendation
Performance Highlights
Website for Coal Combustion Products Partnership Conflicts With Agency Policies—EPA's
Coal Combustion Products Partnership website presented an incomplete picture regarding actual
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EPA Office of Inspector General Annual Performance Report Fiscal Year 2011
damage and potential risks that can result from large-scale placement of coal combustion
residuals. In its May 2010 proposed rule, EPA showed that environmental risks and damage can
be associated with the large-scale placement of unencapsulated coal combustion residuals. We
recommended that the Assistant Administrator for Solid Waste and Emergency Response direct
immediate removal of the Coal Combustion Products Partnership website during the coal ash
rulemaking process, and identify the breakdowns in management controls that allowed actions
prohibited by EPA ethics policies to occur and implement controls to establish accountability.
http://www.epa.gov/oig/reports/2011/20101013-1 l-P-0002.pdf
EPA Should Improve Its Oversight of Long-Term Monitoring at Wheeling Disposal
SuperfundSite in Missouri—Our independent sampling results from the Wheeling Disposal
Superfund Site were generally consistent with the sampling data that Region 7 has obtained
historically. However, when the responsible parties reported their annual monitoring results,
Region 7 inadvertently allowed them to use incorrect and outdated surface water standards, and
outdated ground water standards. We recommended that Region 7 ensure that accurate surface
water and ground water standards are used to assess conditions at the site; laboratories use the
correct analytic standards; the ecological risk assessment is completed; and excess levels of iron,
aluminum, and any other compounds are controlled at the site.
http://www.epa.gov/oig/reports/2011/20101220-ll-P-0034.pdf
EPA Must Implement Controls to Ensure Proper Investigations Are Conducted at Brownftelds
Sites—EPA does not review all appropriate inquiries reports submitted by grantees to assure that
they comply with federal requirements. Rather, EPA has relied on the environmental
professional conducting the all appropriate inquiries to self-certify that requirements are met.
We recommended that the Assistant Administrator for Solid Waste and Emergency Response
establish accountability for compliant reports, to include those conducted under ARRA
Brownfields grants; develop a plan to review all appropriate inquiries reports to determine the
reports' compliance with documentation requirements; and establish criteria to determine
whether noncompliant grantees should return federal grant money.
http://www.epa.gov/oig/reports/2011/20110214-1 l-P-0107.pdf
EPA Promoted the Use of Coal Ash Products With Incomplete Risk Information—EPA did
not follow accepted and standard practices in determining the safety of the 15 categories of coal
combustion residuals beneficial uses promoted through its Coal Combustion Products Partnership
program. Without proper protections, coal combustion residuals contaminants can leach into
ground water and migrate to drinking water sources, posing significant public health concerns.
We recommended that the Assistant Administrator for Solid Waste and Emergency Response
define and implement risk evaluation practices for beneficial uses of coal combustion residuals,
and determine if further action is warranted to address historical coal combustion residuals
structural fill applications, http://www.epa.gov/oig/reports/2011/20110323-1 l-P-0173.pdf
EPA's Gulf Coast Oil Spill Response Shows Need for Improved Documentation and Funding
Practices—EPA needs additional management controls to track and recover its Gulf Coast oil
spill response costs. While response costs were charged to a site code, we were unable to
determine the specific tasks associated with certain costs to ensure they were related to
authorized activities. We recommended that the Chief Financial Officer implement controls to
ensure that documentation supports authorized response activities and response bills and
supporting cost documentation packages are clear and complete. We also recommended that the
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EPA Office of Inspector General Annual Performance Report Fiscal Year 2011
Deputy Administrator work with Coast Guard counterparts to develop and ensure the timely
implementation of an appropriate means of sharing EPA contractors' response cost
documentation designated as confidential business information.
http://www.epa.gov/oig/reports/2011/20110825-1 l-P-0527.pdf
EPA Should Clarify and Strengthen Its Waste Management Oversight Role With Respect to
Oil Spills of National Significance—As a support agency to the Coast Guard, EPA's oversight
of the Gulf Coast oil spill waste management activities provided assurance that oil-contaminated
waste was disposed of properly. However, EPA can be better prepared to respond to future Spills
of National Significance. At the time of the spill, EPA did not have adequate waste management
guidance for a spill of this magnitude. We recommended that the Assistant Administrator for
Solid Waste and Emergency Response work with other federal partners to determine whether the
National Contingency Plan and National Response Framework for waste management oversight
and roles should be updated; complete waste management guidance in Area Contingency Plans;
develop a model waste management plan; seek additional authorities, as needed, to perform
waste management oversight in offshore Spills of National Significance; and update the 2002
guidance on the oil and gas exploration and production waste exemption.
http://www.epa.gov/oig/reports/2011/20110926-1 l-P-0706.pdf
EPA Progress on the 2007Methamphetamine Remediation Research Act—EPA has met some,
but not all, of its requirements under the Methamphetamine Remediation Research Act, known
as the Meth Act. While EPA published an initial set of guidelines in 2009, it has not yet
developed plans to periodically update the guidelines as required. We recommended that EPA
determine the Agency's ability to implement the Meth Act requirements and communicate its
plan to Congress. We recommended that the Associate Administrator for Congressional and
Intergovernmental Relations and the Associate Administrator for Policy update several areas of
the voluntary guidelines and develop internal controls to ensure legislative requirements are
identified, tracked, and met. http://www.epa.gov/oig/reports/2011/20110927-1 l-P-0708.pdf
Cross Media
Cross Media results summary
s issued: 7
Environmental and business outcomes
4 EPA policy, directive, practice, or process changes/decisions
Environmental and business outputs
> 12 recommendations for improvement
Performance Highlights
ENERGY STAR Label Needs to Assure Superior Energy Conservation Performance—EPA's
implementation of the ENERGY STAR program has become inconsistent with the program's
authorized purpose. We believe the program has sought to maximize the number of qualified
products available at the expense of identifying products and practices that maximize energy
efficiency. We recommended that the Assistant Administrator for Air and Radiation develop a
strategic vision and program design that assures that the ENERGY STAR label represents
superior energy conservation performance, and develop a set of goals and reliable measures to
measure program benefits, http://www.epa.gov/oig/reports/2011/20101028-1 l-P-0010.pdf
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EPA Office of Inspector General Annual Performance Report Fiscal Year 2011
EPA Needs to Assure Effectiveness of Antimicrobial Pesticide Products—As designed and
implemented, the Antimicrobial Testing Program cannot assure the public that product label
claims are valid. After nearly 19 years, over 40 percent of registered products have not been
tested. We recommended that the Assistant Administrator for Chemical Safety and Pollution
Prevention redesign the process to verify antimicrobial effectiveness. The new program should
include testing that provides reasonable efficacy assurances for all registered tuberculocides,
hospital-level disinfectants, registered sanitizers, and all subsequently registered products.
Also, the program should provide an efficient sampling protocol that enables regulatory and
enforcement actions as well as consistent monitoring of enforcement actions taken by EPA
regions. http://www.epa.gov/oig/reports/2011/20101215-ll-P-0029.pdf
EPA Needs an Agency-Wide Plan to Provide Tribal Solid Waste Management Capacity
Assistance—EPA cannot determine whether its efforts are assisting tribal governments in
developing the capacity to manage solid waste or reduce the risks of open dumps in Indian
country. In addition, EPA's performance measures do not assess whether its efforts are effective
in building solid waste management capacity in Indian country. EPA also lacks internal data
controls to track the status of open dumps. We recommended that the Deputy Administrator
develop an Agency-wide plan to implement consistent and effective tribal solid waste
management capacity assistance, http://www.epa.gov/oig/reports/2011/20110321-1 l-P-0171.pdf
EPA's Plan to Reduce Agency Greenhouse Gas Emissions Is on Track to Meet Executive
Order 13514 Requirements—EPA has completed its plan to reduce greenhouse gas emissions as
required by Executive Order 13514. However, projected greenhouse gas emission reductions are
contingent on the full funding and implementation of the plan's energy efficiency projects. We
recommended that the Assistant Administrator for Administration and Resources Management
describe changes to greenhouse gas emission reductions and/or reduction goals based on actual
funding and status of projects, and make adjustments to the overall reduction goal as needed.
http://www.epa.gov/oig/reports/2011/20110412-ll-P-0209.pdf
EPA Actively Evaluating Effectiveness of Its BP andEnbridge Oil Spill Response
Communications—EPA is actively evaluating the effectiveness of its spill response
communications activities. Because we found that the Agency has several ongoing efforts
focused on lessons-learned activities, we made no recommendations in this report.
http://www.epa.gov/oig/reports/2011/20110623-1 l-P-0273.pdf
EPA's Voluntary Chemical Evaluation Program Did Not Achieve Children's Health
Protection Goals—The Voluntary Children's Chemical Evaluation Program pilot did not
achieve its goals to design a process to assess and report on the safety of chemicals to children.
The pilot's design did not allow for desired outcomes to be produced. Specifically, the pilot had
a flawed chemical selection process and lacked an effective communication strategy. We
recommended that the Assistant Administrator for Chemical Safety and Pollution Prevention
identify the chemicals with highest potential risk to children, apply the Toxic Substances Control
Act regulatory authorities as appropriate for data collection, interpret results and disseminate
information to the public, and include outcome measures that assure valid and timely results.
http://www.epa.gov/oig/reports/2011/20110721-1 l-P-0379.pdf
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EPA Office of Inspector General Annual Performance Report Fiscal Year 2011
EPA Faced Multiple Constraints to Targeting Recovery Act Funds—After obligating over
$7 billion in ARRA funds, EPA is unable, both on a programmatic and national basis, to assess
the overall impact of those funds on economically disadvantaged communities or those most
impacted by the recession. While EPA was able to track financial expenditures, it considered but
could not execute an effort to track the distribution of its ARRA funds to economically
disadvantaged communities. We recommended that the Deputy Administrator establish a clear
and consistent regime that can address socioeconomic factors within the bounds of statutory and
organizational constraints, http://www.epa.gov/oig/reports/2011/20110411-1 l-R-0208.pdf
Special Reviews
Special Reviews results summary
Reports issued: 5
Environmental and business outcomes
> 1 EPA policy, directive, practice, or process change/decision
> 1 environmental or business operational/control risk or challenge eliminated
(including noncompliance)
Environmental and business outputs
> 1 critical congressional or public management concern
> 6 recommendations for improvement
> 1 referral for Agency action
Sustained recommendations
4 sustained environmental or business recommendations
Performance Highlights
Congressionally Requested Inquiry Into EPA's Handling of Freedom of Information Act
Requests—EPA does not have a process to filter Freedom of Information Act requests by
political appointees. EPA policy permits releasing information at the lowest practicable level.
Generally, political appointees are not involved in deciding Freedom of Information Act requests
unless there is denial of information. We found exceptions, but political appointees were usually
involved only to sign denials or partial denials. Freedom of Information Act coordinators
provided regular status reports on the processing of Freedom of Information Act requests to
managers at various levels within the office. No recommendations were made during this review.
http://www.epa.gov/oig/reports/2011/20110110-1 l-P-0063.pdf
EPA Needs Better Agency-Wide Controls Over Staff Resources—EPA does not enforce a
coherent program of position management to assure the efficient and effective use of its
workforce. In addition, while some organizational elements have independently established
programs to control their resources, there is no Agency-wide effort to ensure that personnel are
put to the best use. We recommended that the Assistant Administrator for Administration and
Resources Management establish an Agency-wide workforce program that includes controls to
ensure regular reviews of positions for efficiency, effectiveness, and mission accomplishment.
http://www.epa.gov/oig/reports/2011/20110222-1 l-P-0136.pdf
EPA Needs to Strengthen Management Controls Over Its Travel Authorization Process—
EPA's travel program lacks sufficient management controls to ensure that travel documents are
properly routed and authorized. In addition, the EPA travel system allows unauthorized
personnel to self-approve travel, and does not ensure that GovTrip routing lists are controlled to
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EPA Office of Inspector General Annual Performance Report Fiscal Year 2011
ensure an independent review. We recommended that the Chief Financial Officer revise Agency
guidance to prevent self-authorization of travel at any level; request that the General Services
Administration change GovTrip to prevent self-authorization of travel and include audit trails to
determine who made changes to routing lists; and develop scripts to determine whether travelers
complied with policy for managing routing lists, run the scripts monthly, and investigate
exceptions, http://www.epa.gov/oig/reports/2011/20110510-1 l-P-0223.pdf
An Overall Strategy Can Improve Communication Efforts at Asbestos Superfund Site in
Libby, Montana—Region 8 does not have an overall communication strategy to guide,
coordinate, and evaluate its communication efforts at the Libby Asbestos Superfund Site. Despite
extensive communication efforts that exceed minimum Superfund requirements, Region 8 has
not fully satisfied community concerns about health risk or effectively communicated the
limitations of its risk assessment. We recommended that Region 8 ensure that Libby outreach
products are readable for a general audience and implement a process for ongoing evaluation of
Region 8's communication, http://www.epa.gov/oig/reports/2011/20110803-1 l-P-0430.pdf
EPA Should Prepare and Distribute Security Classification Guides—EPA has not established
any official classification guides even though EPA Administrators have taken original
classification actions. Original classification actions involve someone with original classification
authority assigning a classification level to a particular document. Executive Order 13526,
Classified National Security Information, states that agencies with original classification
authority shall prepare classification guides to facilitate the proper and uniform derivative
classification of information. We recommended that the Administrator ensure the preparation,
review, and approval of appropriate security classification guides that conform to the
requirements of Executive Order 13526 and EP A's National Security Information handbook. We
also recommended that the Administrator ensure the distribution of classification guides to users
of EPA's originally classified information and to program offices that work in related subject
areas. http://www.epa.gov/oig/reports/2011/20110929-ll-P-0722.pdf
Contracts and Assistance Agreements
Contracts and Assistance Agreements results summa
Environmental and business outcomes
> 37 EPA policy, directive, practice, or process changes/decisions
> 1 environmental/health improvement
> 1 action taken or resolved prior to report issuance (not reported)
> 1 certification, verification, validation, or correction
Environmental and business outputs
40 recommendations for improvement
Criminal, civil, and administrative actions
> 1 allegation disproved
Sustained recommendations
> 34 sustained environmental or business recommendations
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EPA Office of Inspector General Annual Performance Report Fiscal Year 2011
Performance Highlights
EPA's Small Business Innovative Research Awards Should Include Additional Certifications
to Reduce Risk—EPA's Small Business Innovative Research solicitations and contracts have
certifications and contract clauses that address many of the government-wide Counsel of
Inspectors General for Integrity and Efficiency suggestions. However, EPA does not require
awardees to submit a certification against false statements when submitting the proposal and
does not require a certification with the final report that addresses whether the report statements
are true and completed. We recommended that the Assistant Administrator for Research and
Development add a certification statement to the current requirements that funding applicants
must submit prior to award, and require funding recipients to submit a certification statement
with their final reports, http://www.epa.gov/oig/reports/2011/20110330-1 l-N-0199.pdf
Hotline Allegations Unsubstantiated, but Region 7 Contract Administration and Award Issues
Identified—Hotline allegations that ARRA funds were obligated on the ASW Associates, Inc.,
contract, and that the contract was terminated for convenience, were not substantiated. However,
we recommended that Region 7 revise the Region 7 peer review checklist to require review of
the preaward file; provide clarification to contracting officers on time and materials contracts and
annual invoice reviews; implement a process to ensure annual invoice reviews are completed by
contracting officers; and prepare and submit a contractor performance evaluation for the ASW
Associates, Inc., contract in the Contractor Performance Assessment Reporting System as
required, http://www.epa.gov/oig/reports/2011/20110504-1 l-P-0217.pdf
EPA Needs to Reexamine How It Defines Its Payment Recapture Audit Program—EPA makes
numerous efforts to recapture improper payments, but does not consider its activities to be a
formal payment recapture audit program, as defined by OMB guidance. A payment recapture
audit program is an agency's overall plan for risk analysis and the performance of payment
recapture audits and recovery activities. We recommended that the Chief Financial Officer report
the results of all activities when reporting on its payment recapture audit program in 2011.
http://www.epa.gov/oig/reports/2011/20110719-1 l-P-0362.pdf
EPA's Contracts and Grants Workforce May Face Future Workload Issues—EPA should
ensure that it has sufficient contracts and grants staff to perform both ARRA and non-ARRA
activities. EPA emphasized ARRA activities, resulting in non-ARRA activities being delayed or
not completed. We recommended that the Assistant Administrator for Administration and
Resources Management have its office review the September 30, 2010, metrics and prepare
action plans for any measure that did not meet its goal in 2010. We also recommended the
developing of organization-wide performance measures to better manage activities.
http://www.epa.gov/oig/reports/2011/20101025-ll-R-0005.pdf
EPA's Terms and Conditions as Well as Process to Award Recovery Act Interagency
Agreements Need Improvement—EPA did not clearly describe its responsibilities in the terms
and conditions of the ARRA-funded interagency agreements, and thus did not effectively
establish accountability. We recommended that EPA amend the terms and conditions for ARRA
interagency agreements under the Superfund and Drinking Water State Revolving Fund
programs, and revise its standard terms and conditions for use in future agreements to include
EPA's roles and responsibilities, http://www.epa.gov/oig/reports/2011/20101116-1 l-R-0016.pdf
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EPA Office of Inspector General Annual Performance Report Fiscal Year 2011
EPA Can Improve the Use of Financial Monitoring Reviews for Recovery Act Superfund
Contracts—EPA is implementing the monitoring functions established in the contracts
functional area of the EPA Recovery Act Stewardship Plan. EPA's implementation of these
functions should help ensure that a high degree of accountability is associated with the
investment of ARRA funds. We recommended that the Assistant Administrator for
Administration and Resources Management revise policies and procedures to ensure that
financial monitoring review reports are distributed timely.
http://www.epa.gov/oig/reports/2011/20110131-1 l-R-0081.pdf
EPA Needs to Better Document Project Delays for Recovery Act Diesel Emission Reduction
Act Grants—While Diesel Emission Reduction Act project officers were aware of ARRA grant
project delays, they did not always document delays in EPA's grants management system or, in
some cases, take action to reduce the impact of project delays. We recommended that the
Assistant Administrator for Administration and Resources Management revise the baseline and
advanced monitoring report questions and corresponding guidance. We recommended that the
Assistant Administrator for Air and Radiation verify that project officers document delays in
baseline and advanced monitoring reports, institute corrective actions when delays occur, and
regularly report on the progress, http://www.epa.gov/oig/reports/2011/20110328-1 l-R-0179.pdf
EPA and States Should Strengthen Oversight of Clean Water State Revolving Fund Recovery
Act Projects—State oversight of Clean Water State Revolving Fund projects does not always
ensure subrecipient compliance with ARRA. Some states did not conduct adequate oversight of
subrecipient compliance with ARRA Buy American provisions, and the frequency of inspections
varied among states. We recommended that the Assistant Administrator for Water implement a
plan to supplement state inspections and require states to use an updated checklist during
inspections, update checklists that regions use for semiannual reviews of state programs and
establish deadlines for completing reviews, and analyze reviews of state programs for nationwide
trends. http://www.epa.gov/oig/reports/2011/20110824-ll-R-0519.pdf
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EPA Office of Inspector General Annual Performance Report Fiscal Year 2011
Forensic Audits
Forensics Audits results summary
Reports issued: 16
Environmental and business outcomes
> 84 certifications, verifications, validations, or corrections
> 5 implemented recommendations previously reported as unimplemented
Environmental and business outputs
> 253 recommendations for improvement
> 1 best practice identified
> 1 referral for Agency action
> 1,261 findings without controlled recommendations
Return on investments
> $8.7 million questioned costs
> $1.1 million recommended efficiencies, costs saved or avoided
Criminal, civil, and administrative actions
2 administrative actions
Sustained recommendations
> 192 sustained environmental or business recommendations
> $0.8 sustained questioned costs
* One of the reports contains sensitive information and is not summarized below.
Performance Highlights
Examination of Costs Claimed Under EPA Cooperative Agreement X83275501 Awarded to
The Montana Physical Sciences Foundation—The grantee did not meet Code of Federal
Regulations requirements for procurement. In particular, the grantee has an apparent, if not real,
conflict of interest with its subcontractor; awarded a sole-source subcontract without a
documented justification and a cost or price analysis; and did not amend the sole-source
subcontract to cover a major change in project scope and extension of the project period. We
recommended that the Assistant Administrator for Administration and Resources Management
disallow and recover $707,320 in costs claimed for the grantee's subcontract, and consider
suspension and debarment proceedings against the grantee and its subcontractor.
http://www.epa.gov/oig/reports/2011/20101108-1 l-4-0013.pdf
American Recovery and Reinvestment Act Site Inspection of Sewer Pump Station
Rehabilitation and Improvements, Town of Ball, Louisiana—At the time of our visit to this
site, in May 2010, the construction contractor had suspended work while waiting for American-
made materials and parts. Based upon our inspection, nothing came to our attention that would
require action from the town, http://www.epa.gov/oig/reports/2011/20101109-1 l-R-0014.pdf
American Recovery and Reinvestment Act Site Inspection of the Clean Water State Revolving
Fund Projects at the City of Long Beach, California—We toured four projects at this site in
May 2010. We identified a wage compliance issue that merits attention from and action by the
city, the California State Water Resources Control Board, and EPA.
http://www.epa.gov/oig/reports/2011/20110201-1 l-R-0082.pdf
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EPA Office of Inspector General Annual Performance Report Fiscal Year 2011
American Recovery and Reinvestment Act Site Inspection of Sewer System Improvement
Projects, City of Parma, Ohio—We conducted a site inspection of the Bradenton, Grantwood,
and Manhattan Avenue sewer system improvement projects from June 28 through July 1, 2010.
Based upon our site inspection, nothing came to our attention that would require action from the
city, state, or EPA. http://www.epa.gov/oig/reports/2011/20110202-ll-R-0083.pdf
American Recovery and Reinvestment Act Site Visit of the Denver Street Storage Project,
City of Astoria, Oregon—We conduced a site visit in June 2010. We found that the city and the
Oregon Department of Environmental Quality understated the number of jobs created or
retained with ARRA funds, and for one of four contracts awarded, a change order did not meet
applicable procurement requirements. We recommended that Region 10 require Oregon to
require the city to correct the reported number of jobs created or retained, obtain the corrections,
and submit corrected documentation to the federal government. We also recommended that the
region require Oregon to disallow $57,346 in costs incurred under the change order unless the
city is able to show that the costs meet applicable Oregon requirements.
http://www.epa.gov/oig/reports/2011/20110322-1 l-R-0172.pdf
American Recovery and Reinvestment Act Site Visit of the Comprehensive Sewer System
Rehabilitation, Subsystem PS-5, Saugus, Massachusetts—We conducted a site visit in
December 2009. Based upon our visit, no significant issues or concerns came to our attention
that would require immediate action by the town, state, or EPA.
http://www.epa.gov/oig/reports/2011/20110329-1 l-R-0192.pdf
American Recovery and Reinvestment Act Site Visit of Water System Improvement Project,
Waleska, Georgia—We conducted a site visit in March 2010. We found that the city did not
execute written contracts for engineering, inspection, and legal services, and did not prepare a
cost or price analysis for its engineering services. However, we found no applicable federal,
state, or local requirements that require the city to execute written contracts or prepare a cost or
price analysis. We found no other problems that would require action from the city, state, or
EPA, http://www.epa.gov/oig/reports/2011/20110329-1 l-R-0193.pdf
American Recovery and Reinvestment Act Site Visit of the Wastewater Treatment Facility
Improvements Project, Perkins, Oklahoma—We conducted a site visit in April 2010. Based
upon our review, we did not identify any issues that would require action by the Perkins Public
Works Authority, state, or EPA. http://www.epa.gov/oig/reports/2011/20110502-1 l-R-0214.pdf
American Recovery and Reinvestment Act Site Visit of the Wastewater Treatment Facility
Expansion, Town of Buckeye, Arizona—We conducted a site visit in October 2010. We found
that the town was not in compliance with reporting requirements for jobs created or retained for
the 9-month period ended September 30, 2010. We recommended that Region 9 require the
Water Infrastructure Finance Authority of Arizona to direct the town to obtain, to the maximum
extent possible, complete information on jobs created or retained with ARRA funding for the
primary contractor and subcontractors; direct the town to correct the number of jobs created or
retained; obtain the corrections for the reported number of jobs; and submit corrections to the
federal government, http://www.epa.gov/oig/reports/2011/20110509-1 l-R-0222.pdf
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EPA Office of Inspector General Annual Performance Report Fiscal Year 2011
American Recovery and Reinvestment Act Site Visit of the La Plata Water Treatment Plant
Phase IIProject, Aibonito, Puerto Rico—We conducted a site visit in August 2010. During our
review, we were unable to determine the total hours worked for employees due to variances in
labor hours reported on certified payroll reports and employee pay stubs. We recommended that
Region 2 require that the Puerto Rico Aqueduct and Sewer Authority reconcile the payroll hours
reported, verify that previously reported information reflects actual hours worked, and verify that
future hours reported are supported by payroll reports and pay stubs. We also recommended that
the region review the authority's reconciliation and verification responses and ensure compliance
with ARRA. http://www.epa.gov/oig/reports/2011/20110523-1 l-R-0232.pdf
American Recovery and Reinvestment Act Site Visit of Sanitary Sewer System Improvements,
Ingenio Community, Toa Baja, Puerto Rico—We conducted a site visit in August 2010.
The Puerto Rico Aqueduct and Sewer Authority informed us of a potential Buy American
noncompliance and the actions being taken to resolve the matter. Also, we identified two
subcontract agreements that did not contain ARRA requirements.
http://www.epa.gov/oig/reports/2011/20110524-1 l-R-0233.pdf.
American Recovery and Reinvestment Act Site Visit of Las Marias Potable Water System
Phase IIA Project, Las Marias, Puerto Rico—We conducted a site visit in August 2010.
Based upon our site visit, we did not identify any issues that would require action from the
Commonwealth of Puerto Rico, Puerto Rico Aqueduct and Sewer Authority, or EPA.
http://www.epa.gov/oig/reports/2011/20110525-1 l-R-0241.pdf
American Recovery and Reinvestment Act Site Visit of the Clifton Street Sewer Separation and
Water Main Replacement Projects, Portland, Maine—We conducted a site visit in June 2009.
The projects were performed jointly by the City of Portland, Maine (sewer separation) and
Portland Water District (water main replacement). Based upon our site visit, we did not identify
any issues that would require action from the city, the Portland Water District, or EPA.
http://www.epa.gov/oig/reports/2011/20110607-1 l-R-0248.pdf
American Recovery and Reinvestment Act Site Visit of the Tower Chemical Superfund Site,
Clermont, Lake County, Florida—We conducted a site visit in July 2010. Based upon our site
visit, we did not identify any issues that would require action from the contractor or EPA.
http://www.epa.gov/oig/reports/2011/20110803-1 l-R-043 l.pdf
American Recovery and Reinvestment Act Site Visit of Wastewater Treatment Plant—Phase II
Improvements Project, City of Ottawa, Illinois—We conducted site visits in October 2010,
November 2010, and April 2011. The city could not provide sufficient documentation to support
that some manufactured goods used on the project met ARRA Buy American requirements.
We recommended that Region 5 employ the procedures set out in the Code of Federal
Regulations to resolve the noncompliance on the Ottawa project.
http://www.epa.gov/oig/reports/2011/20110923-1 l-R-0700.pdf
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EPA Office of Inspector General Annual Performance Report Fiscal Year 2011
Financial Management
Financial Management results summary
Reports issued: 12
Environmental and business outcomes
> 22 EPA policy, directive, practice, or process changes/decisions
> 3 actions taken or resolved prior to report issuance (not reported)
> 13 certifications, verifications, validations, or corrections
> 24 implemented recommendations previously reported as unimplemented
Environmental and business outputs
> 42 recommendations for improvement
> 23 unimplemented recommendations identified
Return on investments
> $21.9 million recommended efficiencies
> $15.8 million monetary actions taken or resolved
Sustained recommendations
> 4 sustained environmental or business recommendations
> $17.2 sustained efficiencies
Performance Highlights
Audit of EPA's Fiscal 2010 and 2009 Consolidated Financial Statements—We rendered an
unqualified, or clean, opinion on EPA's Consolidated Financial Statements for FYs 2010 and
2009, meaning we found the statements to be fairly presented and free of material misstatement.
However, in evaluating internal controls, we noted four deficiencies: (1) further improvements
are needed in reviewing the Superfund state contract unearned revenue spreadsheets, (2) EPA
should assess collectibility of federal receivables and record allowances for doubtful accounts as
needed, (3) EPA needs to improve its controls for headquarters personal property, and (4) EPA
needs to properly close the Fund Balance with Treasury when cancelling treasury symbols. We
also found one noncompliance issue involving EPA's need to continue efforts to reconcile
intragovernmental transactions, http://www.epa.gov/oig/reports/2011/20101115-1 l-l-0015.pdf
EPA Did Not Fully Comply With Guidance Regarding OMB Circular A-l23 Unliquidated
Obligation Reviews—Seventeen of 24 EPA regions and program offices did not fully comply
with the guidance for conducting and reporting on their FY 2009 OMB Circular A-123 reviews
of internal controls over the unliquidated obligations process. We recommended that the Chief
Financial Officer develop and implement procedures to oversee the regional and program office
A-123 unliquidated obligations internal control reviews, require regions and program offices to
develop plans that address staffing and training for the reviews, develop a guide to assist those
conducting the reviews, and implement standard performance measures to assess assurance letter
completeness and timeliness, http://www.epa.gov/oig/reports/2011/20110119-1 l-l-0069.pdf
Fiscal Year 2010 and 2009 Financial Statements for the Pesticides Reregistration and
Expedited Processing Fund—We rendered an unqualified opinion on EPA's FYs 2010 and
2009 financial statements for the Pesticides Reregistration and Expedited Processing Fund. We
noted one significant deficiency in internal controls. EPA misapplied federal retirement benefit
cost factors in calculating FY 2010 imputed cost related to the Civil Service Retirement System
and the Federal Employees Retirement System, resulting in a material understatement of
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EPA Office of Inspector General Annual Performance Report Fiscal Year 2011
$340,772. The Agency corrected FY 2010 imputed costs in the fund's financial statements.
http://www.epa.gov/oig/reports/2011/20110310-1 l-l-0156.pdf
Fiscal Year 2010 and 2009 Financial Statements for the Pesticide Registration Fund—We
rendered an unqualified opinion on EPA's Pesticide Registration Fund financial statements for
FYs 2010 and 2009. We noted one significant deficiency in internal controls. EPA misapplied
federal retirement benefit cost factors in calculating FY 2010 imputed cost related to the Civil
Service Retirement System and the Federal Employees Retirement System, resulting in an
understatement of $120,422. The Agency has corrected FY 2010 imputed costs in the fund's
financial statements, http://www.epa.gov/oig/reports/2011/20110310-1 l-l-0157.pdf
Agreed-Upon Procedures on EPA's Fiscal Year 2011 Quarterly Financial Statements—
As part of our review of EPA's financial statement reporting, we performed certain agreed-upon
procedures on the Agency's FY 2011 first, second, and third quarter financial statements. We
compared the statements with EPA's crosswalk, recomputed them for mathematical accuracy,
and compared them with balances separately generated by the OIG. The links to the three reports
on our reviews for the first through third quarters, respectively, follow.
http://www.epa.gov/oig/reports/2011/20110502-1 l-2-0213.pdf
http://www.epa.gov/oig/reports/2011/20110629-1 l-2-0300.pdf
http://www.epa.gov/oig/reports/2011/20110923-1 l-2-0699.pdf
EPA Region 3 Reduced Unliquidated Obligations Under Water Program Assistance
Agreements—We identified $6,130,166 of unneeded funds for three assistance agreements
awarded by EPA Region 3 to the District of Columbia, and the region deobligated those funds
during the course of the audit. Deobligating the funds results in the funds being used for other
environmental projects. Because Region 3 deobligated the funds during the course of our audit,
we made no recommendations. http://www.epa.gov/oig/reports/2011/20110315-ll-P-0170.pdf
EPA Should Reduce Unliquidated Obligations Under Expense Reimbursement Grants—We
identified $6.6 million of potentially unneeded funds that could have been deobligated for three
Expense Reimbursement Grants awarded by EPA Regions 4 and 5 ($3.3 million for Georgia,
$2.3 million for North Carolina, and $1.0 million for Wisconsin). The regions either deobligated
funds or extended the time period in which the funds needed to be used. Also, states did not
adequately use the funds to provide training and certification to water system operators in
accordance with requirements, http://www.epa.gov/oig/reports/2011/20110516-1 l-P-0228.pdf
EPA Should Bill Superfund Oversight Costs More Timely—On oversight billings for nine sites
in Regions 1, 5, and 9, we found that Region 5 did not timely bill or did not bill approximately
$8.6 million in oversight costs for two sites. During our audit, Region 5 billed about $1 million.
We did not identify problems with oversight cost billings in Regions 1 or 9. We recommended
that Region 5 develop a policy to require that oversight billings be issued at least annually, and
procedures to help staff prepare oversight billings and resolve billing problems. We also
recommended that Region 5 bill two potentially responsible parties for $5.1 million incurred.
http://www.epa.gov/oig/reports/2011/20110922-1 l-P-0697.pdf
EPA Should Update Its Fees Rule to Recover More Motor Vehicle and Engine Compliance
Program Costs—EPA is not recovering all reasonable costs of administering the Motor Vehicle
and Engine Compliance Program. Using the Agency's cost estimate for FY 2010, we found a
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EPA Office of Inspector General Annual Performance Report Fiscal Year 2011
$6.5 million difference between estimated program costs of $24.9 million and fee collections of
$18.4 million. EPA has not conducted a formal cost study since 2004 to determine the actual
program costs, and has not updated the annual fee adjustment formula in the 2004 fees rule. We
recommended that the Assistant Administrator for Air and Radiation update the 2004 fees rule to
increase the amount of program costs it can recover, and conduct biennial reviews of the
program fee collections and the full cost of operating the program to determine whether EPA is
recovering its costs, http://www.epa.gov/oig/reports/2011/20110923-1 l-P-0701.pdf
EPA's Contract Oversight and Controls Over Personal Computers Need Improvement—EPA
paid the Customer Technology Solutions contractor a total of $489,734 over an 11-month period
for 3,343 seats—a standard seat includes a leased computer with accessories and technical
support—not ordered by the Agency during the period. Because EPA did not safeguard and track
personal computers to ensure proper replacement and disposal in accordance with property
regulations, it cannot account for 638 personal computers valued at over $1 million. We
recommended that the Assistant Administrator for Environmental Information and Chief
Information Officer review and/or modify the Customer Technology Solutions contract to adjust
the minimum standard seat requirement to eliminate monthly payments for computers that EPA
will not need, http://www.epa.gov/oig/reports/2011/20110926-1 l-P-0705.pdf
Risk Assessment and Program Performance
Risks Assessment and Program Performance results summary
ts issued:
Environmental and business outcomes
> 6 EPA policy, directive, practice, or process changes/decisions
> 5 actions taken or resolved prior to report issuance (not reported)
Environmental and business outputs
> 31 recommendations for improvement
> 2 environmental or business operational/control risks or challenges identified
(including noncompliance)
> 5 referrals for Agency action
> 4 awareness/technical briefings conducted
Sustained recommendations
> 2 sustained environmental or business recommendations
* One of the reports is on CSB and is discussed later, in the CSB section.
Performance Highlights
EPA Needs to Strengthen Internal Controls for Determining Workforce Levels—EPA's
policies and procedures do not include a process for determining employment levels based on
workload as prescribed by OMB. Further, EPA does not determine the number of positions
needed per mission-critical occupation using workforce analysis as required by the Office of
Personnel Management. We recommended that the Chief Financial Officer amend guidance to
require that the Agency complete a workload analysis for all critical functions to support the
Agency's budget request for full-time equivalents. We recommended that Office of
Administration and Resources Management amend its workforce planning guidance to require
that program offices and regions provide the number of positions needed for each mission-
critical occupation, http://www.epa.gov/oig/reports/2011/20101220-1 l-P-0031 glance.pdf
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EPA Office of Inspector General Annual Performance Report Fiscal Year 2011
EPA Should Further Connect the National Program Manager Process With Federal
Guidance on Internal Control Risks—EPA has not fully integrated the Federal Managers'
Financial Integrity Act (FMFIA) and national program manager processes. Activities conducted
per the national program manager process support internal controls; however, the Office of the
Chief Financial Officer did not connect these processes until midway through FY 2009 (in
supplemental guidance) and in FY 2010 guidance. We recommended that the Chief Financial
Officer assign national program managers primary responsibility for FMFIA reporting on
internal controls for national programs and rely on the lead regional coordinator process for input
from the regions, and direct regional personnel to report on administrative and financial internal
control activities, http://www.epa.gov/oig/reports/2011/20110118-1 l-P-0067.pdf
Office of Research and Development Should Increase Awareness of Scientific Integrity
Policies—The Office of Research and Development has internal controls that include policies,
procedures, training, and peer review. However, the office should improve how it evaluates the
effectiveness of its policies and procedures for scientific integrity and research misconduct.
Currently, the office does not test its policies and procedures because the Agency asserts that few
reported instances of misconduct means that midconduct generally does not occur. We
recommended that the Assistant Administrator for Research and Development periodically test
the effectiveness of controls in place to address scientific integrity and research misconduct, and
initiate outreach with EPA offices to raise awareness on roles/responsibilities and reporting
steps, http://www.epa.gov/oig/reports/2011/20110722-1 l-P-0386.pdf
Revisions Needed to National Contingency Plan Based on Deepwater Horizon Oil Spill—
EPA and the manufacturer of Corexit completed required steps to include Corexit products on
the National Contingency Plan Product Schedule. However, EPA has not updated the National
Contingency Plan since 1994 to include the most appropriate efficacy testing protocol. We
recommended that the Office of Solid Waste and Emergency Response establish policies to
review and update contingency plans incorporating lessons learned during the Deepwater
Horizon oil spill, clarify roles and responsibilities for Spills of National Significance, and
develop a research plan on long-term health and environmental effects of dispersants.
http://www.epa.gov/oig/reports/2011/20110825-ll-P-0534.pdf
EPA Needs Workload Data to Better Justify Future Workforce Levels—EPA has not collected
comprehensive workload data or conducted workload analysis in about 20 years. EPA does not
require program offices to collect and maintain workload data, and the programs do not have
databases or cost accounting systems in place to collect data on time spent on specific mission-
related outputs. During our audit, we identified some basic concepts of workload modeling from
which EPA could benefit. We recommended that the Chief Financial Officer conduct a pilot
project requiring EPA offices to collect and analyze workload data on key project activities.
http://www.epa.gov/oig/reports/2011/201110914-ll-P-0630.pdf
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EPA Office of Inspector General Annual Performance Report Fiscal Year 2011
Efficiency
Efficiency results summar
Reports issued: 3
Environmental and business outcomes
> 3 EPA policy, directive, practice, or process changes/decisions
> 1 environmental/health improvement
> 9 best practices implemented
> 1 Environmental or business operational/control risk or challenge
reduced or eliminated
> 1 actions taken or resolved prior to report issuance (not reported)
> 1 certification, verification, validation, or correction
Environmental and business outputs
> 11 recommendations for improvement
> 1 unimplemented recommendation identified
> 5 referrals for Agency action
> 4 awareness/technical briefings conducted
Sustained recommendations
> 1 sustained environmental or business recommendations
Performance Highlights
Agency-Wide Application of Region 7 NPDES Program Process Improvements Could
Increase EPA Efficiency—Although Region 7 NPDES Kaizen event participants continued to
follow up on commitments and action items identified, no single authority was responsible for
tracking the process improvement outcomes. A Kaizen event is an activity that helps an
organization find ways to operate more efficiently. Also, EPA did not have a process to develop
and track quantifiable results and outcomes from the event. Further, EPA encountered barriers
when planning the Kaizen event. We recommended that EPA identify process improvements
from the Region 7 Kaizen event that can be applied elsewhere and develop a national policy on
how to plan, design, and implement business process improvement events.
http://www.epa.gov/oig/reports/2011/20110706-1 l-P-0315.pdf
EPA Has Not Fully Implemented a National Emergency Response Equipment Tracking
System—Although EPA spent $2.8 million to develop and implement an Emergency
Management Portal emergency equipment tracking module, EPA has not fully implemented the
module, and the module suffers from operational issues. We recommended that the Assistant
Administrator for Solid Waste and Emergency Response ensure that only essential equipment
tracking data are required to be recorded and determine whether the this module is the most cost-
efficient alternative. We also recommended that the Deputy Administrator mandate that regions
and emergency response teams employ the national tracking system that EPA decides to use for
emergency response equipment, http://www.epa.gov/oig/reports/2011/20110913-1 l-P-0616.pdf
EPA Should Improve Timeliness for Resolving Audits Under Appeal—EPA's efforts to resolve
over $55 million for audits under appeal in Regions 2 and 5 were not efficient, effective, or
timely. We found that indequate communication between audit follow-up coordinators and
EPA personnel responsible for resolving audits under appeal, and policies were not complete,
relevant, or consistent. Also, audits under appeal were not timely; 17 of 30 audits under appeal
had been in resolution for 10 to 21 years. We recommended that the Office of the Chief Financial
Officer ensure that the in-process revisions to EPA Manual 2750 include a communication
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EPA Office of Inspector General Annual Performance Report Fiscal Year 2011
strategy, establish a finite number of reconsideration requests, and provide for consistency
among policies, http://www.epa.gov/oig/reports/2011/20110921-1 l-P-0687.pdf
Information Resources Management
Information Resources Management results summa
Environmental and business outcomes
> 1 EPA policy, directive, practice, or process change/decision
> 3 best practices implemented
> 3 environmental or business operational/control risks or challenges eliminated
(including noncompliance)
> 9 implemented recommendations previously reported as unimplemented
Environmental and business outputs
> 52 recommendations for improvement
> 1 unimplemented recommendation identified
> 3 awareness/technical briefings
Sustained recommendations
> 16 sustained environmental or business recommendations
* One of the reports is on CSB and is discussed later, in the CSB section.
Performance Highlights
Fiscal Year 2010 Federal Information Security Management Act Report: Status of EPA's
Computer Security Program—The Agency continues to make progress in improving its
information technology security. While EPA took steps to identify inactive network accounts,
EPA offices do not take appropriate action to timely disable or terminate accounts. In addition,
audit work during FY 2010 noted significant weaknesses with several aspects of EPA's
information security program, http://www.epa.gov/oig/reports/2011/20101116-1 l-P-0017.pdf
Improvements Needed in EPA's Efforts to Replace Its Core Financial System—Processes do
not ensure compliance with EPA's Systems Life Cycle Management policies and procedures
and, thus, provide reasonable assurance that efforts to replace the Agency's core financial system
achieve the desired results. We recommended that the Chief Financial Officer develop and
implement formal procedures for future projects to ensure that the requirements document(s) and
test plans are authorized by executive management prior to approving the system to move into
the next phase of the life cycle, http://www.epa.gov/oig/reports/2011/20101129-1 l-P-0019.pdf
EPA Could Improve RCRAInfo Data Quality and System Development—This audit found that
data in the Resource Conservation and Recovery Act Information System, which tracks
hazardous waste handlers and shipment and receipt of hazardous waste, contains errors and is
missing source documentation. Further, system owners did not follow the prescribed System Life
Cycle Management testing procedures to validate the updated software and system. The report
recommended that EPA implement a procedure for regional personnel to notify a state when
changes are made to handler records, that provide guidance on retaining source documentation,
and implement control procedures on updating documentation and reviewing the production
database for test data, http://www.epa.gov/oig/reports/2011/20110207-1 l-P-0096.pdf
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EPA Office of Inspector General Annual Performance Report Fiscal Year 2011
Improvements Needed in EPA's Network Traffic Management Practices—The Office of
Environmental Information does not have consistent, repeatable intrusion detection system
monitoring practices in place, which inhibits EPA's ability to monitor unusual network activity
and thus protect Agency systems and associated data. The office also has not documented a
methodology to aid in making decisions about potentially unusual network traffic. We
recommended that the Office of Environmental Information develop and implement
comprehensive log review policies and procedures, establish a management control process to
review contractor performance, and update and approve the Wide Area Network security plan.
http://www.epa.gov/oig/reports/2011/20110314-1 l-P-0159 glance.pdf
EPA Has Taken Steps to Address Cyber Threats but Key Actions Remain Incomplete—
We issued previous reports and made recommendations that could help the Agency strengthen
cyber security practices for combating Advanced Persistent Threats. However, some of those
recommendations remain unimplemented, and we continue to find and report on similar
weaknesses at other EPA locations. We recommended that the Assistant Administrator for
Environmental Information and Chief Information Officer issue a memorandum stressing the
importance of and expectation for completing audit recommendations, and strengthen processes
for monitoring and completing all open and future audit recommendations by the agreed-upon
milestone date, http://www.epa.gov/oig/reports/2011/20110623-1 l-P-0277.pdf
Results of Technical Network Vulnerability Assessment: EPA's National Health &
Environment Effects Research Laboratory, Western Ecology Division—Vulnerability testing of
EPA's National Health & Environment Effects Research Laboratory, Western Ecology Division,
network conducted in March 2011 identified Internet Protocol addresses with numerous high-risk
and medium-risk vulnerabilities. These vulnerabilities could expose EPA's assets to unauthorized
access and potentially harm the Agency's network. We made recommendations to address these
risks, http://www.epa.gov/oig/reports/2011/20110803-1 l-P-0429 glance.pdf
Results of Technical Vulnerability Assessment: EPA's Directory Service System
Authentication and Authorization Servers—Vulnerability testing of EPA's directory service
system authentication and authorization servers conducted in March 2011 identified
authentication and authorization servers with numerous high-risk and medium-risk
vulnerabilities. These vulnerabilities could expose EPA's assets to unauthorized access and
potentially harm the Agency's network. We made recommendations to address these risks.
http://www.epa.gov/oig/reports/2011/20110909-ll-P-0597 glance.pdf
Region 9 Technical and Computer Room Security Vulnerabilities Increase Risk to EPA's
Network—OIG technical vulnerability scans conducted at Region 9 headquarters revealed a
multitude of high-risk and medium-risk vulnerabilities on Region 9 servers, desktops, and
printers. The exploitation of vulnerabilities could greatly impact the network security posture of
Region 9 headquarters and/or the entire EPA network by exposing Agency data, information,
and configurations to unauthorized access. We made recommendations to address these risks.
http://www.epa.gov/oig/reports/2011/20110930-ll-P-0725 glance.pdf
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EPA Office of Inspector General Annual Performance Report Fiscal Year 2011
Investigations
Investigative results summary
Investigations opened and closed
> 84 investigations closed
> 131 investigations opened
Environmental and business outcomes
> $3.91 million fines, settlements, restitutions
> $2.16 million cost efficiencies (also counted
> 15 criminal convictions
> 1 civil action
> 17 indictments/informations/complaints
> 104 administrative actions
> 24 allegations disproved
in total OIG efficiencies)
Performance Highlights
Bid Rigging at New Jersey Superfund Sites—As a result of an OIG investigation, five men were
sentenced in U.S. District Court for the District of New Jersey on criminal charges related to a bid
rigging case at two New Jersey Superfund sites. Two of the men received prison sentences.
• On September 12, 2011, Robert P. Griffiths, a former executive of Bennett Environmental,
Inc., was sentenced to 50 months in prison for participating in money-laundering and fraud
conspiracies in connection with contracts at the Federal Creosote Superfund Site in
Manville, New Jersey. Griffiths was also sentenced to pay a $15,000 fine and $4,644,379
in restitution, jointly and severally with other co-conspirators. Griffiths' sentencing follows
his 2009 guilty plea to defrauding EPA with others by inflating the prices he charged to an
EPA prime contractor and providing kickbacks to employees of that prime contractor at the
Federal Creosote site. The co-conspirators were able to allocate at least $43 million in
fraudulently awarded subcontracts to Bennett Environmental, a Canada-based company
that treats and disposes of contaminated soil, for work at the Federal Creosote site.
Griffiths and his co-conspirators also conspired to commit international money laundering,
and Griffiths made false statements to the U.S. Securities and Exchange Commission.
• On May 23, 2011, Norman Stoerr, a former contracts administrator for Sevenson
Environmental Service of Niagara Falls, New York, was sentenced to 8 months of home
detention and 60 months of probation, and was also ordered to pay a $25,000 fine and
$391,228 in restitution, jointly and severally with other co-conspirators. Stoerr's
sentencing follows his 2008 guilty plea to charges of fraud, bid rigging, and tax crimes.
Stoerr solicited and accepted thousands of dollars in kickbacks in exchange for helping
companies get lucrative subcontract work at the Federal Creosote site and the Diamond
Alkali Superfund Site in Newark, New Jersey.
• On April 26, 2011, Victor Boski and his company, National Industrial Supply, were
sentenced to 36 months' probation. He was also ordered to pay a $25,000 fine and
$50,000 in restitution, jointly and severally with other co-conspirators. National
Industrial Supply was ordered to serve 36 months' probation and pay a $32,000 fine and
$50,000 in restitution, joint and severally with other co-conspirators. In March 2009,
Boski and National Industrial Supply, an industrial pipes, valves, and fittings supply
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EPA Office of Inspector General Annual Performance Report Fiscal Year 2011
company located in Middlesex, New Jersey, pleaded guilty to participating in a separate
kickback and fraud conspiracy at the Federal Creosote and Diamond Alkali sites.
• On April 6, 2011, John Drimak and his company, JMJ Environmental, Inc., a Laurel
Springs, New Jersey, wastewater treatment supply company, were sentenced to
18 months in prison to be followed by 36 months' probation. He was also ordered to pay
a $30,000 fine and $283,242 in restitution, jointly and severally with other
co-conspirators. JMJ Environmental was ordered to serve 12 months' probation and pay
$283,242 in restitution, jointly and severally with other co-conspirators. In July 2008,
Drimak and JMJ Environmental pleaded guilty to bid rigging, fraud, and tax charges in
connection with paying kickbacks for subcontracts for wastewater treatment supplies and
services at the Federal Creosote and Diamond Alkali sites.
• On March 30, 2011, Zul Tejpar, Vancouver, Canada, was sentenced to 3 years'
probation. He was also ordered to pay a $15,000 fine and $300,000 in restitution to EPA.
Tejpar was a former vice president of Business Development for Bennett Environmental,
Inc. Tejpar previously pled guilty to a one-count information, in which he was charged
with providing and attempting to provide kickbacks to his co-conspirators at the Federal
Creosote site.
To date, 10 individuals and 3 companies have been charged as part of this investigation. More
than $6 million in criminal fines and restitution have been imposed. This case is being conducted
with the Internal Revenue Service Criminal Investigation Division.
Former Arkansas Department of Health Employees Sentenced—Two former employees of
the Arkansas Department of Health were sentenced for falsely claiming meal and hotel expenses
for 5 years while being paid under an EPA Drinking Water State Revolving Fund loan. On
August 8, 2011, Craig Burger was sentenced in the Circuit Court of Pulaski County, Arkansas, to
8 years in prison to be followed by 12 years of supervised probation. He was also ordered to pay
$45,306 in restitution to the Arkansas Department of Health. On September 14, 2011,
Mark Allen Mclntosh was sentenced to 60 months of probation and 50 hours of community
service, and ordered to pay a $2,500 fine and $275 in court costs. Under the State Revolving
Fund loan, Burger and Mclntosh were paid to visit community water systems to provide training
and technical assistance to water operators.
Sentencing in Conspiracy to Defraud Idaho Department of Environmental Quality—As a
result of an OIG investigation, Jorge Garcia and Karen Damberg Garcia, both of Boise, Idaho,
were sentenced in U.S. District Court for the District of Idaho for conspiring to defraud the Idaho
Department of Environmental Quality of EPA grant funds that were to be used to install diesel
emission reduction equipment on school buses. Jorge Garcia was sentenced to 30 months in
prison to be followed by 3 years of supervised release. Karen Garcia was sentenced to 5 months
of probation with 10 months of home detention, also to be followed by 3 years of supervised
release. The two were also ordered to pay $42,333 in restitution to the Idaho Department of
Environmental Quality. In 2008, Jorge Garcia was a project manager for the Idaho Department
of Environmental Quality and was in charge of the school bus diesel emission reduction project.
Using the name Emission Control Systems, the Garcias submitted a bid to the Idaho Department
of Environmental Quality for the retrofit work, and Idaho awarded a $332,320 contract to the
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EPA Office of Inspector General Annual Performance Report Fiscal Year 2011
firm. The mechanic hired by Garcia to perform the work under the contract was not experienced
in the work, resulting in improper installation that damaged school buses.
Sentencing in Wire Fraud in Commonwealth of the Northern Mariana Islands—As a result
of an OIG investigation, on May 24, 2011, Martin Cabrera, former Vice President, Saipan
Pacific Environmental Planning and Consulting, Saipan, was sentenced in the U.S. District Court
for the District of Oregon to one count of wire fraud. Cabrera was previously indicted in the
Judicial District of the Commonwealth of the Northern Mariana Islands, where the crime
occurred. Cabrera was ordered to serve 3 years of supervised probation, and to pay $8,650 in
restitution to EPA and $3,950 to the Commonwealth of the Northern Marianas Islands'
Department of Public Lands. Cabrera was awarded a Department of Public Lands contract
funded by EPA in May 2007 for completion of site assessments. Cabrera fraudulently used the
identities and work experience of others in the contract proposal he submitted to the department,
and produced no deliverables. Cabrera repeatedly failed to meet with Department of Public
Lands to discuss his lack of performance and ultimately fled Saipan and moved to Oregon.
Former Northern Mariana Islands Official Guilty of Bribery—As a result of an OIG
investigation, on September 23, 2011, Franz Reksid, former Special Assistant to the Secretary of
Department of Public Lands in the Commonwealth of the Northern Mariana Islands, was found
guilty of bribery in the U.S. District Court for the Northern Mariana Islands. From 2007 to 2009,
Reksid was the special assistant to the Department of Public Lands secretary, responsible for
managing the department's contracts with funding provided from EPA Brownfields grants. In
February 2009, Reksid recommended that a 2007 contract to John Scott, President, All Hazards
Management Professionals, LLC, Yona, Guam, be amended to include an additional $200,000
for the cleanup and disposal of unexploded ordnance at the Marpi Village Homestead Site. While
recommending the above-mentioned contract amendment to the Department of Public Lands
secretary, Reksid sought and received from Scott a $3,000 "loan." Former Department of Public
Lands officials testified at Reksid's trial that he concealed from them his intentions to add
$200,000 to Scott's existing contract and never sought their approval for such a change order.
Montana Contractor and U.S. Department of Energy Agree to Settle Allegations—As a
result of an OIG investigation, on October 14, 2010, a Montana contractor entered into an
agreement with the U.S. Department of Energy to settle allegations related to the allowability of
certain costs. The company will repay $438,790 over a 2-year period. The Department of Energy
issued the contract, and other agencies, such as the EPA, used the contract to have research
conducted for their respective agency. In turn, each agency paid the Department of Energy an
administrative fee. The investigation disclosed that the contractor billed the government for
unallowable lobbying costs, trade mission costs, and severance pay. This investigation was
conducted jointly with the U.S. Department of Energy; the Federal Bureau of Investigation;
the U.S. Army Criminal Investigative Command; the U.S. Air Force, Office of Special
Investigations; and the Defense Criminal Investigative Service.
Debarments in Arizona Fabricated Laboratory Documentation Case—As a result of an OIG
investigation, on February 18, 2011, two individuals and five companies, all of Yuma, Arizona,
were each debarred for a period of 3 years related to a case involving fabricated laboratory
documentation. Two laboratory co-owners, Nancy Miller and Richard Miller, were debarred,
along with Sunstate Environmental Laboratory; El Prado Water Company; Sunstate Utility
Management; Sunstate Environmental Services; and Tierra Mesa Estates Water Company, Inc.
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The debarment follows Nancy Miller's conviction and sentencing in April 2010. Miller was the
co-owner of Sunstate Environmental Laboratories and performed environmental laboratory
testing for drinking water and wastewater analysis. The investigation determined that Miller
fabricated laboratory documentation to defraud her customers into believing she had reported the
analyses correctly. These documents were false in that the laboratory tests were not performed.
Sunstate is no longer a licensed laboratory in Arizona.
U.S. Chemical Safety and Hazard Investigation Board
CSB was created by the Clean Air Act Amendments of 1990.
CSB's mission is to investigate accidental chemical releases at
facilities, report to the public on the root causes, and recommend
measures to prevent future occurrences. In FY 2004, Congress
designated the EPA Inspector General to serve as the Inspector
General for 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. Details on our work involving CSB are at
http://www.csb.gov/service.default.aspx.
Performance Highlights
EPA OIG Proposes Management Challenges for CSB—On August 3, 2011, the EPA OIG
provided to CSB two management challenges:
• Clarifying CSB's Statutory Mandate. OMB Circular A-123 instructs agencies to
design a management structure that helps ensure accountability for results as they
develop and execute strategies for implementing agency programs and operations.
CSB requested clarification from Congress in November 2009, but as of August 2011,
CSB had not received a response. After Congress clarifies CSB's statutory mandate, we
anticipate that it will be a challenge for CSB to collect data to measure results.
• Promulgating a Chemical Incident Reporting Regulation. CSB has not published a
chemical incident reporting regulation as envisioned in the Clean Air Act Amendments.
In 2008, the U.S. Government Accountability Office recommended that CSB publish a
regulation requiring facilities to report all chemical accidents. In 2009, CSB notified the
public of a proposed reporting regulation, but had not published the regulation as of
August 2011. As CSB continues its efforts to implement a reporting regulation, it should
consider how the regulation would coordinate with other chemical incident reporting
requirements, the impact such a requirement will have on its resources, and the cost
effectiveness associated with using an existing chemical incident reporting system.
Chemical Safety and Hazard Investigation Board Did Not Take Effective Corrective Actions
on Prior Audit Recommendations—CSB did not take timely corrective actions to address
34 audit recommendations from 3 inspectors general and the U.S. Government Accountability
Office. In four instances, it took CSB 4 years beyond the agreed-upon corrective actions date (or
report date) to implement corrective actions. CSB's actions to address 13 recommendations were
not completely effective and require additional corrective actions, and 7 recommendations are
not yet completed. CSB's control environment and control activities do not ensure
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EPA Office of Inspector General Annual Performance Report Fiscal Year 2011
accountability. On September 16, 2010, CSB announced an internal reorganization and
appointed a managing director to oversee all aspects of CSB operations. We recommended that
the CSB Chairman create a management control plan, take actions to fully address all
outstanding audit recommendations, and further improve upon actions taken on previous
recommendations, http://epa.gov/oig/reports/2011/20110215-1 l-P-0115.pdf
Evaluation of U.S. Chemical Safety and Hazard Investigation Board's Compliance With the
Federal Information Security Management Act (Fiscal Year 2010)—CSB has an information
security program in place that appears to be functioning as designed. CSB takes information
security weaknesses seriously, as 8 of the 10 prior-year recommendations were resolved.
However, the FY 2010 Federal Information Security Management Act assessment for CSB
found insecure system protocols, default configuration settings, and unpatched network devices,
which significantly elevated CSB's risk of system and data compromise by unauthorized users.
The report made various recommendations to correct the deficiencies noted, including
consistently performing vulnerability scans and documenting audit log reviews, implementing
baseline configurations for network devices, and developing a contingency plan.
http://www.epa.gov/oig/reports/2011/20110308-1 l-P-0148.pdf
Testimony
Performance Highlights
Testimony on Cutting EPA Spending—On October 12, 2011, Arthur A. Elkins, Jr., Inspector
General for EPA, testified before the Subcommittee on Oversight and Investigations, Committee
on Energy and Commerce, U.S. House of Representatives, during a hearing to discuss
opportunities for cost savings and greater efficiencies within EPA. Over the last 5 years, EPA
has averaged a little over 18,000 positions in its organizational structure with annual payroll
costs of approximately $2 billion. Efficient and effective operations require that an organization
know what its workload is. The main objectives of assessing and predicting workload are to
achieve an evenly distributed and manageable workload, and accurately determine resource
levels needed. OIG work has identified other areas in which EPA could potentially realize cost
savings or improve program efficiencies; these include EPA unliquidated obligations, space and
facilities, information technology, administrative activities, and process improvements within
EPA's water pollution control program. In a tight budget environment, EPA must find ways to
better manage and utilize its resources and improve its operational efficiencies.
Testimony on Stimulus Status: Two Years and Counting—On May 4, 2011, Inspector
General Elkins testified before the Committee on Transportation and Infrastructure, U.S. House
of Representatives, during a hearing to discuss OIG work on EPA progress in implementing and
monitoring ARRA projects. EPA's senior leadership has demonstrated a strong commitment to
meeting ARRA requirements. Now that ARRA funds have been awarded, the OIG remains
concerned that there may be insufficient EPA oversight to ensure that projects are completed
timely and environmental objectives are achieved. As of April 25, 2011, EPA had only obligated
about 73 percent of its management and oversight funds. While EPA was required to obligate its
oversight funds before the end of FY 2011, many ARRA projects were not expected to have
been completed by that date. Given the number and scope of ARRA-funded projects, effective
oversight will be a challenge for EPA and its state partners. The OIG will continue to monitor
and assess EPA's ARRA activities in these and other areas.
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Testimony on EPA's Major Management Challenges—On March 2, 2011, Inspector General
Elkins testified before the Subcommittee on Interior, Environment, and Related Agencies,
Committee on Appropriations, U.S. House of Representatives, during a hearing to discuss the
significant management challenges facing EPA that the OIG identified for FY 2010. Our annual
list of management challenges provides the OIG with the opportunity to inform EPA senior
leadership, Congress, and the public about what we see as the most pressing issues facing EPA.
We also offer recommendations on how EPA can address these challenges. EPA takes our
management challenges seriously and has made some progress in addressing them, but we
believe a more sustained and robust effort is needed to fully resolve them. We will continue to
monitor and track EPA's actions to address these challenges while looking to identify any
emerging issues warranting attention.
OIG Enabling Support Programs
Performance Highlights
OIG FY 2012 Annual Plan Designed to Address Agency Risks—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. This
planning process resulted in the development of an FY 2012 strategy and work plan for the OIG
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. This plan is designed to adjust for new priorities and conditions while
pursuing a program of work that leverages the greatest return on investment.
Peer Reviews Conducted—The most recent external peer review of the EPA OIG's system of
quality controls was conducted by the U.S. Department of Homeland Security for the period
October 1, 2005, through September 30, 2008. The report, issued July 10, 2009, contained no
recommendations, and the EPA OIG received a rating of pass. The EPA OIG had conducted an
external peer review of the system of quality control for the audit organization of the Treasury
Inspector General for Tax Administration for the period April 1, 2006, through March 31, 2009.
Our report, issued February 3, 2010, contained no recommendations and provided the Treasury
Inspector General for Tax Administration a rating of pass. Both peer reviews were completed in
accordance with Government Auditing Standards and guidelines established by the Council of
the Inspectors General on Integrity and Efficiency.
Legislation, Regulations, and Policies Reviewed—Section 4(a)(2) of the Inspector General Act
requires the EPA OIG to review existing and proposed legislation and regulations relating to the
programs and operation of EPA, and to make recommendations concerning their impact. We
primarily base our comments on audit, evaluation, investigation, and legislative experiences, as
well as our participation on the Council of the Inspectors General on Integrity and Efficiency.
During this fiscal year, we reviewed 185 items of legislation, regulation, policy, and procedure
that could affect EPA, and provided comments on 19. We also reviewed drafts of OMB circulars,
memoranda, executive orders, program operations manuals, directives, and reorganizations.
Some of the key items upon which we provided comments and suggestions included:
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EPA Office of Inspector General Annual Performance Report Fiscal Year 2011
• Proposed Revisions to EPA Order 1400.1 A3, Preventing Violence in the Workplace.
The revised order affirms EPA's commitment to protect EPA and non-EPA employees
while in EPA-controlled space or wherever official duties are performed. We identified
apparent inconsistencies with the stated purpose of the document and provided a number
of comments to help strengthen and clarify the policy.
• National Security Staffs Proposed Executive Order, Structural Reforms to Improve
the Security of Classified Networks and the Responsible Sharing and Safeguarding of
Classified Information. The proposed executive order would direct certain structural
reforms to ensure responsible sharing and safeguarding of classified information on
computer networks. We identified a number of areas where we believe inspectors general
could provide the needed oversight, expertise, and assistance.
• S. 3480, Protecting Cyberspace as a National Asset Act of 2010. We commented that
cyber security is a concern that spans the federal government, not just homeland security
and intelligence agencies, and that OIGs should be partners in combating cyber crime.
We commented that OIGs should have an enhanced oversight role in their agencies'
cyber security programs and should fully participate in criminal and other investigations
of attacks on agency computer systems and programs.
• New Policy Standard and Procedure Documents for Resource Management
Directive 2540-02, Internal Controls. The proposed directive will include a policy
standard and policy procedures that assist EPA employees in safeguarding financial
transactions in accordance with OMB standards. We provided a number of comments
to help strengthen and clarify the policy and procedures outlined in these documents.
• Draft OMB Guidance on Effective Measurement and Remediation of Improper
Payments. We noted that the definition of a "payment recapture audit program" is
integral to the implementation of the law and this guidance, as the law contains specific
provisions for how funds collected under a payment recapture audit program can be used.
The EPA OIG reviewed EPA's description of its existing activities under the Improper
Payments Elimination and Recovery Act of 2010 that OMB requested the Agency to
submit previously. In that document, EPA did not consider activities it performs on
contracts and grants that include a review of the allowability of payments or testing of
transactions for erroneous payments as "payment recapture audits."
Other Activities
OIG Follow-Up Improvements Increase Action on Outstanding Recommendations—
The OIG initiated a follow-up improvement strategy to examine ways to improve the monitoring,
managing, reporting, and implementing of OIG recommendations. OMB Circular A-50 describes
audit follow-up as an integral part of good management and a shared responsibility between
Agency management and the OIG. Without attention to needed action on OIG recommendations
by both the Agency and the OIG, the value and usefulness of OIG recommendations in achieving
savings and cost reductions, eliminating or reducing risk, and promoting EPA's program and
operational effectiveness may be lost. Therefore, the OIG reviewed its own internal process and
performance in transmitting audit and evaluation recommendations to the Agency and tracking
the Agency's progress. We identified a number opportunities for process and technical
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EPA Office of Inspector General Annual Performance Report Fiscal Year 2011
improvements to ensure that all OIG recommendations are individually accounted for, directed
to the proper Agency action official, and achieving resolution with appropriate corrective action
plans. The OIG follow-up improvement strategy, which focuses on both OIG and Agency
responsibilities for effective follow-up, is increasing the Agency's attention to, and
accountability for, completing corrective action on recommendations.
Additionally, at the OIG's behest, EPA created an Agency-wide task force to review and revise
EPA Manual 2750, to promote a better understanding of and compliance with audit management,
resolution, and follow-up activity. Similarly, the OIG is carefully examining ways in which it
can improve its internal report processes, leading to faster report resolution and greater
accountability for unimplemented recommendations. The task force is led by the Office of the
Chief Financial Officer, and the OIG is a participant. The OIG and Chief Financial Officer are
working together to identify areas of mutual agreement for change.
OIG Reviews Agency's FY 2011 Draft Performance and Accountability Report. Our review
of EPA's FY 2011 draft Performance and Accountability Report found that, overall, the report
fulfills GPRA requirements. We generally did not verify the accuracy of the data. EPA continues
to incorporate improvements in the report based on our suggestions from prior and current year
reviews.
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EPA Office of Inspector General Annual Performance Report Fiscal Year 2011
OIG-Reported Key Agency Management Challenges
The Reports Consolidation Act of 2000 requires the OIG to report on the Agency's most serious
management and performance challenges, known as the key management challenges.
Management challenges represent vulnerabilities in program operations and their susceptibility
to fraud, waste, abuse, or mismanagement. For FY 2011, the OIG identified five challenges. The
Agency had taken sufficient action on two previous challenges, and they were removed from the
list. The table below includes issues the OIG identified as key management challenges facing
EPA, the years in which the OIG identified the challenge, and the relationship of the challenge to
the Agency's goals in its FY 2011-2015 Strategic Plan, found at
http ://epa. gov/planandbudget/strategi cplan.html.
OIG-identified top major management challenges for EPA 2009 2010 2011
The Need for a National Environmental Policy: Environmental quality depends on
policies related to farming, energy, water, transportation, and federal land management.
A national environmental policy would help EPA and other federal agencies to set
national environmental goals and regulatory standards, particularly for problems that
cross state or national borders, or pose risks to future generations.
Water and Wastewater Infrastructure: Over the next 20 years, EPA estimates that
approximately $1 trillion will be needed to pay for water and wastewater infrastructure.
EPA needs to lead in developing a coherent federal strategy with states and local
governments to assess and organize resources to meet water and wastewater
infrastructure needs.
Oversight of Delegations to States: Differences between state and federal policies,
interpretations, strategies, and priorities require that EPA more consistently and
effectively oversee its delegation of programs to the states, to assure that delegated
programs achieve their intended goals.
Safe Reuse of Contaminated Sites: EPA's duty is to ensure that reused contaminated
sites are safe for humans and the environment. EPA must strengthen oversight of the
long-term safety of sites, particularly within a regulatory structure in which non-EPA
parties have key responsibilities, site risks change overtime, and all sources of
contamination may not be removed.
Limited Capability to Respond to Cyber Security Attacks: EPA has a limited
capacity to effectively respond to external network threats. Although the Agency has
deployed new tools to improve its architecture, these tools raise new security
challenges. EPA has reported that over 5,000 servers and user workstations may have
been compromised from recent cyber security attacks. (Previous years reported under
Homeland Security)
Reducing Domestic Greenhouse Gas: In response to a Supreme Court ruling in April
2007, EPA issued an endangerment finding that current and projected atmospheric
concentrations of six greenhouse gas emissions threaten the public health and welfare
of current and future generations. EPA must take significant actions to address the
adverse impacts of these air pollutants.
EPA's Framework for Assessing and Managing Chemical Risks: EPA's
effectiveness in assessing and managing chemical risks is limited by its authority to
regulate chemicals under the Toxic Substances Control Act. Chemicals manufactured
before 1976 were not required to develop and produce data on toxicity and exposure,
which are needed to properly and fully assess potential risks.
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
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EPA Office of Inspector General Annual Performance Report Fiscal Year 2011
OIG Internal Management Challenges
GPRA requires that annual performance reports identify organizational management challenges.
The OIG uses the results of its FMFIA internal control vulnerability assessment to identify and
report on internal management challenges. As a result of its FY 2011 assessment, for the
12th straight year, the OIG reported no material weaknesses under FMFIA. Further, the OIG
continues to make progress in addressing reported OIG-level weaknesses. Some weaknesses
identified in FY 2010 were not fully resolved in FY 2011 because of their complexity.
OIG-level weaknesses (including new and
previous issues currently being resolved
Assignment time charging
Independent contracting function
Product timeliness
Secured/classified communications
Monitoring WCF charges
Staffing
Records management
Follow-up on corrective actions — data quality
Policies and procedures
Investigative case management
•/
•/
S
S
FY2010
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EPA Office of Inspector General Annual Performance Report Fiscal Year 2011
• Prepared a comprehensive Annual Performance Report demonstrating full accountability
for the use of resources and performance results in relation to GPRA targets.
OIG Information Technology Developments
• Made nearly 100 percent of OIG products available electronically to the public
(not including products with sensitive but unclassified information).
• Continued to develop and transfer OIG applications to a common information technology
infrastructure.
OIG Process Activities
• Conducted a review of unliquidated obligations to identify any funds that could be put to
better use. Reviewed 100 percent of the inactive unliquidated funds and deobligated
funds where appropriate.
• Issued an internal review on OIG report recommendation follow-up and closeout
processing, leading to a number of process and automated system changes to provide
better control and quality assurance.
• Implemented several automated systems developed by the OIG Office of Mission
Systems, including a Training Module to automate the individual development plan
process, including training requests, approvals, and funding; and the consolidation of
Continuing Professional Educations units records.
• Improved the quality of the OIG assignment planning process through application of
advanced business case criteria.
• Provided training and technical documentation to improve both user understanding and
technical input controls for the Inspector General Enterprise Management System and the
Performance Measurement and Results System, resulting in quality of data and systems
usability improving.
• Prepared an annual assignment plan with a rigorous assessment of Agency risks,
investments, customer outreach, evaluation, prioritization, and selection process for the
greatest potential return on investment.
• Created a series of process improvement workgroups to examine OIG product planning,
production, reporting, and review. Identified a number of best practices and made a
number of recommendations for performance improvement throughout the OIG.
• Conducted a strategic and annual planning outreach effort to OIG external stakeholders
and a comprehensive internal SWOT (strengths, weaknesses, opportunities, and threats)
analysis to identify areas for operational improvement and mission-directed areas for
OIG attention in EPA.
OIG Human Resources Activities
• Conducted reviews of the OIG's progress in meeting continuing professional education
requirements.
• Prepared additional performance standards supplementing the generic OIG critical
elements to support the performance goals of certain OIG offices.
• Prepared contemporaneous funding and staffing projections under different scenarios to
support organization-wide planning, spending, and staffing decisions.
37
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EPA Office of Inspector General Annual Performance Report Fiscal Year 2011
Statistical Data
OIG FY 2011 Profile of Activities and Results
Audit/evaluation activity and Agency action
Investigative activity
Reports issued
• Reviews performed by OIG 85
• Single audit reviews 636
Total reports 721
Monetary results (dollars in millions)
• Questioned EPA costs—OIG performed $10.8
• Cost efficiencies—OIG performed* $67.7
• Questioned EPA costs sustained
(from current and prior periods) $0.8
• Cost efficiencies sustained $54.7
(from current and prior periods)
• Reports resolved (from current and prior periods) 721
• Agency recoveries (from current and prior periods) $3.9
* includes $2.2 million from investigative savings
Investigations opened 131
Investigations closed 84
Pending investigations as of
9/30/11 210
Indictments persons/firms 17
Convictions persons/firms 15
Administrative actions:
EPA employees/firms 104
Civil judgments 1
Fines and recoveries (in millions) $3.9
Cost savings (in millions) $2.2
Prison time (in months) 230
Probation/Detention (in months) 18
Community service (in hours) 50
Audit resolution (in millions)
Questioned Efficiencies
Other
Recommendations as costs
• With no management decision start
FY 2011 (33)
• Issued in FY 2011 (24)
• Total inventory—net (57)
• Agreed to/sustained by management
or value of nonawards (not including
prior to issuance) (9)
• Not agreed to/sustained to by
management (10)
• With no management decision,
end FY 2011 (23)*
• Total audits with no final actions as of
9/30/11 which are over 365 days past
acceptance of a management
decision: 64 reports
o Program 36
o Assist agreements 10
o Contract 0
o Single audits 17
o Financial statement 1
• Reports with costs for which no
management decision was made
within 6 months of issuance at
9/30/11: 23
• Reports resolved: 72
$10.8
$1.1
*$14.1
$0.0
$7.5
$7.5
$7.5
$1.1
*$12.3
Hotline inquiries received
Hotline inquiries closed
Hotline inquiries pending 9/30/11
Referrals to other offices
Legislative/regulatory/policy
items reviewed
Legislative/regulatory/policy
items upon which comments and
suggestions were made
252
150
118
252
185
19
$14.1
$12.3
* Any difference in number of reports and dollar amounts is due to adjustments and corrections made in our tracking
system between semiannual reporting periods.
38
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EPA Office of Inspector General Annual Performance Report Fiscal Year 2011
OIG FY 2011 Audit, Inspection, and Evaluation Report Resolution
In FY 2011, EPA was responsible for addressing OIG recommendations and tracking follow-up
activities for 377 audits. The Agency achieved final action (completing all corrective actions
associated with the audit) on 178 audits, which included program evaluation/program
performance, assistance agreement, and single audits. This total excludes Defense Contract Audit
Agency audits issued after January 1, 2009; these audits are discussed in a separate section below.
Category
A. Audits with management decisions but without final
action at the beginning of the period
B. Audits for which management decisions were made
during the period
(i) Management decisions with disallowed
costs (12) and with better use funds (2)
(ii) Management decisions with no disallowed
costs (79) and with no better use funds (44)
C. Total audits pending final action during the period
(A+B)
D. Final action taken during the period:
(i) Recoveries
a. Offsets
b. Collection
c. Value of property
d. Other
(ii) Write-offs
(iii) Reinstated through grantee appeal
(iv) Value of recommendations completed
(v) Value of recommendations management
decided should/could not be completed
E. Audits without final action at end of period (C - D)
Disallowed costs
(financial audits)
No. Value
65 $66,371,403
91 853,496
156 67,224,899
108 39,960,302
1,695,420
1,027,915
0
17,205,909
54,300
19,976,758
0
0
48 27,264,597
Fund put to better use
(performance audits)
No. Value
77* $ 80,070,565
46 9,647,000
123 89,717,565
57 13,880,370
13,880,370
74 75,837,195
* Includes all performance audits, including those without funds to be put to better use (efficiencies).
Final Corrective Action Not Taken. Of the 377 audits that EPA tracked, a total of 199 audits—
including program evaluation/program performance, assistance agreement, contract, and single
audits—were without final action and not yet fully resolved at the end of FY 2011. (The 13 audits
with management decisions under administrative appeal by the grantee are not included in the
199 total; see discussion below.)
Final Corrective Action Not Taken Within 1 Year. Of the 199 audits, EPA officials had not
completed final action on 52 audits (5 of which involve multiple offices) within 1 year after the
management decision (the point at which the OIG and action official reach agreement on the
corrective action plan). Because the issues to be addressed may be complex, Agency managers
often require more than 1 year to complete the agreed-upon corrective actions. These audits are
listed below by category—audits of program performance, single audits, and assistance
agreements—and identified by title and responsible office. Additional details are at EPA's
website at http://www.epa.gov/planandbudget/.
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EPA Office of Inspector General Annual Performance Report Fiscal Year 2011
Audits of Program Performance. Final action for program performance audits occurs when all
corrective actions have been implemented, which may require more than 1 year when corrections
are complex and lengthy. Some audits include recommendations requiring action by more than
one office. EPA is tracking 44 audits in this category (4 of these involve multiple offices,
indicated with +):
Office of Administration and Resources Management:
09-P-0087+ EPA Plans for Managing Counter Terrorism/Emergency Response Equipment
10-P-0002 Review of Hotline Complaint on Employee Granted Full-Time Work-at-Home Privilege
Office of Air and Radiation:
2005-P-00003 Additional Analysis of Mercury Emissions Needed Before Finalizing Rules for Coal-Fired Utilities
2005-P-00010 Evaluation of Clean Air Act Title V Operating Permit Quality
08-P-0206 Voluntary Greenhouse Gas Reduction Programs Have Limited Potential
09-P-0087+ EPA Plans for Managing Counter Terrorism/Emergency Response Equipment
Office of the Chief Financial Officer:
08-P-0116 EPA Can Recover More Federal Superfund Money
09-P-0087+ EPA Plans for Managing Counter Terrorism/Emergency Response Equipment
10-1-0029 Audit of 2009 and 2008 (Restated) Consolidated Financial Statements
10-P-0077+ EPA Needs to Improve Its Recording and Reporting of Fines and Penalties
Office of Enforcement and Compliance Assurance:
2001-P-00013 State Enforcement Effectiveness - National Audit
2005-P-00024 Limited Knowledge of Universe of Regulated Entities Impedes EPA
2007-P-00027 Benchmarking Other Organizations Statistically Valid Compliance Practices
08-P-0141 EPA Needs to Track Compliance with Superfund Cleanup Requirements
09-P-0092 EPA Can Improve Implementing Risk Management Program for Airborne Chemical Releases
09-P-0144 EPA Needs to Improve Internal Controls to Increase Cost Recovery
10-P-0007 EPA Oversight and Policy for High Priority Violations of Clean Air Act Need Improvement
10-P-0009+ EPA Needs a Better Strategy to Identify Violations of Section 404 of the Clean Water Act
10-P-0077+ EPA Needs to Improve Its Recording and Reporting of Fines and Penalties
10-P-0133 EPA Should Improve Its Oversight of Federal Agency Superfund Reviews
10-P-0066 EPA Needs a Coordinated Plan to Oversee Its Toxic Substances Control Act Responsibilities
Office of Environmental Information:
2007-P-00008 EPA Could Improve Controls over Mainframe Software
09-P-0127 EPA Has Improved its Response to Freedom of Information Act Requests
Office of Research and Development:
09-P-0232 EPA's Office of Research and Development Could Better Use FMFIA
09-P-0235 EPA Needs an Oversight Program for Protocol Gases
10-P-0042+ Lack of Final Guidance on Vapor Intrusion Impedes Efforts to Address Indoor Air Risks
Office of Solid Waste and Emergency Response:
2006-P-00013 Superfund Mandate: Program Efficiencies
2006-P-00007 More Information Is Needed on Toxaphene Degradation Products
2007-2-00003 Superfund Cooperative Agreement Obligations
2007-P-00002 Asbestos Cleanup in Libby Montana
08-P-0265 EPA Should Continue Efforts to Reduce Unliquidated Obligations in Brownfields Pilot Grants
10-P-0042+ Lack of Final Guidance on Vapor Intrusion Impedes Efforts to Address Indoor Air Risks
10-P-0133 EPA Should Improve Its Oversight of Federal Agency Superfund Reviews
Office of Water:
2002-P-00012 Controlling and Abating Combined Sewer Overflows
09-P-0223 EPA Needs to Accelerate Adoption of Numeric Nutrient Water Quality Standards
10-P-0009+ EPA Needs a Better Strategy to Identify Violations of Section 404 of the Clean Water Act
10-P-0081 EPA Needs Procedures to Address Delayed Earmark Projects
10-R-0057 EPA Needs Definitive Guidelines for Recovery Act and Future Green Reserve Projects
Region 1:
09-P-0119 Improved Management of Special Accounts Will Make More Funds Available
40
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EPA Office of Inspector General Annual Performance Report Fiscal Year 2011
Region 2:
2007-P-0039
2007-P-0016
Region 3:
2007-P-0031
10-P-0055
Region 9:
08-P-0196
OIG Congressional Request-Ringwood Mines/Landfill Superfund
Ringwood Mines/Landfill Superfund Site
Chesapeake Bay Land Use
Conditions at Wildcat Landfill Superfund Site in Delaware Call for Increased EPA Oversight
Making Better Use of Stringfellow SF Special Accounts
Single audits. Final action for single audits occurs when nonmonetary compliance actions are
completed. Achieving final action may require more than a year if the findings are complex or
the grantee does not have the resources to take corrective action. Single audits are conducted of
nonprofit organizations, universities, and state and local governments. EPA is tracking
completion of corrective action on 11 single audits for the period beginning October 1, 2011.
Region 2:
2007-3-00139
Region 9:
09-3-0234
10-3-0164
Region 10:
2002-3-00009
2002-3-00042
2003-3-00047
2003-3-00117
2003-3-00145
2004-3-00011
2006-3-00167
2006-3-00168
State of New York, FY 2006
Guam Waterworks Authority FY 2008
Guam Waterworks Authority FY 2009
Iliama Village Council
Iliama Village Council
Stevens Village Council
Stevens Village Council
Circle Village Council
Northway Village Council
State of Alaska-FY 2003
State of Alaska-FY 2004
Audits of Assistance Agreements. Reaching final action for assistance agreement audits may
require more than 1 year, as the grantee may appeal, refuse to repay, or be placed on a repayment
plan that spans several years. EPA is tracking three audits in this category:
Region 2:
1989-9-01299
Region 3:
2001-1-00101
Region 5:
08-2-0039
Nassau County, New York
Center for Chesapeake Communities Assistance Agreements
Village of Laurelville, Ohio
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EPA Office of Inspector General Annual Performance Report Fiscal Year 2011
OIG Reports With Unimplemented Recommendations by Program
Office (as of September 30, 2011)
Off ice of Administration and Resources Management:
10-P-0002 Review of Hotline Complaint on Employee Granted Full-Time Work-at-Home Privileges
09-P-0087 EPA Plans for Managing Counter Terrorism/Emergency Response Equipment
Office of Enforcement and Compliance Assurance:
10-P-0009 EPA Needs a Better Strategy to Identify Violations of Section 404 of the Clean Water Act
Office of Research and Development:
10-P-0042 Lack of Final Guidance on Vapor Intrusion Impedes Efforts to Address Indoor Air Risks
Office of Water:
10-R-0057 EPA Needs Definitive Guidance for Recovery Act Future Green Reserve Projects
09-P-0223 EPA Needs to Accelerate Adoption of Numeric Water Quality
Region 3:
2007-P-00031 Development Growth Outpacing Progress in Watershed Efforts to Restore the Chesapeake Bay
42
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EPA Office of Inspector General Annual Performance Report Fiscal Year 2011
OIG FY 2011 Budget and Resources Analysis Use and Allocation
The Department of the Interior, Environment, and Related Agencies Appropriations Act, 2011,
provided the EPA OIG with an FY 2011 budget funding level of $54,586,000. Additionally,
ARRA provided the OIG with $20,000,000 through FY 2012. In accordance with a
congressional directive to increase its staffing level to that of prior years, and at the same time
recruit staff to fulfill the oversight requirements of ARRA, the OIG is continuing a hiring
initiative consistent with available funds. Additionally, during FY 2011, the OIG improved
organizational efficiency by creating a new Office of the Chief of Staff. The chart below shows
the OIG budget and staffing history for FYs 2000-2012.
Historical budget and manpower summary
Fiscal year
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
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
5,0459,000
52,585,000
54,696,000*
54,766,000*
54,586,000*
51,955,000*
On-board staff
(as of October 1)
340
351
354
348
363
365
350
326
290
304
316
356
339
Expenditures
(including carryover)
$39,364,100
41,050,807
45,238,608
46,023,048
52,212,862
61,733,781
49,583,584
48,658,217
52,231,690
51,182,958*
51,725,199*
57,419,980*
TBD
Exclusive of ARRA funds.
ARRA funding, cumulative spending, and balance available
ARRA funding FY 2009-2012
ARRA cumulative spending FY 2009-201 1
ARRA balance available for FY 2012
$20,000,000
12,387,011
$ 7,612,989
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EPA Office of Inspector General Annual Performance Report Fiscal Year 2011
Resource usage by appropriation
FY 2010 appropriation usage
Account
Management
Superfund
TOTAL
FY2011 FTE usage
Account
Management
Superfund
ARRA
TOTAL
$ appropriation available
$44,721,000
9.975.000
$54,696,000
FY11 FTE available
269.9
60.1
32.8
362.8
FY 2011 appropriation usage
Account $ appropriation available
Management $44,631,000
Superfund 9.955.000
TOTAL $54,586,000
$ appropriation used
$44,376,125
9.865.628
$54,241,753
FY11 FTE used
265.4
50.0
28
343.3
$ appropriation used
$35,457,797
7.454.027
$42,911,824
% $ appropriation used
99.2%
98.9%
99.2%
% FTE budget used
98.3%
83.2%
85.4%
94.6%
% $ appropriation used
79.4%
74.9%
78.6%
Unused FY 2010 funds were available through FY 2011; unused FY 2011 funds are available through FY 2012.
FY 2011 funds used by object class: $57,419,980 + $3,848,339 ARRA
Salaries,
--$45,063,917
Awards,
$775,054
Travel,
WCF _/ Expenses' ARRA, Contracts, Training, $2,129,513
$3,495,713 $2'432'998 $3,848,339 $2,778,223 $744,562
FY 2011 FTE used by component: Total 343.3 FTE (including 28 ARRA)
Investigations ARRA, 28
60.4
Immed IG/COS,
15.3
Cong Public
Affairs, 17.0
.Mission
Counsel, 14.2 Systems, 45.9
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EPA Office of Inspector General Annual Performance Report Fiscal Year 2011
OIG Financial Statement: Analysis of FY 2011 Fund Use
EPA OIG FY 2011 financial statement: sources, uses, and balance of funds
MANAGEMENT
PC&B
Travel
Expenses
Contracts
WCF
Grants
Total
Management
SUPERFUND
PC&B
Travel
Expenses
Contracts
WCF
Grants
Total
Superfund
Total
Management &
Superfund
FY 2010
carryover
available in
FY2011
$10,005,216
1,049,983
310,357
1,267,077
243,152
0
$12,875,784
FY2010 0
carryover
available in
FY2011
$1,337,735
245,872
68,399
271,615
0
0
$1,923,620
0
$14,799,404
FY2010
carryover
used in
FY2011
$9,730,564
1,021,123
303,000
1,233,071
243,152
$12,530,910
FY2010
carryover
used in
FY2011
$1,245,636
236,752
66,646
265,215
0
$1,814,249
$14,345,159
FY2010
lapsed
funds
$274,651
28,860
7,357
34,006
0
0
$344,874
FY2010
lapsed
funds
$92,099
9,120
1,752
6,400
0
0
$109,371
$454,245
FY2011
appropriation
$37,131,000
1,330,000
1,776,000
1,673,000
2,634,000
87.000
$44,631,000
FY2011
appropriation
$7,637,000
296,000
526,000
834,000
643,000
19.000
$9,955,000
0
$54,586,000
FY 201 1/2012
funds
used
$28,946,213
712,468
1,691,253
1,490,561
2,617,303
0
$35,457,797
FY 201 1/2012
funds
used
$5,916,557
159,170
372,100
424,239
581,962
$7,454,027
$42,911,824
FY2011
carryover to
FY2012
$8,184,787
617,532
84,747
182,440
16,697
87.000
$9,173,203
FY2011
carryover to
FY2012
$1,720,443
136,830
153,900
409,761
61,038
19.000
$2,500,973
$11,674,176
Total cost
of FY 2011
operations
$38,676,777
1,733,591
1,994,253
2,723,631
2,860,455
90.000
$48,078,707
Total cost
of FY 2011
operations
$7,162,193
395,922
438,746
689,454
635,258
19.700
$9,341,273
$57,419,980
Total cost
as % of
FY2011
appropriation
104%
130%
112%
163%
109%
103%
108%
Total cost
as % of
FY2011
appropriations
94%
134%
83%
83%
99%
104%
94%
105%
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EPA Office of Inspector General Annual Performance Report Fiscal Year 2011
OIG Data Verification and Validation
As required by GPRA, the following is a discussion of sources, processes, and controls in place
to provide the basis for assurance of data quality.
Performance Database: The OIG Performance Measurement and Results System captures and
aggregates information on an array of measures in a logic-model format, linking immediate
outputs with long-term intermediate outcomes and results. OIG performance measures are
designed to demonstrate value added by promoting economy, efficiency, and effectiveness; and
preventing and detecting fraud, waste, and abuse as described by the Inspector General Act of
1978 (as amended). Because intermediate and long-term results may not be realized for several
years, only verifiable results are reported in the year completed.
Data Source: Designated OIG staff enter data into the systems. Data are from OIG performance
evaluations, audits, research, court records, EPA documents, data systems, and reports that track
environmental and management actions or improvements made and risks reduced or avoided.
The OIG also collects independent data from EPA's partners and stakeholders.
Methods, Assumptions, and Suitability: OIG performance results are a chain of linked events,
starting with OIG outputs leading to subsequent actions taken by EPA or its stakeholders/
partners to improve operational efficiency and environmental program delivery, reported as
intermediate outcomes. The OIG can only control its outputs; it has no authority to implement its
recommendations, which lead to environmental and management outcomes.
Quality Assurance/Quality Control Procedures: All performance data entered in the database
require at least one verifiable source assuring data accuracy and reliability. Data quality
assurance and control are performed as an extension of OIG products and services, subject to
rigorous compliance with the Government Auditing Standards of the Comptroller General
(2007 Revision), U.S. Government Accountability Office, GAO-07-731G, July 2007, available
at http://www.gao.gov/govaud/ybk01.htm; and regularly reviewed by an independent OIG
quality assessment review team and external independent peers. Each Assistant Inspector
General certifies the completeness and accuracy of his or her respective performance data.
Additionally, the EPA OIG earned a clean, or unmodified, opinion in FY 2009 through a
rigorous peer review performed the previous year.
Data Limitations: All OIG staff are responsible for data accuracy in their products and services.
However, human error or time lags can lead to incomplete, miscoded, or missing data in the
system. Further, data supporting achievement of results often come from indirect or external
sources that have their own methods or standards for data verification/validation.
Error Estimate: The error rate for outputs is estimated at +1-2 percent, while the error rate for
outcomes is presumably greater due to the delay in results and difficulty in verifying a nexus
between our work and subsequent impacts beyond our control. Errors tend to be those of
omission.
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EPA Office of Inspector General Annual Performance Report Fiscal Year 2011
Historic Planned Versus Actual Resources and Results, FYs 2009-2012
Annual performance
measures
Environmental and
business actions taken for
improved performance from
OIG work
(outcomes)
Environmental and
business recommendations
or risks identified for
corrective action by OIG
work
(outputs)
Potential monetary return
on investment in the OIG,
as a percentage of the OIG
budget (in millions)
administrative, and fraud
prevention actions taken
from OIG work
Activity
OIG appropriation:
Enacted
Used
FTE:
Authorized
Used
FY2009 FY2010
$54,800,000
$51,179,920
331.0
292.7
$54,800,000
$51,725,199
361.8
335.5/289.5* net
I |
FY2011 FY2012
$54,586,000
$57,419,980
365.8
343.3/315.4* net
Supporting indicators Target Actual Target Actual Target Actual
o Policy, process, practice or control
changes implemented
o Environmental or operational risks
reduced or eliminated
o Critical congressional or public concerns
o Certifications, verification, or analysis for
decision or assurance
o Recommendations or best practices
identified for implementation
o Risks or new management challenges
identified for action
o Critical congressional/public actions
addressed or referred for action
o Recommended questioned .
o Recommended cost efficienoe^and
savings
o Fines, penalties, settlements, restitutions
o Criminal convictions
o Indictments/Informations
o Civil judgments
o Administrative actions (staff actions and
suspension or debarments)
o OIG-issued audit/evaluation reports
318
903
120%
$65.7
80
N/A
272
983
150%
$83.3
95
66
334
903
120%
$65.7
75
N/A
391
945
36%
$19.6
115
83
334
903
120%
$65.6
80
N/A
315
2011
150.6%
$82.4
160
85
$51,840,000
(Pres. Bud.)
358.1
TBD
Target
334
903
110%
$57.0
85
N/A
Note: All targets are set, consistent with relative changes in funding. Outputs change in nearly direct proportion, while outcomes are further adjusted for growth
because a lag generally occurs between all previous outputs (recommendations) before they come to fruition as outcomes (action on recommendations). N/A
means no reporting targets were set.
* The latter (net) figure does not include funds, FTEs, or performance results associated with ARRA.
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OIG Recovery Act Resources and Performance
ARRA is an unprecedented effort to jump start our economy, create or save millions of jobs, and
address long-neglected challenges emerging in the 21st century. ARRA included $7.2 billion for
programs administered by EPA to protect and promote both green jobs and a healthier environment.
ARRA provides the EPA OIG with $20 million through September 30, 2012, for oversight and
review. The OIG is assessing whether EPA uses its $7.2 billion of ARRA funds in accordance with
its requirements and meets the accountability objectives as defined by OMB. The OIG is using the
funds to determine whether:
• Funds are awarded and distributed in a prompt, fair, and reasonable manner
• Recipients and uses of funds are transparent to the public, and the public benefits of these
funds are reported clearly, accurately, and in a timely manner
• Funds are used for authorized purposes and instances of fraud, waste, error, and abuse are
mitigated
• Projects funded under ARRA avoid unnecessary delays and cost overruns
• Program goals are achieved, including specific program outcomes and improved results on
broader economic indicators
For more information on the EPA OIG and its implementation of ARRA activities, visit
http://www.epa.gov/oig/recovery.htm.
OIG ARRA Resource Use as of September 30, 2011:
• Total cumulative expenditures—$12,387,011 ($3,848,339 in FY 2011)
• Total cumulative FTE used—85.0 (28 in FY 2011)
Program accomplishments as of September 30, 2011
FY2011 results
ARRA performance measures (12 months)*
Number of certifications, verifications, validations, or corrections
Number of EPA policies, directives, practices, or process changes/decisions
Number of awareness/technical briefings conducted
Number of best practices identified
Findings without controlled recommendations (from single audits)
Number of recommendations for improvement
Number of referrals for Agency action
Recommended efficiencies, costs saved or avoided (in millions)
Number of administrative actions
Number of allegations disproved
Civil actions
Number of sustained environmental or business recommendation
Fines, recoveries, settlements, restitutions (in millions)
Hotline complaints received
106
13
163
2
1,137
160
9
$2.8
3
10
1
71
$0.2
19
Note: All targets are set, consistent with relative changes in funding and staffing levels. Output targets
change in nearly direct proportion to funding and staffing, while outcome targets are adjusted recognizing
a time lag required for output products (recommendations) to be to acted upon as intermediate outcomes,
and then have to be recognized as having intended impact outcomes.
* The long-term targets set for the OIG extend until 2014. The oversight work of the OIG will continue
after all the ARRA funds are spent or expired, recognizing that the time-lag for actions on audit
recommendations by EPA and the time for investigative cases to come to fruition are beyond the
control of the OIG.
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