U.S. ENVIRONMENTAL PROTECTION AGENCY
OFFICE OF INSPECTOR GENERAL
Annual Performance Report
Fiscal Year 2012
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EPA-350-R-13-002
July 2013
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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, D.C. 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
CFR Code of Federal Regulations
CSB U.S. Chemical Safety and Hazard Investigation Board
DCAA Defense Contract Audit Agency
EPA U.S. Environmental Protection Agency
FTE Full-Time Equivalents
FY Fiscal year
GPRA Government Performance and Results Act Modernization Act of 2010
OIG Office of Inspector General
OMB Office of Management and Budget
Photo Captions: From left: Mining activities on the site of the future Botanic Garden of
Pennsylvania, a project which received Recovery Act funds; and an
aboveground storage facility in Nenana, Alaska. (EPA OIG photos)
Hotline
To report fraud, waste, or abuse, contact us through one of the following methods:
email: 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 2012
Message From the Inspector General
I am pleased to present the Annual Performance Report of the
U.S. Environmental Protection Agency Office of Inspector
General. This report summarizes OIG activity, performance,
results and challenges, and provides a financial accounting of
resources for fiscal year 2012 compared to our FY 2012 annual
performance targets. It also presents cumulative OIG results for
FYs 2010-2012 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 2012 Agency Financial Report and
Fiscal Year 2012 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 2012:
Arthur A. Elkins Jr.
• Identified over $424.8 million in EPA potential savings and recoveries.
• Identified recommendations that resulted in 216 environmental and business actions
taken for improvement of EPA operations or reduced risks.
• Identified 1,242 recommendations to improve agency programs, operations, public health
and safety, including key legislative recommendations to Congress.
• Prepared semiannual compendiums of unimplemented recommendations to the agency
and Congress.
• Issued reports on agency major management challenges and internal control weaknesses
for corrective action.
• Continued to develop and transfer OIG applications into a common information
technology infrastructure.
• Issued the FYs 2012-2016 strategic plan that includes our vision, mission, values, goals,
objectives and strategic themes.
• Collaborated with the Office of the Chief Financial Officer on the revision of
EPA Manual 2750 to improve agency audit, resolution and follow-up actions.
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. Recovery Act work accounted for cost
savings, questioned costs, recoveries and forfeitures of $16.8 million during FY 2012, and
over $28.3 million cumulatively since FY 2009.
In FY 2012, the EPA OIG received an unqualified ("clean") opinion on its performance as a
result of a biennial external peer review that looked at our compliance with the Government
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EPA Office of Inspector General Annual Performance Report Fiscal Year 2012
Auditing Standards. The peer review, conducted by another OIG, had given the EPA OIG a
rating of pass with no deficiencies cited.
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 in this regard,
as one of my personal goals is to build constructive relationships that promote the economic,
efficient and effective delivery of the EPA's mission.
Arthur A. Elkins Jr.
Inspector General
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EPA Office of Inspector General Annual Performance Report Fiscal Year 2012
Table of Contents
About the U.S. Environmental Protection Agency Office of Inspector General 1
OIG Product and Service Lines 1
OIG Strategic Plan 2
Planning Our Work to Achieve Our Goals 3
OIG Strategic Cumulative Performance Results, FYs 2010-2012 4
Summary of FY 2012 Performance Results by Product Line and Other Activities 6
Air/Research and Development 6
Water/Enforcement 7
Superfund/Land 8
Cross Media 9
Special Reviews 10
Contracts and Assistance Agreements 11
Forensic Audits 14
Financial Management 17
Risk Assessment and Program Performance 19
Efficiency 20
Information Resources Management 21
Investigations 24
U.S. Chemical Safety and Hazard Investigation Board 26
Testimony 28
OIG Enabling Support Programs 28
OIG-Reported Key Agency Management Challenges 31
OIG Internal Management Challenges 32
Statistical Data 34
OIG FY2012 Profile of Activities and Results 34
OIG FY 2012 Audit, Inspection and Evaluation Report Resolution 35
OIG Reports With Unimplemented Recommendations by Program Office
With Past Due Completion Dates 38
OIG FY 2012 Budget and Resource Analysis Use and Allocation 39
OIG Financial Statement: Analysis of FY 2012 Fund Use 41
OIG Data Verification and Validation 42
Historic Planned Versus Actual Resources and Results, FYs 2007-2013 43
OIG Recovery Act Resources and Performance 44
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EPA Office of Inspector General Annual Performance Report Fiscal Year 2012
About the U.S. Environmental Protection Agency
Office of Inspector General
The Office of Inspector General is an independent office of the U.S. Environmental Protection
Agency 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 the 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 (P.L. 95-452). The EPA OIG also serves as the inspector general for the
U.S. Chemical Safety and Hazard Investigation Board.
OIG Product and Service Lines
OIG staff are physically located at headquarters in Washington, D.C.; at regional headquarters
offices for all 10 EPA regions; and at other EPA locations including Research Triangle Park,
North Carolina, and Cincinnati, Ohio. OIG activities can be divided among four main categories,
with specialized product and service lines in each, through which the OIG carries out its mission:
P Program
evaluations
Mr/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
Misconduct
• Laboratory Fraud
• Computer/
Cyber Crimes
• Hotline
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
• Information Technology
• System Support
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EPA Office of Inspector General Annual Performance Report Fiscal Year 2012
OIG Strategic Plan
The OIG developed its strategic plan for fiscal years 2012-2016 based upon statutory
requirements for the EPA OIG; the statutory mission of the EPA; and direct input from the
OIG's stakeholders, managers and staff. The plan is currently being updated. Key elements from
the OIG's strategic plan follow.
Vision
Be the best in public service and oversight for a better environment tomorrow.
Mission
I 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.
' Contribute to
improved human health,
safety, and the
environment
Goals
Contribute to
invToved EPA and CSB
business practices and
accountability
_ Be responsible
stewards of taxpayer
dollars
Be the best in public
service
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
• 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
• Promote and maintain an
accountable, results-
oriented culture
• Ensure our products and
services are timely,
responsive, and 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
• 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 2012
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 the 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 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
3
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EPA Office of Inspector General Annual Performance Report Fiscal Year 2012
OIG Strategic Cumulative Performance Results,
FYs 2010-2012
This section demonstrates the EPA OIG annual progress in attaining its strategic performance
goals for FYs 2010-2012 as per the Government Performance and Results Act Modernization
Act of 2010, known as GPRA.
The OIG exceeded three of its four annual performance goal targets during FY 2012, with
three of the targets significantly exceeded. The OIG increased its focus on identifying cost
efficiencies through performance audits and program evaluations. As a result, the OIG
identified questioned costs, cost efficiency savings, fines, settlements and recoveries
totaling over $424.8 million. This amount represents a greater than 734 percent return on
investment in potential monetary benefits alone when considering the OIG's FY 2012
annual budget. Additionally, EPA sustained over $53.6 million in OIG monetary
recommendations and savings from current and prior periods. During FY 2012, 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. A primary
factor was the time delay between outputs and outcomes—the time between when we
make our recommendations and the agency actually acts upon them—which is beyond the
OIG's control. We also encountered 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 2010-2012.
The OIG continuously tests its own controls and operating procedures to identify potential
vulnerabilities and opportunities for improving product quality and accountability in the
use of its resources. During FY 2012, the OIG identified the following issues:
• Follow-up on corrective actions - data quality.
• Updating of policies and procedures.
• Investigative case management.
• Administration - product timeliness.
• Data quality.
The OIG is continuing to improve its integration of information technology systems and
data quality by applying new control tools and policies. Further, 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 2012
Annual Performance Goal: Environmental and business improvements, actions, changes,
improvements in business systems efficiency, risks reduced or eliminated
Target
• Actual
Annual Performance Goal: Environmental and business recommendations, challenges, best
practices, risks identified, and Recovery Act technical briefings
Target
• Actual
FY 2010
FY 2011
Results
FY2012
Annual Performance Goal: OIG questioned costs, efficiencies, savings, fines, and recoveries from
OIG audits, evaluations, and investigations
$450
$400
$350
$300
= $250
= $200
^ $150
$100
$50
$0
82.4
54.7
FY2010
54.7
FY 2011
Results
63.7
Target
• Actual
FY 2012
Annual Performance Goal: Criminal, civil, and administrative actions from OIG investigations
450
400
350
300
| 250
1 20°
115
160
152
Target
• Actual
FY 2010
FY 2011
Results
FY2012
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EPA Office of Inspector General Annual Performance Report Fiscal Year 2012
Summary of FY 2012 Performance Results by Product Line
and Other Activities
Air/Research and Development
Air/Research and Development results summary
Reports issued:
Environmental and business outcomes
> 6 EPA policy, directive, practice corrective action or process changes made or implemented
(including best practices)
> 1 environmental or business operational or internal control risk, challenge or weakness reduced or
eliminated (including noncompliance)
Environmental and business outputs
> 9 recommendations for improvement
> 1 environmental or business operational or internal control risk or challenge identified
(including noncompliance)
Sustained recommendations
> 12 sustained environmental or business recommendations
Performance Highlights
Early Warning Report: Use of Contractors to Conduct Clean Air Act Risk Management
Program Inspections in Certain States Goes Against Court Decisions—EPA Regions 4 and 7
used contractors to conduct Clean Air Act 112(r) risk management program inspections in Kansas,
Kentucky and Tennessee despite decisions by the Sixth and Tenth Circuit Courts prohibiting this
practice and the EPA policy memo that reiterated this prohibition. We recommended that the EPA
immediately review the legality and appropriateness of its practice of using contractors to perform
Clean Air Act risk management program inspections in the states covered by the Sixth and Tenth
Circuit Courts (Colorado, Kansas, Kentucky, Michigan, New Mexico, Ohio, Oklahoma,
Tennessee, Utah and Wyoming). http://www.epa.gov/oig/reports/2012/20120328-12-P-0376.pdf
EPA Could Improve the SmartWay Transport Partnership Program by Implementing a Direct
Data Verification Process—Recent studies corroborate the EPA's claims that its SmartWay
Transport Partnership program helps remove marketplace barriers in order to deploy fuel-efficient
technologies faster. To calculate SmartWay program emission reductions, the EPA relies on self-
reported industry data. The EPA's Office of Transportation and Air Quality performs some checks
of data provided by industry. We recommended that the assistant administrator for the Office of
Air and Radiation develop and implement direct verification or other measures to verify the
accuracy of a sample of the self-reported industry data for the SmartWay Transport Partnership.
http://www.epa.gov/oig/reports/2012/20120830-12-P-0747.pdf
EPA's Review of Applications for a Water Research Grant Did Not Follow All Review
Procedures and Lacked Transparency—The EPA's Office of Research and Development,
National Center for Environmental Research, did not follow all applicable policies and procedures
in reviewing applications submitted under Request for Applications EPA-G2009-STAR-F1, and
lacked procedures for a key aspect of its Science to Achieve Results grant application peer review
process. Specifically, the center did not follow the review process required by the Code of Federal
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EPA Office of Inspector General Annual Performance Report Fiscal Year 2012
Regulations under 40 CFR Part 40.150. We recommended that the assistant administrator for the
Office of Research and Development ensure that the center makes the public aware of its class
exception from 40 CFR 40.150, establishes and adheres to improved procedures and management
controls for administering the Science to Achieve Results grant program, and improves its
guidance and management controls for communicating with grant applicants.
http://www.epa.gov/oig/reports/2012/20120925-12-P-0864.pdf
Water/Enforcement
Water/Enforcement results summary
Reports issued: 3
Environmental and business outcomes
> 4 EPA policy, directive, practice corrective action or process changes
(including best practices)
made or implemented
Environmental and business outputs
> 11 recommendations for improvement
> 1 critical congressional or public management concern addressed anc
> 3 best practices identified
resolved
Performance Highlights
EPA Must Improve Oversight of State Enforcement—The EPA does not administer a
consistent national enforcement program. Despite efforts by the Office of Enforcement and
Compliance Assurance and the EPA regions to improve state enforcement performance, state
enforcement programs frequently do not meet national goals and states do not always take
necessary enforcement actions. State enforcement programs are underperforming: EPA data
indicate that noncompliance is high and the level of enforcement is low. We recommended that
the EPA establish clear national lines of authority for enforcement that include centralized
authority over resources; cancel outdated guidance and policies and consolidate and clarify
remaining enforcement policies; establish clear benchmarks for state performance; and establish
a clear policy describing when and how EPA will intervene in states, and procedures to move
resources to intervene decisively, when appropriate, under its escalation policy.
http://www.epa.gov/oig/reports/2012/20111209-12-P-0113.pdf
EPA Needs to Further Improve How It Manages Its Oil Pollution Prevention Program—
Although the EPA has taken steps to improve its program to prevent oil spills from known
facilities to waters of the United States, the agency remains largely unaware of the identity and
compliance status of the vast majority of Clean Water Act Section 311 regulated facilities. We
recommended that the assistant administrator for the Office of Solid Waste and Emergency
Response, in consultation with the assistant administrator for the Office of Enforcement and
Compliance Assurance, improve oversight of facilities regulated by the EPA's oil pollution
prevention program; improve oversight by biennially assessing and reporting on the quality and
consistency of Spill Prevention, Control, and Countermeasure Plans and Facility Response Plans;
implement a risk-based inspection strategy; update guidance; and consistently interpret regulations
and establish a national oil program database.
http://www.epa.gov/oig/reports/2012/20120206-12-P-0253.pdf
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EPA Office of Inspector General Annual Performance Report Fiscal Year 2012
Controls Over State Underground Storage Tank Inspection Programs in EPA Regions
Generally Effective—EPA regions have management controls to verify the quality of state
underground storage tank inspections. All three regions where we conducted our review had
annually reviewed underground storage tank inspection programs to verify compliance with
requirements. While we did not find any major deficiencies in the administration of the state
underground storage tank inspection programs or regional oversight activities, we have one
concern about EPA's oversight of state inspection programs. We recommended that the EPA and
states enter into memorandums of agreement that reflect program changes from the 2005 Energy
Policy Act and address oversight of municipalities conducting inspections.
http://www.epa.gov/oig/reports/2012/20120215-12-P-0289.pdf
Superfund/Land
Superfund/Land results summary
Environmental and business outputs
> 14 recommendations for improvement
> 3 awareness/technical briefings/training conducted
Sustained recommendations
> $32.0 million sustained efficiencies
Performance Highlights
Stronger Management Controls Will Improve EPA Five- Year Reviews of Superfund Sites—
The Five-Year Review process benefited from Office of Solid Waste and Emergency Response
Office of Superfund Remediation and Technology Innovation reviews of draft reports, but
improvements could be made to increase the impact of these reviews. Office of Superfund
Remediation and Technology Innovation's reviews are intended to ensure that protectiveness
determinations are accurate, supported by available information, and consistent in format
nationwide. We recommended that the Office of Solid Waste and Emergency Response establish
a process to resolve disagreements with regions on protectiveness determinations. The OIG also
recommended steps to improve the consistency, thoroughness and communication of Office of
Superfund Remediation and Technology Innovation reviews and to better define protectiveness
determinations. http://www.epa.gov/oig/reports/2012/20120206-12-P-0251.pdf
EPA Has Implemented Corrective Actions to Improve Conditions atAsheville, North Carolina
Superfund Site—EPA Region 4 took actions to implement all recommendations made in EPA
OIG Report No. 10-P-0130, EPA Activities Provide Limited Assurance of the Extent of
Contamination and Risk at a North Carolina Hazardous Waste Site, issued May 17, 2010.
However, further actions are needed to complete two OIG recommendations. We recommended
that the Region 4 administrator revise an information sheet on the results of private well sampling,
revise the community involvement plan, create and maintain an index for the site informational
repository, and complete the final report on the removal action pilot study and fact sheet for the
community on study results. http://www.epa.gov/oig/reports/2012/20120321-12-P-0362.pdf
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EPA Office of Inspector General Annual Performance Report Fiscal Year 2012
EPA Inaction in Identifying Hazardous Waste Pharmaceuticals May Result in Unsafe
Disposal—Since 1980, the EPA has not used its Resource Conservation and Recovery Act
authority to determine whether pharmaceuticals may qualify as hazardous waste. The EPA also has
not established a process for the regular identification and review of pharmaceuticals that may
qualify for regulation as hazardous waste. We recommended that the assistant administrator for the
Office of Solid Waste and Emergency Response identify and review existing pharmaceuticals to
determine whether they qualify for regulation as hazardous waste, establish a process to review
new pharmaceuticals to determine whether they qualify for regulation as hazardous waste, and
develop a nationally consistent outreach and compliance assistance plan to help states address
challenges that health care facilities and others have in complying with Resource Conservation and
Recovery Act regulations for managing hazardous waste pharmaceuticals.
http://www.epa.gov/oig/reports/2012/20120525-12-P-0508.pdf
Review of Hotline Complaint Concerning Cost and Benefit Estimates for EPA's Lead-Based
Paint Rule—Although the EPA stated that its economic analysis underwent extensive intra-agency
review and was approved by the Office of Management Budget prior to publication, the EPA used
limited data to develop its cost and benefit estimates for the Lead Rule. We did not conclude that
the EPA violated policies or failed to follow requirements in conducting its analysis. We
recommended that the EPA reexamine the costs and benefits of the 2008 Lead Rule and the 2010
amendment to determine whether the rule should be modified, streamlined, expanded or repealed.
The OIG also recommended that the EPA add a disclaimer to its training program materials to
communicate the differences between required and recommended work practices.
http://www.epa.gov/oig/reports/2012/20120725-12-P-0600.pdf
Environmental Job Training Program Implemented Well, But Focus Needed on Possible
Duplication With Other EPA Programs—The EPA effectively established and adhered to
competitive criteria that resulted in the selection of job training proposals that addressed the broad
goals of the Environmental Job Training program. However, the EPA did not have internal
controls to identify and prevent duplication with other EPA job training programs. We
recommended that the assistant administrator for the Office of Solid Waste and Emergency
Response establish internal controls for coordination with other EPA-funded job training
programs to prevent duplication of effort and spending.
http://www.epa.gov/oig/reports/2012/20120921-12-P-0843.pdf
Cross Media
Cross Media results summary
Reports issued: 2
Environmental and business outputs
> 3 recommendations for improvement
Performance Highlights
EPA Needs to Manage Nanomaterial Risks More Effectively—The EPA does not currently have
sufficient information or processes to effectively manage the human health and environmental
risks of nanomaterials. The EPA has the statutory authority to regulate nanomaterials but currently
lacks the environmental and human health exposure and toxicological data to do so effectively. We
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EPA Office of Inspector General Annual Performance Report Fiscal Year 2012
recommended that the assistant administrator for the Office of Chemical Safety and Pollution
Prevention develop a process to assure effective dissemination and coordination of nanomaterial
information across relevant offices, http://www.epa.gov/oig/reports/2012/20121229-12-P-0162.pdf
Limited Public Comment on EPA's Regulatory Flexibility Act Section 610 Reviews—An
essential aspect of Section 610 reviews is obtaining public comment on the impact of regulations.
We found that the EPA receives little to no public comment when Section 610 review notices are
published in the Federal Register. This limited public comment can hinder the ability of the
agency to implement an effective Section 610 review process. The EPA's ability to conduct
effective retrospective reviews is dependent on feedback from the public and the regulated
community. We recommended that the EPA's associate administrator for the Office of Policy
coordinate the Section 610 review with other required retrospective reviews, and implement
additional public outreach efforts to increase awareness of the Section 610 purpose and process.
http://www.epa.gov/oig/reports/2012/20120719-12-P-0579.pdf
Special Reviews
Special Reviews results summary
Reports issued: 4
Environmental and business outcomes
> 5 EPA policy, directive, practice, or process changes/decisions
> 5 environmental or business operational/control risks or challenges eliminated (including noncompliance)
> 1 action taken or resolved prior to report issuance
> 2 implemented recommendations previously reported as unimplemented
Environmental and business outputs
> 15 recommendations for improvement
> 8 environmental or business operational or internal control risks or challenges identified
> 2 awareness/technical briefings/training conducted
Sustained recommendations
> 4 sustained environmental or business recommendations
Performance Highlights
Early Warning Report: Use of Unapproved Asbestos Demolition Methods May Threaten Public
Health—The OIG identified that unapproved methods are currently being used or considered at
multiple sites. The Hanford Superfund Site, near Richland, Washington, is one location where use
of Alternative Asbestos Control Method-like methods has been allowed by the EPA under
conditions that are less restrictive than required by the Asbestos National Emission Standards for
Hazardous Air Pollutants. We recommended that the EPA immediately and clearly communicate
requirements for the demolition of asbestos-containing structures to regional, program and field
offices to prevent potentially hazardous asbestos exposures, notify these offices that unapproved
methods are not to be used without obtaining appropriate waivers, identify all sites with work
plans that contain EPA authorization to use unapproved methods for asbestos demolitions, and
retract any such approvals that deviate from the Asbestos National Emission Standards for
Hazardous Air Pollutants regulation. We also recommended that the EPA assess whether any
authorizations resulted in potential asbestos exposure of workers or the public and notify them.
http://www.epa.gov/oig/reports/2012/20111214-12-P-0125.pdf
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EPA Office of Inspector General Annual Performance Report Fiscal Year 2012
Training Contractor Not Promptly Paid Under Purchase Order EP07H001074—ThQ EPA did
not pay Laboratory for Scientific Interrogation, Inc., for services rendered in 2007 because the EPA
did not receive an invoice from the laboratory until after the July 2011 congressional inquiry.
Contrary to regulation, the EPA contracting officer in the Office of Administration and Resources
Management apparently did not provide the laboratory with a copy of the purchase order to
provide training for the OIG. We recommended that the inspector general assure that invoices are
obtained, reviewed and paid within a reasonable period of time after receiving services. We also
recommended that the director, Headquarters Procurement Operations Division, Office of
Administration and Resources Management, require that contracting officers properly document
contract actions in contract files and obtain adequate support to pay the travel costs.
http://www.epa.gov/oig/reports/2012/20111228-12-P-0160.pdf
Improvement Required to Safeguard Enforcement and Inspection Credentials—Some EPA
internal controls over credentials were not being implemented. In Region 3, where we conducted
an in-depth review, we initially found that the required annual 10 percent inventory of credentials
had not been completed for EPA personnel and was not being documented for non-EPA personnel.
We recommended that the assistant administrators for the Office of Administration and Resources
Management and the Office of Enforcement and Compliance Assurance comply with the internal
controls of EPA Order 3510 and revise EPA Order 3510 to include certain provisions that will
improve enforcement and inspection credentialing.
http://www.epa.gov/oig/reports/2012/20120309-12-P-0328.pdf
EPA's National Security Information Program Could Be Improved—Under its classified
National Security Information program, the EPA has assigned responsibilities and provided
guidance, training and oversight. EPA program offices provide secure equipment and space,
following National Security Information program specifications. The EPA has procedures in place
so employees can obtain security clearances and classify information. Annual reports are prepared
on the status of the program. We recommended that the assistant administrator for the Office of
Administration and Resources Management issue a directive to establish controls that address
identified deficiencies. http://www.epa.gov/oig/reports/2012/20120618-12-P-0543-redacted.pdf
Contracts and Assistance Agreements
Contracts and Assistance Agreements results summary
Reports issued: 8
Environmental and business outcomes
> 17 EPA policy, directive, practice, or process changes/decisions
> 1 environmental or business operational or internal control risk, challenge or weakness reduced or
eliminated
> 1 implemented recommendation previously reported as unimplemented
Environmental and business outputs
> 28 recommendations for improvement
> 1 critical congressional or public management concern
> 1 best practice identified
Sustained recommendations
> 7 sustained environmental or business recommendations
> $1.24 million sustained questioned costs
> $0.41 million sustained efficiencies
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EPA Office of Inspector General Annual Performance Report Fiscal Year 2012
Performance Highlights
EPA Should Improve Policies and Procedures to Ensure Effective DCAA Audit Report
Resolution—The EPA should improve its policies and procedures to ensure timely and accurate
tracking and reporting of the resolution of Defense Contract Audit Agency reports. When the EPA
is the cognizant agency responsible for resolving audit recommendations, it is generally resolving
DCAA reports within 6 months as required. We recommended that the EPA develop or revise and
implement policies and procedures to ensure that unresolved DCAA audit reports are reported on a
semiannual basis to the EPA Administrator, to record management decision and final action dates
for DCAA reports, and to define the resolution point for the various types of DCAA audits. We
also recommended that the EPA revise EPA Manual 2750 to reflect current agency processes for
requesting, tracking and reporting unresolved DCAA reports that impact EPA contracts; reexamine
audits that we identify as already resolved and provide the OIG an adequate management decision
where appropriate; and develop a plan to accelerate audit resolution when not receiving adequate
DCAA audit support, http://www.epa.gov/oig/reports/2012/20111110-12-P-0071.pdf
Enhanced Coordination Needed to Ensure Drinking Water State Revolving Funds Are Used to
Help Communities Not Meeting Standards—The Drinking Water State Revolving Fund program
is not taking full advantage of the data and tools that are available to identify noncompliant
systems that may benefit from Drinking Water State Revolving Fund funding. We recommended
that the assistant administrator for the Office of Water include in the annual regional review of
states checklist an assessment of the coordination between state Drinking Water State Revolving
Fund and enforcement programs, create a national intended use plan review checklist that includes
a requirement to assess coordination between state Drinking Water State Revolving Fund and
enforcement programs, and identify and implement actions to enhance coordination between
regional and state Drinking Water State Revolving Fund and Public Water System Supervision
programs, http://www.epa.gov/oig/reports/2012/20111201-12-P-0102.pdf
EPA Policy on Financing Local Reserves Needs Revision—The EPA policy that allows states to
use State Revolving Fund funds to establish local reserve accounts conflicts with other regulations.
Office of Water Policy Memorandum State Revolving Fund 91-08 states local reserve accounts,
used to secure loan repayments, are eligible costs of the State Revolving Fund. However, the
financing of local reserve accounts does not represent eligible incurred project costs, a requirement
for cash draws from the federal capitalization grants per the CFR. We recommended that the
assistant administrator for the Office of Water rescind guidance allowing federal funds to be used
to finance local reserve accounts. http://www.epa.gov/oig/reports/2012/20120125-12-P-0231.pdf
EPA Can Improve Its Improper Payments Reporting—The EPA complied with the Improper
Payments Elimination and Recovery Act in that it reported all required information on improper
payments, but the EPA can improve the accuracy and completeness of the information. In the
Fiscal Year 2011 Agency Financial Report, the EPA reported the results of its efforts to recapture
improper payments. The EPA is taking actions to improve internal controls in preventing, reducing
and recapturing improper payments. We recommended that the EPA issue guidance requiring that
the results of all grant improper payment determinations and recaptures, as well as discounts not
taken as improper payments, be reported, and issue guidance to program offices to ensure the
quality of reported information. http://www.epa.gov/oig/reports/2012/20120301-12-P-0311.pdf
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EPA Office of Inspector General Annual Performance Report Fiscal Year 2012
Policies Needed for Proper Use and Management of Cost-Reimbursement Contracts Based on
Duncan Hunter Act—EPA did not comply with several key revisions to the Federal Acquisition
Regulation as amended by the interim rule, Proper Use and Management of Cost Reimbursement
Contracts (Federal Acquisition Regulation Case 2008-030). We recommended that the EPA
develop a policy that provides a standardized approach for preparing written acquisition plans to
ensure compliance with new Federal Acquisition Regulation revisions, update the procurement
initiation notice to include a copy of the contracting officer's representative's appointment
memorandum, and direct contracting officers to verify that nomination forms and appointment
memorandums are included in all contract files. Further, we recommended that the EPA develop
and distribute instructions on coding of indefinite-delivery/indefinite-quality contracts.
http://www.epa.gov/oig/reports/2012/20120306-12-P-0320.pdf
EPA Superfund Contract Initiatives and Controls to Reduce Fraud, Waste, and Abuse—We
identified three EPA initiatives related to Superfund contracting controls: Contracts 2010 Strategy,
Office of Acquisition Management's Performance Measurement and Management Program, and
the Recovery Act Stewardship Plan. In addition to the above initiatives, the EPA has other contract
internal controls in place. The EPA describes its contracting internal controls in documents such as
the Contracts Management Manual, EPA Acquisition Handbook, EPA Acquisition Regulation, and
Interagency Agreements Desk Manual. The EPA evaluates implementation of internal controls
through Office of Management and Budget Circular A-123 reviews.
http://www.epa.gov/oig/reports/2012/20120316-12-P-0360.pdf
Great Lakes National Program Should Improve Internal Controls to Ensure Effective Legacy
Act Operations—Great Lakes Legacy Act of 2002 program funding has increased five-fold over
the last 7 years; however, the program has not established needed internal controls to ensure
effective operations. Without adequate internal controls, funds owed from nonfederal sponsors
may not be collected timely, costs invoiced on act projects may not be reasonable and allowable,
and nonfederal sponsors with whom the Great Lakes National Program Office enters into project
agreements may not be able to meet their commitments. We recommended that the EPA develop
and implement policies and procedures for the Great Lakes National Program Office that address
the establishment of accounts receivable, recording of in-kind contributions, completion of final
accounting, and review of the financial capability of nonfederal sponsors.
http://www.epa.gov/oig/reports/2012/20120409-12-P-0407.pdf
EPA Can Improve Its Reporting of Dollars Leveraged From the American Recovery and
Reinvestment Act Brownfields Program—EPA project officers verified grant recipient reported
outputs and outcomes for Recovery Act brownfields assessments completed, acres ready for reuse,
and cleanups completed, but did not always verify dollars leveraged. Dollars leveraged are
additional non-EPA resources invested in the project as a result of the use of grant funds. We
recommended that the assistant administrator for the Office of Solid Waste and Emergency
Response instruct the director, Office of Brownfields Land Revitalization, to create a checklist for
grant recipients and project officers that defines dollars leveraged and identifies specific types of
supporting documents needed. We also recommended that the assistant administrator instruct the
director, Office of Brownfields Land Revitalization, to include a letter in closeout packages
reminding recipients of their responsibility to continue to report dollars leveraged as they are
realized. http://www.epa.gov/oig/reports/2012/20120927-12-R-0898.pdf
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EPA Office of Inspector General Annual Performance Report Fiscal Year 2012
Forensic Audits
Forensics Audits results summary
Environmental and business outcomes
> 1 environmental or business operational or internal control risk, challenge or weakness reduced or
eliminated
> 19 certifications, verifications, validations
Environmental and business outputs
> 373 recommendations for improvement
> 5 referrals for agency action
> 325 findings without controlled recommendations
Return on investments
> $40.88 million questioned costs
> $0.70 million recommended efficiencies, costs saved or avoided
Criminal, civil and administrative actions
> $0.09 million actual costs recovered
> 2 allegations disproved after documented investigation or review
Sustained recommendations
> 283 sustained environmental or business recommendations
> $0.83 million sustained questioned costs
> $0.02 million sustained efficiencies
Performance Highlights
Examination of Costs Claimed Under Cooperative Agreement X7-83325501 Awarded to
Kathleen S. Hill, Chiloquin, Oregon—The grantee did not have a financial management system
that met federal standards. We identified the following material weaknesses: the recipient did not
have adequate controls to ensure that costs claimed were in accordance with 2 CFR Part 230, and
the recipient's cash draws did not comply with 40 CFR Part 30 or the terms and conditions of the
cooperative agreement. We recommended that the director, Office of Grants and Debarment,
disallow and recover $80,721 in questioned costs, verify that the recipient has an adequate
financial management system in place prior to any future award, and verify that the recipient's
final financial status report is properly supported by accounting system records.
http://www.epa.gov/oig/reports/2012/20120123-12-4-0224-redacted.pdf
Costs Claimed by the North Carolina Rural Economic Development Center, Inc., Under
EPA Grant No. X96418405—The OIG determined that the North Carolina Rural Economic
Development Center, Inc., did not comply with 2 CFR Part 230 regarding financial management.
The center did not properly allocate direct costs between state and federal funding sources.
Therefore, the EPA should recover $1,192,500 in costs questioned under the grant. Region 4 must
recognize that the $178,556 budget revision it directed is not allocable to the EPA grant because it
shifted subcontract costs allocable to state funding sources to the EPA grant. We recommended
that the regional administrator, Region 4, disallow all costs paid under the grant and recover
$1,192,500. http://www.epa.gov/oig/reports/2012/20120523-12-4-0499.pdf
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EPA Office of Inspector General Annual Performance Report Fiscal Year 2012
Examination of Costs Claimed Under EPA Cooperative Agreements CB-97324701 Through
CB-973 24705 Awarded to Alliance for the Chesapeake Bay, Inc.—The recipient achieved the
intended result of producing the Bay Journal, but did not comply with 40 CFR Part 30 and 2 CFR
Part 230 regarding procurement and financial management requirements. We recommended that
the regional administrator, Region 3, disallow the total questioned project costs of $1,357,035 and
recover $1,189,864 of federal funds paid under the cooperative agreements, require the recipient to
improve its procurement internal controls and ensure that future federal financial reports are
supported by accounting system data, and include certain special conditions for all active and
future EPA awards to the recipient until the region determines that the recipient has met all
applicable federal financial and procurement requirements.
http://www.epa.gov/oig/reports/2012/20120822-12-4-0720.pdf
American Recovery and Reinvestment Act Site Visit of the Elizabeth City Well Field Expansion
Project, Elizabeth City, North Carolina—We conducted an unannounced site visit of the
Elizabeth City Well Field Expansion Project in Elizabeth City in July 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/2012/20111208-12-R-0109.pdf
American Recovery and Reinvestment Act Site Visit of the Botanic Garden of Western
Pennsylvania—The Botanic Garden of Western Pennsylvania clean water project used Recovery
Act funds to construct ponds that are not being used for their stated purpose. The Botanic
Garden's funding agreement with Pennvest states that the Botanic Garden will build irrigation
ponds to collect, store and recycle water for future irrigation needs. However, the ponds were
being used as sediment ponds to capture runoff from a mining reclamation operation. We
recommended that the regional administrator, Region 3, recover from Pennvest all Recovery Act
funds, totaling $1,368,894, awarded to the Botanic Garden, and prevent the continued use of
Clean Water State Revolving Fund funding for this project. Further, if the full Recovery Act funds
are not recovered, we recommended that the regional administrator reduce the project costs to be
funded by the Recovery Act by the amount of program income earned by the Botanic Garden
from mining operations and recover the amount earned in program income.
http://www.epa.gov/oig/reports/2012/20120308-12-R-0321.pdf
American Recovery and Reinvestment Act Site Visit of Wastewater Treatment Plant, Village of
Itasca, Illinois—The village of Itasca did not comply with the Buy American requirements of the
Recovery Act. Steel pipes and fittings used in the project were manufactured in foreign countries.
We also identified other manufactured goods that did not comply with the Buy American
requirements of the Recovery Act. As a result, the project is not eligible for the $10 million of
Recovery Act funds authorized by the state unless the EPA exercises a regulatory option. We
recommended that the regional administrator, Region 5, require the state to withdraw Recovery
Act funds unless the state can verify that Itasca has complied with Buy American requirements;
employ the procedures set out in the CFR to resolve any iron, steel, and manufactured goods that
do not comply with Buy American requirements; and verify that the substitutes for the German-
made micropilots meet Buy American requirements.
http://www.epa.gov/oig/reports/2012/20120330-12-R-0377.pdf
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EPA Office of Inspector General Annual Performance Report Fiscal Year 2012
American Recovery and Reinvestment Act Site Visit of the Diversion Ditch Repair Project at the
Gilt Edge Mine Superfund Site, Lawrence County, South Dakota—Pacific Western Technologies
did not have adequate controls to ensure that its subcontractors and vendors complied with the Buy
American and Davis-Bacon Act provisions of the Recovery Act. Non-American-made steel
grouting pipes were used in the project. As a result, we questioned $349,635 in costs incurred
under the project, consisting of ineligible pipe costs of $88,712 and unsupported field inspection
costs of $260,923. We recommended that the EPA's director, Office of Acquisition Management,
Office of Administration and Resources Management, advise the contracting officer to designate
the grouting pipe cost of $88,712 as ineligible costs and to reduce the funding for the project
accordingly, and disallow and recover Pacific Western Technologies' field inspection costs.
http://www.epa.gov/oig/reports/2012/20120725-12-R-0601.pdf
Examination of Costs Claimed Under EPA Cooperative Agreement 2A-83440701 Awarded
Under the Recovery Act to Cascade Sierra Solutions, Eugene, Oregon—Cascade Sierra
Solutions' financial management system did not support that funds drawn are reasonable, allocable
and allowable in accordance with applicable laws, regulations, and cooperative agreement terms
and conditions. We recommended that the director, Office of Grants and Debarment, disallow and
recover $9 million in questioned costs; consider suspension and debarment of the recipient on
current and future awards; require the recipient to ensure that the use of funds meets federal
criteria; require special conditions for future awards to the recipient; and provide clarifying
guidance to the recipient on progress reporting requirements. We also recommended that the
director require the recipient to comply with pertinent procurement requirements; disallow
pre-2007 model year trucks as project costs; and assist the recipient with developing a
methodology to calculate number of jobs created and direct the recipient to correct the numbers
reported, with documentation, http://www.epa.gov/oig/reports/2012/20120904-12-R-0749.pdf
American Recovery and Reinvestment Act Site Visit of Wastewater Treatment Plant
Improvements Project, City ofNappanee, Indiana—We noted an instance where the city of
Nappanee could not demonstrate that an item was manufactured in the United States contrary to
Buy American requirements of the Recovery Act. As a result, the project was not eligible for the
$1,769,000 of Recovery Act funds authorized unless the EPA exercises a regulatory option. We
recommended that Region 5 employ the procedures set out in the CFR to ensure compliance with
the Buy American requirements and require the state to verify the city's corrective actions taken
and ensure the replaced items meet the Buy American requirements.
http://www.epa.gov/oig/reports/2012/20120912-12-R-0789.pdf
Close-Out of Complaint on Metropolitan Water Reclamation District of Greater Chicago
Incurring Inappropriate Expenses on Recovery Act Projects—Our review of a hotline complaint
did not disclose any indication of misuse of funds provided to the district by Illinois' Clean Water
State Revolving Fund loans or Recovery Act funds provided through the EPA. The types of costs
mentioned in the complaint were not included in the amounts paid to the district by the Clean
Water State Revolving Fund. According to state personnel, most, if not all, of the funding
administered through the Clean Water State Revolving Fund was for construction-related
expenses. The Clean Water State Revolving Fund and Recovery Act funds did not pay for
professional services contracts or other administrative costs such as training, travel, entertainment
or conference expenses, http://www.epa.gov/oig/reports/2012/20111122-12-X-0090.pdf
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EPA Office of Inspector General Annual Performance Report Fiscal Year 2012
Close-Out of Hotline Complaint on Unreasonable Cost Increase to the Wastewater Treatment
Facility Improvements, Perkins, Oklahoma—We have closed a hotline complaint that project
costs increased unreasonably due to Recovery Act requirements because we found no evidence to
support the complaint. According to the complaint, project costs increased by about 40 percent
when the Perkins Public Works Authority added the Recovery Act's Buy American and Wage
Rate requirements, while other projects only increased by about 5 percent. Because we did not find
any indication that Recovery Act requirements increased project costs, we closed the complaint,
and plan no further action. http://www.epa.gov/oig/reports/2012/20121229-12-X-0161.pdf
Financial Management
Financial Management results summary
Reports issued: 6
Environmental and business outcomes
> 27 EPA policy, directive, practice, or process changes/decisions
> 12 actions taken or resolved prior to report issuance (not reported)
> 5 environmental or business operational or internal control risks, challenges or weakness reduced or
eliminated
Environmental and business outputs
> 38 recommendations for improvement
Return on investments
$3.11 million recommended efficiencies
Sustained recommendations
> 30 sustained environmental or business recommendations
> $19.67 million sustained efficiencies
Performance Highlights
Audit ofEPA's Fiscal 2011 and 2010 Consolidated Financial Statements—We rendered an
unqualified opinion on the EPA's Consolidated Financial Statements for FYs 2011 and 2010,
meaning we found the statements to be fairly presented and free of material misstatement.
However, in evaluating internal controls, we noted the following deficiencies: (1) regions and
headquarters did not timely provide accounts receivable supporting documentation, (2) the EPA
did not timely bill other federal agencies for reimbursable costs, (3) the EPA did not properly close
general ledger accounts in its cancelling Treasury symbols, (4) the EPA double counted contractor-
held property, (5) the EPA headquarters could not account for 1,284 personal property items, (6)
the EPA needs to better secure marketable securities, (7) the EPA recorded earned revenue without
recognizing corresponding expenses, and (8) the EPA was withholding payments related to the
BP Deepwater Horizon oil spill, http://www.epa.gov/oig/reports/2012/20111115-12-l-0073.pdf
Fiscal Years 2011 and 2010 Financial Statements for the Pesticides Reregistration and
Expedited Processing Fund—We rendered an unqualified, or clean, opinion on the EPA's
Pesticides Reregistration and Expedited Processing Fund financial statements for FYs 2011 and
2010, meaning they are fairly presented and free of material misstatement. We noted one material
weakness in internal controls. EPA materially understated the fund's payroll and benefits payable,
and related payroll expenses included in gross costs, in FY 2011. The agency's practice of
transferring employees and expenses and liabilities from the fund to the Environmental Programs
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EPA Office of Inspector General Annual Performance Report Fiscal Year 2012
and Management Fund for cash flow reasons led to the understatement. Understatements could
impact the opinion on the financial statements and reliance on reported financial information.
http://www.epa.gov/oig/reports/2012/20120606-12-l-0521.pdf
Fiscal Years 2011 and 2010 Financial Statements for the Pesticide Registration Fund—
We rendered an unqualified, or clean, opinion on the EPA's Pesticide Registration Fund financial
statements for FYs 2011 and 2010, meaning that they were fairly presented and free of material
misstatement. We noted one material weakness in internal controls. The EPA materially
understated the fund's payroll and benefits payable and related payroll expenses in FY 2011 gross
costs. The agency's practice of transferring employees and expenses and liabilities from the fund
to the Environmental Programs and Management Fund for cash flow reasons led to the
understatement. Understatements could impact the opinion on the financial statements and reliance
on reported financial information, http://www.epa.gov/oig/reports/2012/20120606-12-l-0522.pdf
EPA Should Improve Controls for Managing Contractor-Held Property—The EPA did not have
effective oversight of contractor-held property, did not accurately report such property in its
FY 2010 financial statements, and did not fully implement corrective actions from an OIG 2006
audit report. We recommended that the assistant administrator for the Office of Administration and
Resources Management quantify the universe of contractor-held property and assign more
resources to the property administration function, designate contractor-held property as a
significant deficiency, develop and implement policies and procedures for the property staff, train
property staff and contracting officers on current and any new responsibilities over contracts with
government property, and revise or update the corrective action plan in the agency's Management
Audit Tracking System for the 2006 audit report and reference any corrective actions. We also
recommended that the chief financial officer develop and implement internal controls that require
the financial staff to review the funding appropriations for contracts with government property.
http://www.epa.gov/oig/reports/2012/20120403-12-P-0388.pdf
EPA Did Not Properly Migrate General Ledger Balances to Compass From the Integrated
Financial Management System—EPA did not properly migrate general ledger balances to
Compass from the Integrated Financial Management System. We found differences in certain
FY 2012 beginning balances, abnormal balances, and agency adjustments to beginning balances.
We recommended that the chief financial officer determine whether the supporting data elements
in the beginning balances of the general ledger account and treasury symbol were properly
migrated to Compass from the Integrated Financial Management System; adjust the general ledger
accounts with abnormal balances to include accurate activity and reflect the proper balances; and
correct the general ledger crosswalk and provide the details to the OIG.
http://www.epa.gov/oig/reports/2012/20120709-12-P-0559.pdf
EPA Could Recover More Indirect Costs Under Reimbursable Interagency Agreements—
The EPA did not recover $11 million in indirect costs on funds-in reimbursable interagency
agreements. Federal entities are required to recognize the full cost of goods and services provided
among federal entities; full cost includes both direct and indirect costs. We recommended that the
chief financial officer revise agency policy to include indirect costs in all reimbursable interagency
agreements, revise the rules and policies for future actions to include the ability to recover indirect
costs and educate EPA staff on the new policies, revise agency policy to require that reimbursable
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EPA Office of Inspector General Annual Performance Report Fiscal Year 2012
interagency agreement amendments include indirect costs based on current rates, correct the
indirect cost rate billing errors noted, and develop policy and procedures to verify that correct
indirect cost rates are used. http://www.epa.gov/oig/reports/2012/20120919-12-P-0835.pdf
Risk Assessment and Program Performance
Risks Assessment and Program Performance results summary
Reports issued:
Environmental and business outcomes
> 7 EPA policy, directive, practice, or process changes/decisions
> 1 action taken or resolved prior to report issuance (not reported)
> 4 legislative changes/decisions made influenced by OIG work
> 2 environmental or business operational or internal control risks, challenges or weaknesses reduced or
eliminated
> 4 certifications, verifications, validations
Environmental and business outputs
> 12 recommendations for improvement
> 1 environmental or business operational/control risk or challenge identified (including noncompliance)
> 3 findings without controlled recommendations (not in resolution process)
> 2 awareness/technical briefings conducted
> 3 critical congressional or public management concerns addressed and resolved
Return on investments
$0.03 million recommended efficiencies, costs saved or avoided
Sustained recommendations
> 14 sustained environmental or business recommendations
Performance Highlights
Congressionolly Requested Information on the Status and Length of Review for Appalachian
Surface Mining Permit Applications—After reconciling discrepancies and vetting information,
we identified 185 surface mining permit applications to review from the list of 237 that we
received from a senator. In response to the senator's first request, we found that over half of all
permit activities—whether permitted, withdrawn or pending— have taken a year or longer, with
approximately 40 percent exceeding 2 years. This report makes no recommendations to EPA.
http://www.epa.gov/oig/reports/2012/20111121-12-P-0083.pdf
EPA Should Strengthen Records Management on Clean Water Act Section 404 Permit
Notification Reviews for Surf ace Coal Mining—EPA staff in Regions 3, 4 and 5 should better
document their records of review activities on Clean Water Act Section 404 surface mining permit
notifications. EPA regional staff believe that agency comment letters are the only official records
they should maintain related to notification reviews. We recommended that the Office of Water
coordinate with headquarters and regions to identify the Data on Aquatic Resources Tracking for
Effective Regulation system as an official recordkeeping system and develop a full implementation
plan, identify as official records certain basic information entered into the data system, and
indicate when the system will incorporate additional permit actions. We also recommended that
the Office of Water reconcile any data duplication between the data system and Region 5's
Coal Tracker system and clarify the requirements of certain EPA records schedules.
http://www.epa.gov/oig/reports/2012/20120202-12-P-0249.pdf
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EPA Office of Inspector General Annual Performance Report Fiscal Year 2012
Office of Environmental Information Should Strengthen Controls Over Mobile Devices—
Although the Office of Environmental Information is in the process of developing policies for
domestic and international mobile device usage, the office has no organization-wide standard
operating procedures that explain responsibilities for the office's employees and contractors
regarding mobile devices. We recommended that the office implement standard operating
procedures for each step of the mobile device process to cover all aspects of issuance,
disconnection, multiple devices, inappropriate use, and tracking and recovery; follow up with
employees and contractors to determine business case justifications for users of multiple devices;
and take appropriate action on unauthorized calls identified in the sample we reviewed. Lastly, we
recommended that the office finalize agencywide draft domestic and international mobile device
procedures and develop other agencywide procedures as necessary.
http://www.epa.gov/oig/reports/2012/20120425-12-P-0427.pdf
Alleged Misuse of Tribal Clean Water Act Section 106 Funds in EPA Region 8—We found that
EPA Region 8 funded tribal Section 106 programs based on the region's review of tribal work
plans and did not inappropriately withhold funds. We recommended that the Office of Water
develop guidance on the use of Section 106 tribal grants funds for associated program support
costs, similar to that developed by the EPA's Office of Air and Radiation for Clean Air Act
Section 105. We also recommended that Region 8 develop guidance to formalize the process by
which the region gains approval from tribes for associated program support costs funded with
Section 106 program funds. Further, we recommended that Region 8 evaluate the effectiveness of
its team approach to tribal technical assistance—as part of regional guidance—by querying tribal
Regional Operations Committee members and making adjustments as needed based on tribal
feedback. http://www.epa.gov/oig/reports/2012/20120504-12-P-0453.pdf
Efficiency
Efficiency results summary
Reports issued:
Environmental and business outcomes
> 1 environmental/health improvement
> 13 environmental or business policies, directives, practices
> 4 environmental or business operational/control risks or challenges reduced or eliminated
Environmental and business outputs
> 23 recommendations for improvement
> 4 unimplemented recommendation identified
> 2 environmental or business operational or internal control risks or challenges identified
(including noncompliance)
> 1 awareness/technical briefing conducted
> 11 critical congressional or public management concerns addressed and resolved
Return on investments
> $2.24 million recommended efficiencies, costs saved or avoided
Sustained recommendations
> 20 sustained environmental or business recommendations
' Two of the reports are on CSB and are discussed later, in the CSB section.
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EPA Office of Inspector General Annual Performance Report Fiscal Year 2012
Performance Highlights
Weaknesses in EPA's Management of the Radiation Network System Demand Attention—
EPA's Broken Radiation Network (RadNet) monitors and late filter changes impaired this critical
infrastructure asset. On March 11, 2011, at the time of the Japan nuclear incident, 25 of the 124
installed RadNet monitors, or 20 percent, were out of service for an average of 130 days. We
recommended that the assistant administrator for the Office of Air and Radiation establish and
enforce expectations for RadNet operations readiness; and improve planning and management of
parts availability, monitoring of filter replacement and operators, and monitoring of the installation
of the remaining RadNet monitors. Further, we recommended that this assistant administrator, in
conjunction with the assistant administrator for the Office of Administration and Resources
Management, hold contractors accountable by establishing milestones, using incentives and
disincentives, requiring contracting officers and contracting officer's representatives to formally
evaluate RadNet contractors annually, and ensure that the agency's Management Audit Tracking
System is accurate and current. http://www.epa.gov/oig/reports/2012/20120419-12-P-0417.pdf
Information Resources Management
Information Resources Management results summary
Reports i:
Environmental and business outcomes
3 EPA policy, directive, practice, or process changes/decisions
4 actions taken or resolved prior to report issuance (not otherwise reported)
27 environmental or business operational/control risks or challenges eliminated
(including noncompliance)
Environmental and business outputs
79 recommendations for improvement
3 environmental or business operational or internal control risks or challenges identified
(including noncompliance)
Sustained recommendations
13 sustained environmental or business recommendations
* One of the reports is on CSB and is discussed later, in the CSB section.
Performance Highlights
Fiscal Year 2011 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. The audit work performed during the Federal Information
Security Management Act review disclosed that the agency needs to make significant
improvements in the following programs: (1) Risk Management, (2) Plans of Action and
Milestones, and (3) Continuous Monitoring Management. In addition, audit work during FY 2011
noted significant weaknesses with several aspects of the EPA's information security program.
http://www.epa.gov/oig/reports/2012/20111109-12-P-0062.pdf
Region 10 Technical and Computer Room Security Vulnerabilities Increase Risk to EPA's
Network—OIG technical vulnerability scans conducted at Region 10 headquarters revealed a
multitude of high-risk and medium-risk vulnerabilities. These vulnerabilities were identified on
Region 10 servers, printers or desktops. The exploitation of unidentified and unremediated
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EPA Office of Inspector General Annual Performance Report Fiscal Year 2012
vulnerabilities could greatly impact the network security posture of Region 10 headquarters or the
entire EPA network by exposing agency data, information and configurations to unauthorized
access. We recommended that the senior information official, Region 10, remediate high-risk and
medium-risk technical vulnerabilities, and remediate physical and environmental control
deficiencies. http://www.epa.gov/oig/reports/2012/20120120-12-P-0220_glance.pdf
Results of Technical Network Vulnerability Assessment: EPA's Region 1—Our vulnerability
assessments of Region 1's wireless network infrastructure found no security weaknesses.
However, our testing of networked resources at the Region 1 facility identified Internet
protocol addresses with potentially 18 high-risk and 166 medium-risk vulnerabilities. We
recommended that the senior information officials within Region 1 and the Office of
Environmental Information provide the OIG a status update for all identified high-risk and
medium-risk vulnerability findings; create plans of action and milestones for all vulnerabilities
according to agency procedures; and perform a technical vulnerability assessment test of
assigned network resources to confirm completion of remediation activities.
http://www.epa.gov/oig/reports/2012/20120605-12-P-0518.pdf
EPA Data Standards Plan Completed But Additional Steps Are Needed—Although EPA
completed the steps listed in its corrective action plan to close out the agency-level weakness on
data standards, the actions taken were either incomplete or lacked steps to help management
determine the overall effectiveness of the EPA's implementation of data standards. We
recommended that the assistant administrator for the Office of Environmental Information update
the data standards guidance available to the EPA offices, implement a new data standards
communication plan, provide specific instructions to the EPA offices for updating the Registry of
EPA Applications and Databases, create a high-level data standards report card for senior
executives, and develop a new strategy for ensuring compliance with data standards.
http://www.epa.gov/oig/reports/2012/20120605-12-P-0519.pdf
Results of Technical Network Vulnerability Assessment: EPA's Region 6—Our vulnerability
assessments of the EPA's Region 6 wireless network infrastructure found no security weaknesses.
However, our testing of networked resources at Region 6 facilities identified Internet protocol
addresses with potentially 35 critical-risk, 217 high-risk and 878 medium-risk vulnerabilities. We
recommended that the senior information official, Region 6, provide the OIG a status update for
every critical-risk, high-risk and medium-risk vulnerability identified by the scanning tool; create
plans of action and milestones for all vulnerabilities according to agency interim procedures;
perform a technical vulnerability assessment test of assigned network resources to confirm
completion of remediation activities; and remediate all identified physical and environmental
control weaknesses identified. http://www.epa.gov/oig/reports/2012/20120810-12-P-0659.pdf
EPA Should Improve Management Practices and Security Controls for Its Network Directory
Service System and Related Servers—The Office of Environmental Information was not
managing key system management documentation, system administration functions, the granting
and monitoring of privileged accounts, and the application of environmental and physical security
controls associated with its directory service system. The office was not keeping management
documentation associated with the directory service system current and complete, and did not have
an effective process for maintaining this documentation. We recommended that the Office of
Environmental Information and the Office of Administration and Resources Management's
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EPA Office of Inspector General Annual Performance Report Fiscal Year 2012
Human Resources management undertake a number of corrective actions to improve management
of, and correct specific deficiencies associated with, the agency's directory service system.
http://www.epa.gov/oig/reports/2012/20120920-12-P-0836 glance.pdf
EPA's Radiation and Indoor Environments National Laboratory Should Improve Its Computer
Room Security Controls—Our review of the security posture and in-place environmental controls
of EPA's Radiation and Indoor Environments National Laboratory computer room disclosed an
array of security and environmental control deficiencies. These deficiencies greatly hindered the
ability of the Office of Air and Radiation to safeguard critical information technology assets and
associated data from the risk of damage or loss. We recommended in our draft report that Office
of Air and Radiation remediate physical and environmental control deficiencies. In its response,
the Office of Air and Radiation provided a corrective action plan with milestone dates to address
agreed-upon recommendations 1 through 5. The region did not agree or disagree with
recommendation 6 because corrective actions required consultation with the U.S. General
Services Administration to identify a suitable resolution.
http://www.epa.gov/oig/reports/2012/20120921-12-P-0847.pdf
EPA's Office of Environmental Information Should Improve Ariel Rios and Potomac Yard
Computer Room Security Controls—The security posture and in-place environmental control
review of the computer rooms in the Ariel Rios and Potomac Yard buildings revealed numerous
security and environmental control deficiencies. These control deficiencies greatly reduce the
ability of the Office of Environmental Information to safeguard critical information technology
assets and associated data from the risk of damage and/or loss. We recommended in our draft
report that the Office of Environmental Information remediate physical and environmental control
deficiencies. http://www.epa.gov/oig/reports/2012/20120926-12-P-0879.pdf
Improvements Needed in EPA's Network Security Monitoring Program—The EPA's
deployment of a Security Incident and Event Management tool did not comply with the EPA's
system life cycle management procedures, which require planning project activities to include
resources needed, schedules and structured training sessions. The EPA did not develop a
comprehensive deployment strategy for the tool to incorporate all of EPA's offices or a formal
training program on how to use the tool. We recommended that the assistant administrator for the
Office of Environmental Information develop and implement a strategy to incorporate EPA's
headquarters program offices within the Security Incident and Event Management environment,
develop and implement a formal training program for the tool, develop a policy or revise the
agency's Information Security Policy to comply with audit logging requirements, and require that
the senior agency information security officer be addressed on all of the office's security reports
and reviews. http://www.epa.gov/oig/reports/2012/20120927-12-P-0899.pdf
Results of Technical Network Vulnerability Assessment: EPA's National Vehicle and Fuel
Emissions Laboratory—While our assessments of EPA's National Vehicle and Fuel Emission
Laboratory server room found no weaknesses with physical controls and environmental controls,
testing of networked resources in the lab identified Internet protocol addresses with potentially
9 critical-risk, 70 high-risk and 297 medium-risk vulnerabilities. If not resolved, these
vulnerabilities could expose the EPA's assets to unauthorized access and potentially harm the
agency's network. The lab and Office of Environmental Information manage the resources in the
lab that contained the weaknesses. http://www.epa.gov/oig/reports/2012/20120927-12-P-0900.pdf
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EPA Office of Inspector General Annual Performance Report Fiscal Year 2012
Investigations
Investigative results summary
Investigations opened and closed
125 investigations closed
168 investigations opened
225 hotline complaints received
Environmental and business outcomes
$4.38 million in fines, settlements, restitutions
$3.95 million cost efficiencies (also counted in total OIG efficiencies)
22 criminal convictions
3 civil actions
32 indictments/informations/complaints
93 administrative actions (includes debarments and suspensions)
2 allegations disproved
Performance Highlights
Telemarketers for Florida Company Convicted and Sentenced—A number of former
telemarketers for a Florida company were sentenced to home detention and/or supervised release
on charges related to their falsely claiming a relationship between their product and the EPA. On
April 25, 2012, two former telemarketers from FBK Products, LLC, Palm Beach County, Florida,
were convicted and sentenced in the U.S. District Court, Southern District of Florida, West Palm
Beach Division. Laura Janey was convicted on one count of making false statements and sentenced
to 12 months of supervised release. Cheryl Stephenson was convicted on two counts of wire fraud
and sentenced to 24 months of supervised release and ordered to pay $626 in restitution. On
September 13, 2012, three additional former FBK employees were convicted and sentenced.
Richard Chiat and Mitchell Friedman, both former managers, were convicted of conspiracy to
commit wire fraud and sentenced to 8 months home detention plus 1 year of supervised release.
They were also ordered to pay $5,323 in restitution and a $100 special assessment. Gregory Weiss,
a former general manager/partner, was also convicted of one count of conspiracy to commit wire
fraud and received the same sentence.
Three Sentenced for Embezzling From Tribal Organization—Three people in South Dakota were
sentenced in the U.S. District Court for the District of South Dakota, Western Division, for
embezzling funds from a tribal organization. On May 25, 2012, Rhonda Azure was sentenced to
12 months and 1 day of imprisonment to be followed by 3 years of supervised release. She was
also ordered to pay $75,000 in restitution and a $100 assessment to the Victim Assistance Fund.
Previously, on November 29, 2011, Shirley Rouillard was sentenced to serve 18 months in prison,
to be followed by 36 months of probation. She was also ordered to make restitution of $88,734 to
the EPA and $66,000 to the U.S. Bureau of Reclamation. Also on November 29, 2011, Gaylin
Holy Rock was ordered to serve 24 months on probation and make restitution of $1,009 to the
EPA and $1,009 to the U.S. Bureau of Reclamation. The charges stemmed from the embezzlement
of funds from the Mni Sose Intertribal Water Rights Coalition, which had received EPA funds.
This case was investigated by the EPA OIG and the U.S. Department of the Interior.
Business Owner Sentenced to Jail for Making False Statements—On February 22, 2012, Charles
Tomlin was sentenced in U.S. District Court, Northern District of Georgia, to 20 months in jail to
be followed by 36 months of supervised release for making false statements. Tomlin was also
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EPA Office of Inspector General Annual Performance Report Fiscal Year 2012
ordered to pay a $5,000 fine, $43,331 in restitution and a $100 special assessment. Tomlin was
found guilty during a 2-day trial in December 2011 of fabricating a story in which he claimed
persons posing as EPA employees had assessed him $272,000 in fines for alleged environmental
violations on his business property.
Former Sewage Treatment Plant Operator Sentenced to Prison for Falsifying Monitoring
Reports—On February 6, 2012, Donald Jack Clark of Niota, Tennessee, was sentenced in the
U.S. District Court for the Eastern District of Tennessee to 6 months in prison to be followed by
2 years of supervised release, including 6 months of home detention following his release from
prison, for falsifying Clean Water Act reports. Clark was also ordered to perform 150 hours of
community service and pay a $1,200 special assessment. This investigation was conducted with the
EPA Criminal Investigation Division.
Former EPA Employee Sentenced to 5 Years for Child Pornography—On October 24, 2011,
Jonathan Angier, a former EPA employee, was sentenced in U.S. District Court, District of
Maryland, to 5 years in prison followed by supervised release for life for charges related to receipt
of child pornography. Angier, who must register as a sex offender, was also assessed a $1,000 fine
and ordered to pay a $100 special assessment.
Former EPA Employee Sentenced to 5 Months for Perjury and Obstruction of Justice—
On March 28, 2012, Keith Phillips was sentenced to 5 months in jail, to be followed by 24 months
of probation (including 5 months of home detention), stemming from charges related to perjury
and obstruction of justice. Phillips was also ordered to perform 200 hours of community service
and pay an $8,000 fine and a $200 special assessment.
Man Convicted for Wire Fraud—A Spring, Texas, man was sentenced to 3 years probation,
including 4 months of home detention, on one count of wire fraud related to his inappropriately
using funds provided for travel and moving expenses for a position he accepted in the
Commonwealth of the Northern Mariana Islands. On August 13, 2012, David P. Preston pleaded
guilty and was sentenced on one count of wire fraud in U.S. District Court, Southern District of
Texas. In addition, he was ordered to pay $28,000 in restitution and a $100 special assessment.
Woman Sentenced for Theft of Law Enforcement Items—A Chester, Maryland, woman was
sentenced to probation in connection with the disappearance of an EPA special agent's bag and
credentials. On June 6, 2012, Victoria Lynn Tillbery pleaded guilty to one count of theft in District
Court for Queen Anne's County, Maryland. Tillbery was sentenced to 12 months of probation,
ordered to pay a former EPA OIG special agent $1,195 in restitution, and complete 40 hours of
community service. In March 2012, an EPA OIG special agent mistakenly left his bag behind after
leaving a restaurant. The bag contained the special agent's credentials and badge, a government-
issued credit card and cellular phone, and other items. When the agent returned to retrieve the bag,
Tillbery, a waitress at the restaurant, stated that someone else had taken the bag. The investigation
determined that Tillbery had in fact removed the agent's bag. The property was not recovered.
OIG Employee Sentenced for Theft of Laptop Computer—On September 19, 2012, an EPA OIG
information technology specialist was convicted for the theft of a government laptop computer.
The employee was convicted in U.S. District Court, District of Maryland, of one count of theft.
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EPA Office of Inspector General Annual Performance Report Fiscal Year 2012
The employee was sentenced to 1 year probation, and ordered to perform 50 hours of community
service and pay a $25 special assessment. OIG management plans to take appropriate
administrative action.
EPA Employee Demoted for Role in Telephone Calling Scheme—In April 2012, an EPA
employee was demoted from a GS-12 to a GS-9 pay grade and reassigned due to involvement in a
telephone calling scheme. The scheme involved using government telephone lines that gave
inmates at a prison in Illinois access to EPA telephone lines in order to make personal telephone
calls from prison. The employee reportedly received compensation for performing this act.
EPA Employee Retires While Under Investigation—In May 2012, an EPA employee retired
while under investigation. It was alleged that the employee committed time and attendance fraud,
conducted personal business on government-issued computer equipment, and violated the Hatch
Act. The employee admitted to conducting personal business on government time.
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
CSB Can Improve Reporting of Improper Payments—CSB was not fully compliant with the
reporting requirements of the Improper Payments Elimination and Recovery Act regarding
recovery audits. Each year, the federal government wastes billions of taxpayer dollars on improper
payments to individuals, organizations and contractors. The act requires agencies to report on
improper payments, and inspectors general are required to determine whether agencies are in
compliance with the act. We recommended that CSB conduct an analysis to determine the cost
effectiveness of performing recovery audits on all activities with annual outlays exceeding
$1 million, and provide it to the inspector general as required.
http://www.epa.gov/oig/reports/2012/20120301-12-P-0312.pdf
CSB Can Improve Information Security Practices—CSB has an information security program in
place that appears to be functioning as designed. CSB takes information security weaknesses
seriously, as three of the four prior-year recommendations were resolved. However, CSB needs to
improve its management processes associated with configuration management, patch management,
and management of its information technology assets inventory. The EPA OIG contracted with a
firm to perform the FY 2011 Federal Information Security Management Act assessment for CSB.
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EPA Office of Inspector General Annual Performance Report Fiscal Year 2012
The report recommended that CSB review and implement patches for network devices as required,
develop and implement standard baseline configurations for network devices, and review the
information technology inventory and remove the excess inventory devices through appropriate
means. http://www.epa.gov/oig/reports/2012/20120321-12-P-0363.pdf
CSB Should Improve Its Recommendations Process—CSB did not consistently achieve its goals
and standards, as outlined in its current strategic plan, for timely implementation of its safety
recommendations. CSB issues recommendation reports to government agencies, companies, trade
associations, labor unions and other groups. The reports contain specific, measurable safety
recommendations designed to prevent future accidents. However, these recommendations are only
suggestions for actions; CSB does not have the authority to enforce its safety recommendations.
In 2004, CSB created the Office of Recommendations to work with recipients to pursue closure of
safety recommendations by recipients' taking acceptable actions. We recommended that the CSB
chairperson update board orders that establish policies for the Recommendation Program,
timeliness of board votes, and coordination between CSB offices; and make full use of CSB's
Total Records and Information Management system and implement a formal advocacy program
for safety recommendations. http://www.epa.gov/oig/reports/2012/20120822-12-P-0724.pdf
FY 2012 Management Challenges Presented to CSB
On September 19, 2012, the EPA OIG provided the following two management
challenges to CSB:
• Clarifying CSB's statutory mandate. CSB has an investigative gap between the number
of accidents that it investigates and the number of accidents that fall under its statutory
responsibility to investigate. CSB believes it is operating according to its statutory mandate
and cites a lack of resources to investigate the additional accidents cited. In a letter dated
November 5, 2009, CSB requested that Congress clarify CSB's statutory mandate as it
relates to investigating chemical accidents. To date, there has been no response from
Congress. CSB needs to follow up with the relevant congressional committees on the status
and resolution of this issue.
• 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. The comments stated that Internet search engines
and alerts that notify CSB in almost real time of incidents did not exist when the
requirement for the regulation was established in the 1980s. CSB should submit a
preliminary plan to OMB noting its determination that such a rule should be repealed to
make the organization's regulatory program more effective, streamlined and less
burdensome in achieving its objectives.
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EPA Office of Inspector General Annual Performance Report Fiscal Year 2012
Testimony
Performance Highlights
Fostering Quality Science at the EPA a Topic of Inspector General Testimony—Inspector
General Elkins appeared before the Subcommittee on Energy and Environment, Committee on
Science, Space and Technology, of the House of Representatives, on November 17, 2011, to
discuss OIG work related to the EPA's Office of Research and Development. The inspector
general noted that the OIG made several recommendations in an April 2009 report to Office of
Research and Development to improve its peer review process. Peer review is a process for
enhancing a scientific or technical work product so that the decision or position taken by the
EPA has a sound, credible basis.
Inspector General Testifies on How the EPA Can Cut Spending—On October 12, 2011,
Inspector General Elkins appeared before the Subcommittee on Oversight and Investigations,
Committee on Energy and Commerce, of the House of Representatives, to discuss opportunities
for cost savings and greater efficiencies within the EPA. His testimony focused on findings in
recent OIG reports. With respect to workload and workforce management, Mr. Elkins informed the
subcommittee that the EPA cannot demonstrate that it has the right number of resources to
accomplish its mission, and the EPA's leadership lacks reasonable assurance that it is using
personnel in an effective and efficient manner to achieve mission results. Further, other OIG work
has identified potential efficiencies related to the EPA utilization of space and facilities, as well as
information technology and management of unliquidated obligations.
OIG Enabling Support Programs
Performance Highlights
Legislation and Regulations Reviewed—Section 4(a) of the Inspector General Act requires the
inspector general to review existing and proposed legislation and regulations relating to the program
and operation of the EPA and to make recommendations concerning their impact. We also reviewed
drafts of OMB circulars, memorandums, executive orders, program operations manuals, directives
and reorganizations. The primary basis for our comments are the audit, evaluation, investigation and
legislative experiences of the OIG, as well as our participation on the Council of the Inspectors
General on Integrity and Efficiency. During the reporting period, we reviewed 134 proposed
changes to legislation, regulations, policy, procedures and other documents that could affect EPA
and/or the Inspector General, and provided comments on 13. Details on four items follow.
• OMB's Proposed Executive Order, Promoting Efficient Spending. OMB's proposed
executive order would direct executive departments and agencies to take certain actions to
promote efficient spending. While we strongly support the executive order's intended
reductions in wasteful government expenditures on travel, printing and other purchases, we are
concerned that certain provisions in the executive order give authority to agency officials over
OIG expenditures that could undermine inspector general independence.
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EPA Office of Inspector General Annual Performance Report Fiscal Year 2012
• Proposed New EPA Order 3221, Foreign Visitors and Assignments Program. EPA's Office
of Homeland Security proposed a new EPA Order 3221. The new order establishes EPA's
Office of Homeland Security as the lead for the implementation and oversight for the
documentation and review process of all foreign visitors who access EPA facilities. We raised
concerns that the draft order encroaches on the inspector general's independence because
certain provisions appeared to require the inspector general to report to the agency and get
clearances prior to contacting a foreign subject or witness.
• Proposed Update to EPA Manual 2750, Audit Management Procedures. The EPA's Office
of the Chief Financial Officer proposed numerous revisions to update EPA Manual 2750, Audit
Management Procedures, which had last been issued in 1998. The revised manual provides the
agency with a more comprehensive "one stop shop" for audit management guidance that
ensures consistent procedures throughout the audit management and resolution process.
We provided a number of comments to help strengthen and clarify the manual.
• Proposed Revision to EPA Order 4850, National Security Information; and Establishment
of EPA Manual 4850, National Security Information. The EPA's Office of Administration
and Resources Management, Security Management Division, proposed the establishment of the
EPA Manual 4850 to formalize the program's policies and procedures for EPA employees and
non-federal personnel who have access to classified National Security Information; and a
revision to the EPA Order 4850 to provide more clarity to roles and responsibilities and update
the content of the order based upon recently issued federal guidance. We raised concerns that
certain sections encroached upon the inspector general's independence.
Working Paper Software Champions and Trainers Program Initiated—In January 2012, the
EPA OIG implemented a "Champions and Trainers" program to address functional questions and
provide training for OIG staff on the OIG's database that contains, organizes and displays OIG
electronic working papers for audit and program evaluations. The EPA OIG expects this program
to enhance the efficiency of auditors and evaluators by enabling them to more easily accomplish
tasks for documenting the evidence supporting project results. The champions answer questions
from both new and existing staff, help resolve functional problems, and share tips and lessons
learned. Champions also participate in OIG efforts to improve processes related to working papers.
OIG Issues Annual Plan for FY 2012—The EPA OIG issued its FY 2012 annual workplan of
mandated and selected assignment topics continuing from FY 2011 and scheduled to start in
FY 2012. For this plan, OIG work that is not mandated is selected through a rigorous process to
develop a portfolio of assignments that represent the best possible return on investment in
addressing the needs, risks, challenges, priorities and opportunities of OIG customers, clients and
stakeholders. We conducted considerable outreach to agency leaders and stakeholders, and invited
our entire staff to provide assignment suggestions. The annual plan, constructed to implement the
OIG strategic plan, allows for unforeseen work and new priorities that may be requested by hotline
complaints, agency leadership and Congress.
OIG Reviews Its Own Policies and Procedures, as Well as Independent Referencing—
On June 4, 2012, the EPA OIG issued Report No. 12-N-0516, Analysis of Office of Inspector
General Policies and Procedures Addressing the CIGIE Quality Standards. This review analyzed
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EPA Office of Inspector General Annual Performance Report Fiscal Year 2012
whether the EPA OIG's policies and procedures complied with the Council of the Inspectors
General on Integrity and Efficiency's (CIGIE's) Quality Standards for Federal Offices of
Inspector General (known as the "Silver Book"), along with the EPA OIG's own internal
standards. The review found that the EPA OIG has policies and procedures or other guidance to
satisfy the Silver Book requirements in all except one area. On April 19, 2012, the EPA OIG
issued Report No. 12-N-0416, Quality Assurance Report: Assessing the Quality of the Independent
Referencing Process During Fiscal Year 2011. To assess the process, the review surveyed EPA
OIG managers regarding consistency among the OIG's Quality Assurance staff, timeliness of the
reviews, best practices and areas for improvement. Overall, the majority of the managers who
responded to the survey believed that the independent referencing process was effective and
efficient, and that the referencers were consistent and timely once reviews began.
Small Business Innovative Research Activities Reported to Congress. The OIG is required by
Section 5143 of the National Defense Authorization Act of 2012 (Public Law No. 112-81) to
report on reducing vulnerability to fraud, waste and abuse in the Small Business Innovative
Research program. The EPA OIG has worked with the EPA's Small Business Innovative Research
program staff to reduce vulnerabilities to fraud, waste and abuse. For the period October 1, 2011,
to September 1, 2012, the EPA did not refer any cases involving Small Business Innovative
Research to the OIG.
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EPA Office of Inspector General Annual Performance Report Fiscal Year 2012
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 2012, the OIG identified five challenges. The table below
includes issues the OIG identified as key management challenges facing the 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/strategicplan.html.
OIG-identified top major management challenges for the EPA | 2010
The Need fora National Environmental Policy: Environmental quality depends on policies
related to farming, energy, water, transportation and federal land management. A national
environmental policy would help the 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: Many drinking water and wastewater systems across the
country are unable to maintain compliance with federal water standards due to needed repairs
and new constructions. Over the next 20 years, the EPA estimates that approximately $1 trillion
will be needed to pay for water and wastewater infrastructure. The 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: Due to differences between state and federal policies,
interpretation, strategies and priorities, the EPA needs to more consistently and effectively
oversee its delegation of programs to the states assuring that delegated programs are achieving
their intended goals.
Safe Reuse of Contaminated Sites: The EPA's duty is to ensure that reused contaminated sites
are safe for humans and the environment. The 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 over time, and all sources of contamination may not be
removed.
Limited Capability to Respond to Cyber Security Attacks: The 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. The EPA has reported that
over 5,000 servers and user workstations may have been compromised from recent cyber
security attacks. (Previously reported under Homeland Security.)
Reducing Domestic Greenhouse Gasses: In response to a Supreme Court ruling in April 2007,
the 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. However, the EPA must take significant actions to address the adverse impacts of
these air pollutants.
EPA's Framework for Assessing and Managing Chemical Risks: The 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.
Workforce Planning: The EPA's human capital is an internal control weakness in part due to
requirements released under the President's Management Agenda. The OIG identified significant
concerns with the EPA's management of human capital. The EPA has not developed analytical
methods or collected data needed to measure its workload and the corresponding workforce
levels necessary to carry out that workload.
•
•
•
•
•
•
•
FY
2011
•
•
•
•
•
FY
2012
•
•
•
•
•
EPA
strategic
goal
Cross-
Goal
Goal 2
Cross-
Goal
Goal 3
Cross-
Goal
Goal 1
Goal 4
Goal 5
Cross-
Goal
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EPA Office of Inspector General Annual Performance Report Fiscal Year 2012
OIG Internal Management Challenges
GPRA requires that annual performance reports identify organizational management challenges.
The OIG uses the results of its Federal Managers' Financial Integrity Act internal control
vulnerability assessment to identify and report on internal management challenges. As a result of its
FY 2012 assessment, for the 13th straight year, the OIG reported no material weaknesses under the
act. Further, the OIG continues to make progress in addressing reported OIG-level weaknesses.
Some weaknesses identified in FY 2011 were not fully resolved in FY 2012 due to 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 Working Capital Fund charges
Staffing
Follow-up on corrective actions — data quality
Data quality
Policies and procedures
Investigative case management
FY2010
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EPA Office of Inspector General Annual Performance Report Fiscal Year 2012
• 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 controlled unclassified information).
• Continued to develop and transfer OIG applications to a common information technology
infrastructure.
• Upgraded all four OIG Lotus Notes servers to version 8.3, which will make the servers
more secure, flexible and reliable.
• Made significant progress in implementing a Failover/Continuity of Operations site at the
EPA's National Computer Center.
• Expanded the Technical Support Call Center support across the nation.
OIG Process Activities
• Conducted annual 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.
• Conducted a comprehensive internal control and vulnerability assessment including adding
items to its vulnerability assessment tool focused on the issuance of timely quality audit
reports and assessing controls over those activities.
• Performed an internal review of the OIG Purchase Card Program, reviewing 100 percent of
transactions, and found that the OIG program is used effectively to expedite small
purchases without any cases of loss, abuse or material noncompliance.
• Developed, disseminated and began implementation of the OIG strategic plan across the
OIG to strengthen leadership, organizational unity, coordination and control.
• Applied new integrated performance measurement and accountability reports to better link
operational resources and activities to outputs and outcomes.
• Applied stakeholder input to the OIG planning process for a more rigorous assignment
selection process focusing resources on the greatest risks and opportunities.
• Improved the quality of the OIG assignment planning process and module.
• 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.
• Prepared an annual assignment plan with a rigorous assessment of agency risks,
investments, customer outreach, evaluation and prioritization.
• Continued comprehensive updating of the OIG Policy Manual System across all activities
of the OIG.
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.
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EPA Office of Inspector General Annual Performance Report Fiscal Year 2012
Statistical Data
OIG FY 2012 Profile of Activities and Results
(Dollars in millions)
Audit/evaluation activity and agency action
Investigative activity
Reports issued
• Reviews performed by OIG 71
• Single audit reviews 804
Total reports 875
Monetary results
• Questioned EPA costs—OIG performed $40.8
• Cost efficiencies—OIG performed* $379.6
• Questioned EPA costs sustained
(from current and prior periods) $2.1
• Cost efficiencies sustained
(from current and prior periods) $53.6
• Reports resolved (from current and prior periods) 875
• Agency recoveries (from current and prior periods) $4.4
* includes $1.5 million from investigative savings
Investigations opened 168
Investigations closed 125
Pending investigations as of
9/30/12 254
Indictments: persons/firms 32
Convictions: persons/firms 22
Administrative actions:
EPA employees/firms 93
Civil judgments 3
Fines and recoveries $4.4
Cost savings $3.95
Prison time (in months) 145
Probation/detention (in months) 732
Community service (in hours) 440
Audit resolution
Questioned Efficiencies
Other
Recommendations as costs
• With no management decision start
FY 2012 (26) $13.4 $0.0
• Issued in FY 2012 (26) $40.9 $372.0
• Total inventory—net (52) $54.3 $372.0
• Agreed to/sustained by management
or value of nonawards (not including
prior to issuance) (21) $40.8 $372.0
• Not agreed to/sustained to by
management (4) $14.9 $14.7
• With no management decision,
end FY 2012 (23)* *$42.9 *$30.4
• Total audits with no final actions as of
9/30/12 which are over 365 days past
acceptance of a management
decision: 72 reports
o Program 38
o Assistance agreements 11
o Contracts 0
o Single audits 21
o Financial statements 2
• Reports with costs for which no
management decision was made
within 6 months of issuance at
9/30/12:23 reports. $42.9 $30.4
• Reports resolved: 875
Hotline inquiries received 225
Hotline inquiries closed 231
Hotline inquiries pending 9/30/12 112
Referrals to other offices 225
Legislative/regulatory/policy
items reviewed 134
Legislative/regulatory/policy
items upon which comments and
suggestions were made 13
* Any difference in number of reports and dollar amounts is due to adjustments and corrections made in our tracking
system between semiannual reporting periods.
34
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EPA Office of Inspector General Annual Performance Report Fiscal Year 2012
OIG FY 2012 Audit, Inspection and Evaluation Report Resolution
The EPA was responsible for addressing OIG recommendations and tracking follow-up activities for
433 audits at the end of FY 2012. The agency achieved final action (completing all corrective
actions associated with the audit) on 214 audits, which included program evaluation/program
performance, assistance agreement and single audits. This total excludes DCAA 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 (18) and with better use funds (3)
(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
(Hi) 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
48 $22,829,725
162 2,475,708
210 25,305,433
161 6,304,701
4,532
273,239
0
614,737
100
5,412,093
0
0
49 19,000,732
Fund put to better use
(performance audits)
No. Value
67* $109,637,195
53 47,262,147
119 156,889,342
37 16,586,000
16,586,000
82 140,313,342
* Includes all performance audits, including those without funds to be put to better use (efficiencies).
Final Corrective Action Not Taken. Of the 433 audits that the EPA tracked, a total of
219 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 2012.
(The 16 audits with management decisions under administrative appeal by the grantee are not
included in the 219 total; see discussion below.)
Final Corrective Action Not Taken Within 1 Year. Of the 219 audits, the EPA officials had not
completed final action on 56 audits (five 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/.
35
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EPA Office of Inspector General Annual Performance Report Fiscal Year 2012
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. The EPA is tracking 40 audits in this category (five of these involve multiple offices,
indicated with a +):
Office of Administration and Resources Management
09-P-0087+ EPA Plans for Managing Counter Terrorism/Emergency Response Equipment and Protecting
Critical Assets
10-P-0002 Review of Hotline Complaint on Employee Granted Full-Time Work-at-Home Privilege
11-P-0015+ Audit of EPA's Fiscal 2010 and 2009 Consolidated Financial Statements
11-P-0031+ EPA Needs to Strengthen Internal Controls for Determining Workforce Levels
Office of Air and Radiation
2005-P-00010 Evaluation of Clean Air Act Title V Operating Permit Quality
09-P-0087+ EPA Plans for Managing Counter Terrorism/Emergency Response Equipment and Protecting
Critical Assets
10-P-0154 Key Activities in EPA's Integrated Urban Air Toxics Strategy Remain Unimplemented
11-P-0010 Energy Star Label Needs to Assure Superior Energy Conservation Performance
11-R-0179 EPA Needs to Better Document Project Delays for Recovery Act Diesel Emission Reduction Act Grants
Office of Chemical Safety and Pollution Prevention
10-P-0066 EPA Needs a Coordinated Plan to Oversee Its Toxic Substances Control Act Responsibilities
Office of the Chief Financial Officer
09-P-0087+ EPA Plans for Managing Counter Terrorism/Emergency Response Equipment and Protecting
Critical Assets
10-1-0029 Audit of 2009 and 2008 (Restated) Consolidated Financial Statements
10-P-0177+ Appointment Business Process
11-1-0015+ Audit of EPA's Fiscal 2010 and 2009 Consolidated Financial Statements
11-P-0031+ EPA Needs to Strengthen Internal Controls for Determining Workforce Levels
11 -P-0223 Review of Travel Controls
11-P-0362 EPA Needs to Reexamine How It Defines Its Payment Recapture Audit Program
Office of Enforcement and Compliance Assurance
2001-P-00013 State Enforcement Effectiveness - National Audit
2005-P-00024 Priority Enforcement and Compliance Assurance Universe
2007-P-00027 Benchmarking Other Organizations Statistically Valid Compliance Practices
10-P-0007 EPA Oversight and Policy for High Priority Violations of Clean Air Act Need Improvement
10-P-0224+ EPA Should Revise Outdated or Inconsistent EPA-State Clean Water Act Memoranda of Agreement
10-P-0230 Data Quality Audit of ECHO System Phase II
Office of Environmental Information
2007-P-00008 EPA Could Improve Controls over Mainframe Software
10-P-0146 Improvements Needed in Key EPA Information System Security Practices
10-P-0177+ Appointment Business Process
11-P-0277 EPA Has Taken Steps to Address Cyber Threats but Key Actions Remain Incomplete
Office of Research and Development
10-P-0176 EPA's Office of Research and Development Performance Measures Need Improvement
11-N-0199 EPA's Small Business Innovative Research Awards Should Include Additional Certifications to
Reduce Risk
11-P-0333 Office of Research and Development Needs to Improve Its Method of Measuring Administrative
Savings
11-P-0386 Office of Research and Development Should Increase Awareness of Scientific Integrity Policies
Office of Solid Waste and Emergency Response
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
36
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EPA Office of Inspector General Annual Performance Report Fiscal Year 2012
11-P-0171
11-P-0173
Office of Water
09-P-0223
10-P-0081
10-P-0224+
11-P-0001
Region 1
09-P-0119
Region 2
2007-P-00016
Region 3
10-P-0055
Region 4
11-P-0221
11-P-0228
Region 9
08-P-0196
EPA Needs an Agency-Wide Plan to Provide Tribal Solid Waste Management Capacity Assistance
EPA Promoted the Use of Coal Ash Products With Incomplete Risk Information
EPA Needs to Accelerate Adoption of Numeric Nutrient Water Quality Standards
EPA Needs Procedures to Address Delayed Earmark Projects
EPA Should Revise Outdated or Inconsistent EPA-State Clean Water Act Memoranda of Agreement
EPA Lacks Internal Controls to Prevent Misuse of Emergency Drinking Water Facilities
Improved Management of Special Accounts Will Make More Funds Available
Ringwood Mines/Landfill Superfund Site
Changes in Conditions at Wildcat Landfill Superfund Site in Delaware Call for Increased EPA Oversight
Oversight of North Carolina's Renewals of Thermal Variances
EPA Should Reduce Unliquidated Obligations Under Expense Reimbursements Grants
Making Better Use of Stringfellow Superfund 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 12 single audits for the period beginning October 1, 2012.
Region 2
2007-3-0139
Region 6
11-3-0322
Region 9
09-3-0234
10-3-0164
10-3-0208
Region 10
2002-3-00009
2002-3-00042
2003-3-00047
2003-3-00117
2003-3-00145
2006-3-00167
2006-3-00168
State of New York, FY 2006
New Mexico Environment Department FY 2010
Guam Waterworks Authority FY 2008
Guam Waterworks Authority FY 2009
City of NogalesFY 2008
Iliama Village Council
Iliama Village Council
Stevens Village Council
Stevens Village Council
Circle Village Council
State of Alaska-FY 2003
State of Alaska-FY 2004
37
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EPA Office of Inspector General Annual Performance Report Fiscal Year 2012
Audits of Assistance Agreements. Reaching final action for assistance agreement audits may
require more than a year, as the grantee may appeal, refuse to repay, or be placed on a repayment
plan that spans several years. EPA is tracking four audits in this category:
Region 2
1989-9-01299 Nassau County, NY
1990-0-01119 Nassau County, NY
Region 3
2001-1-00101 Center for Chesapeake Communities Assistance Agreements
Region 5
2008-2-00039 Village of Laurelville, Ohio
Audits Awaiting Decision on Appeal. EPA regulations allow grantees to appeal management
decisions on financial assistance audits that seek monetary reimbursement from the recipient.
In the case of an appeal, the EPA must not take action to collect the account receivable until the
agency issues a decision on the appeal. At the end of FY 2012, 16 audits were in administrative
appeal. When these audits are out of appeal and all issues have been resolved, they will be
captured in audit follow-up data reported in EPA's Agency Financial Report.
OIG Reports With Unimplemented Recommendations by Program
Office (as of September 30, 2012) With Past Due Completion Dates
Off ice of Administration and Resources Management
10-P-0002 Review of Hotline Complaint on Employee Granted Full-Time Work-at-Home Privileges
(Recommendation 2a)
09-P-0087 EPA Plans for Managing Counter Terrorism Emergency Response Equipment and Protecting
Critical Assets Not Fully Implemented (Recommendation 4-1 (b)
Office of Air and Radiation
09-P-0087 EPA Plans for Managing Counter Terrorism/Emergency Response Equipment and Protecting
Critical Assets Not Fully Implemented (Recommendations 2-1, 2-2 and 2-3)
2005-P-00010 Evaluation of Clean Air Act Title V Operation Permit Quality (Recommendations 2-1 and 2-3)
Office of the Chief Financial Officer
10-1-0029 Audit of 2009 and 2008 (Restated) Consolidated Financial Statements (Recommendations 27 and 32)
38
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EPA Office of Inspector General Annual Performance Report Fiscal Year 2012
OIG FY 2012 Budget and Resources Analysis Use and Allocation
The Department of the Interior, Environment, and Related Agencies Appropriations Act, 2012,
provided the EPA OIG with an FY 2012 budget funding level of $51,872,000. Additionally, the
American Recovery and Reinvestment Act of 2009 provided the OIG with $20,000,000 through
FY 2012. The chart below shows the OIG budget and staffing history for FYs 2000-2013.
Historical budget and manpower summary
Fiscal year
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Enacted budget
(after rescissions
where applicable)
$43,379,700
45,493,700
45,886,000
48,425,200
50,422,800
50,542,400
50,241,000
50,459,000
52,585,000
54,696,000*
54,766,000*
54,586,000*
51,872,000*
51,872,000**
On-board staff
(as of October 1)
340
351
354
348
363
365
350
326
290
304
316
356
331
336
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*
56,548,386
TBD
Exclusive of Recovery Act funds. **Continuing Resolution
Recovery Act funding, cumulative spending, and balance available
Recovery Act funding - FY 2009-2012
Recovery Act cumulative spending - FY 2009-2012
Recovery Act balance unobligated and expired
$20,000,000
18,603,521
$1,396,479
39
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EPA Office of Inspector General Annual Performance Report Fiscal Year 2012
Resource usage by appropriation
FY2011 appropriation usage
Account
Management
Superfund
TOTAL
FY2011 FTE usage
Account
Management
Superfund
Recovery Act
TOTAL
$ appropriation available
$44,631,000
9,955,000
$54,586,000
FY11 FTE available
269.9
60.1
32.8
362.8
FY 2012 appropriation usage
Account
Management
Superfund
TOTAL
FY 2012 FTE usage
Account
Management
Superfund
TOTAL
$ appropriation available
$41,867,800
9,939,000
$51,806,800
*FY 12 FTE available
293.0
65.1
358.1
"based on President's Budget
$ appropriation used
$44,556,533
9.943.232
$54,499,765
FY11 FTE used
265.4
50.0
28.0
343.4
$ appropriation used
$36,547,407
8,505,344
$45,052,751
**FY12FTEused
256.4
60.7
317.1
'"based on enacted level
% $ appropriation used
99.8%
99.9%
99.8%
% FTE budget used
98.3%
83.2%
85.4%
89.0%
% $ appropriation used
87.3%
85.6%
87.0%
% FTE budget used
87.5%
93.3%
90.4%
Unused FY 2011 funds were available through FY 2012; unused FY 2012 funds are available through FY 2013.
FY 2012 Funds Used by Object Class and Recovery Act
. _ aining, $3,660,565
Expenses, Award $5Q2
$3,458,979
Salaries,
$43,198,214
Contracts,
$2,728,045
Travel, $2,302,722
IG-lmmed, 8.53
Counsel, 10.26
Cong Public Affairs,
8.02
Mission Systems,
45.61
FY 2012 FTE used by component
Office of the Chief
of Staff, 19.65 Investigations,
62.55
Audit, 80.13
Program
Evaluation, 82.40
40
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EPA Office of Inspector General Annual Performance Report Fiscal Year 2012
OIG Financial Statement: Analysis of FY 2012 Fund Use
EPA OIG FY 2012 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
FY2011
carryover
available in
FY2012
$8,184,787
617,532
84,747
182,440
16,697
87.000
$9,173,203
FY2011
carryover
available in
FY2012
$1,720,443
136,830
153,900
409,761
61,038
19.000
$2,500,973
$11,674,176
FY2011
carryover
used in
FY2012
$8,108,481
617,491
88,055
181,924
15,784
0
$9,011,735
FY2011
carryover
used in
FY2012
$1,711,851
136,304
152,836
408,731
60,481
19.000
$2,489,204
$11,500,939
FY2011
lapsed
funds
$76,306
41
(3,309)
515
914
0
$74,468
FY2011
lapsed
funds
$8,592
526
1,064
1,030
557
0
$11,768
$86,237
FY2012
appropriation
$30,492,689
1,623,458
4,095,844
2,497,505
3,158,304
0
$41,867,800
FY2011
appropriation
$6,838,443
440,841
877,621
563,316
1,218,779
0
$9,939,000
$51,806,800°
FY 201 2/201 3
funds
used
$27,820,772
1,237,921
2,692,679
2,327,701
2,468,333
0
$36,547,407
FY 201 2/201 3
funds
used Q
$6,059,849
311,025
525,409
493,094
1,115,967
-
$8,505,344
$45,052,751
FY 2012
carryover to
FY2013
$2,671,917
385,537
1,403,165
169,804
689,971
_
$5,320,393
FY2012
carryover to
FY2013
$778,594
129,816
352,212
70,222
102,812
0
$1,433,656
$6,754,049
Total cost
of FY 201 2
operations
$35,929,253
1,855,412
2,780,735
2,509,625
2,484,117
0
$45,559,142
Total cost
of FY 201 2
operations
$7,771,700
447,329
678,245
901,825
1,176,448
19.000
$10,994,548
$56,553,690
Total cost
as % of
FY 2012
appropriation
118%
114%
68%
100%
79%
0%
109%
Total cost
as % of
FY2012
appropriations
114%
101%
77%
160%
97%
0%
111%
109%
PC&B: Personnel Compensation and Benefits
WCF: Working Capital Fund
41
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EPA Office of Inspector General Annual Performance Report Fiscal Year 2012
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 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 the 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 the 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 that 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
(2011 Revision) (GAO-12-331G), December 2011, 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 2012 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.
42
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EPA Office of Inspector General Annual Performance Report Fiscal Year 2012
Historic Planned Versus Actual Resources and Results, FYs 2007-2013
OIG appropriation:
Enacted
Used
FTE:
Authorized
Used
FY 2007 FY 2008
$50,509,000
$48,752,387
361.8
308.1
$52,585,000
$51,628,082
331.8
287.8
FY2009 FY2010 FY2011 FY2012 FY2013
$54,800,000
$51,179,920
331.0
292.7
$54,800,000
$51,725,199
361.8
335.5/289.5anet
$54,586,000
$42,911,824
366.0
315.4
$51,872,000
$56,548,386
358.1
317.1
$49,266,000
Adjusted
(Cont. Res.)
XXX
TBD
Annual performance
measures
Environmental and
business sctions
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)
Criminsl civil
administrative and
fraud prevention
actions taken from
OIG work
Activity
Supporting indicators Target Actual Target Actual Target Actual Target Actual Target Actual Target Actual Target
o Policy, process, practice or
control changes implemented
o Environmental or operational
risks reduced or eliminated
o Critical congressional or public
concerns resolved
o Certifications, verification or
analysis for decision or
assurance
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
costs
o Recommended cost
efficiencies and savings
o Fines, penalties, settlements
and 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
925
150%
$75.7
80
N/A
464
949
189%
$95.2
103
71
334
971
150%
$78.5
80
N/A
463
624
186%
$97.3
84
57
318
903
1 20%
$65.7
(without
DCAA
work)
80
N/A
272
983
1 50%
$83.3
(without
DCAA
work)
95
66
334
903
120%
$65.7
75
N/A
391
945
30%
$19.6
115
83
334
903
120%
$65.6
80
N/A
315
2011
150.6%
$82.4
160
85
334
903
120%
$63.7
85
N/A
216
1242
734%
$424.8
152
71
307
786
125%
$61.6
90
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.
a Does not include funds, FTEs, or performance results associated with the Recovery Act.
43
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OIG Recovery Act Resources and Performance
The American Recovery and Reinvestment Act of 2009 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. The Recovery Act included $7.2 billion for programs administered by the EPA to
protect and promote both green jobs and a healthier environment. The Recovery Act provided the
EPA OIG $20 million through September 30, 2012, for oversight and review. Due to the
retrospective nature of audits and investigations, the OIG will likely continue performing Recovery
Act-related work through FY 2014. The OIG is assessing whether the EPA used its $7.2 billion of
Recovery Act funds in accordance with its requirements and meets the accountability objectives as
defined by OMB. The OIG is using Recovery Act 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 the Recovery Act 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 the Recovery Act activities, visit
http://www.epa.gov/oig/recovery.htm.
OIG Recovery Act Resource Use as of September 30, 2012:
• Total cumulative expenditures —$18.603.521 ($6.216.510 in FY 2012)
• Total cumulative FTE used—118.1 (33.8 in FY 2012)
Program accomplishments as of September 30, 2012
FY 201 2 results Cumulative
Recovery Act performance measures (12 months)3 results
Number of certifications, verifications, validations or corrections
Number of EPA policies, directives, practices or process changes/decisions
Number of awareness/technical briefings conducted
Findings without controlled recommendations (from single audits)
Number of recommendations for improvement
Number of referrals for agency action
Value of recommended efficiencies and costs saved or avoided (in millions)
Number of administrative actions
Number of indictments and convictions
Number of allegations disproved
Civil actions
Number of sustained environmental or business recommendation
Fines, recoveries, settlements and restitutions (in millions)
Hotline complaints received
6
9
13
217
162
6
$16.8
16
3
2
2
104
$0.9
20
127
31
175
1349
364
20
$28.3
24
5
19
3
185
$6.2
91
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.
a The long-term targets set for the OIG extend until 2014. The oversight work of the OIG will continue after all the
Recovery Act funds are spent or expired, recognizing that the time-lag for audit recommendation actions by the
EPA and the time for investigative cases to come to fruition are beyond the control of the OIG.
44
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