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Semiannual Report to Congress
April 1, 2013-September 30, 2013
Scan this mobile
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about the EPA OIG.
EPA-350-R-13-003
November 2013
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Index of Reporting Requirements
Inspector General Act of 1978, as amended
Requirement
Section 4(a)(2)
Section 5(a)(1)
Section 5(a)(2)
Section 5(a)(3)
Section 5(a)(4)
Section 5(a)(5)
Section 5(a)(6)
Section 5(a)(7)
Section 5(a)(8)
Section 5(a)(9)
Section 5(a)(10)
Section 5(a)(11)
Section 5(a)(12)
Section 5(a)(14-16)
* Although there were
Subject
Review of legislation and regulations
Significant problems, abuses and deficiencies
Significant recommendations for corrective action
Reports with corrective action not completed
Matters referred to prosecutive authorities
Information or assistance refused
List of reports issued
Summaries of significant reports
Audit, inspection and evaluation reports—questioned costs
Audit, inspection and evaluation reports—funds to be put to better use
Prior audit, inspection and evaluation reports unresolved
Significant revised management decisions
Significant management decisions with which OIG disagreed
Peer reviews conducted
no instances involving the EPA, there was an instance involving the CSB,
Pages
48-49
5-A6, 51-53
7-8, 10-39, 52-53
70
5-6, 9, 40^6, 54, 58
51 *
59-62
7-8, 10-39, 52-53
54-56, 59-62
54-56, 59-62
55-56, 63-69
None
None
71
as detailed on page 51.
Abbreviations
CIA Central Intelligence Agency
CMA Computer Matching Agreement
CSB U.S. Chemical Safety and Hazard Investigation Board
DCAA Defense Contract Audit Agency
EPA U.S. Environmental Protection Agency
FY Fiscal Year
IT Information Technology
MSQPCR Mold Specific Quantitative Polymerase Chain Reaction
NMED New Mexico Environment Department
OIG Office of Inspector General
OMB Office of Management and Budget
ROI Return on Investment
SES Senior Executive Service
STAR Science to Achieve Results
TDOT Tennessee Department of Transportation
Cover photos: Scenes from the EPA warehouse in Landover, Maryland, where significant problems were
noted. See page 7 for details. (EPA OIG photos)
Hotline
To report fraud, waste or abuse, contact us
through one of the following methods:
email: OIG Hotline@.epa.qov
phone: 1-888-546-8740
fax: 1-202-566-2599
online: http://www.epa.qov/oiq/hotline.htm
write: EPA Inspector General Hotline
1200 Pennsylvania Avenue, NW
Mailcode2431T
Washington, DC 20460
Suggestions for Audits or Evaluations
To make suggestions for audits or evaluations,
contact us through one of the following methods:
email: OIG WEBCOMMENTS@.epa.qov.
phone: 1-202-566-2391
fax: 1-202-566-2599
online: http://www.epa.qov/oiq/contact.htmltfFull Info
write: EPA Inspector General
1200 Pennsylvania Avenue, NW
Mailcode2410T
Washington, DC 20460
Printed on 100 percent recycled paper (minimum 50% postconsumer)
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Semiannual Report to Congress April 1, 2013—September 30, 2013
Message to Congress
During the semiannual reporting period, the Office of Inspector General (OIG)
identified numerous areas in which improvements are needed at the U.S.
Environmental Protection Agency (EPA) and the U.S. Chemical Safety and
Hazard Investigation Board (CSB). At the EPA, we frequently encountered a
theme of insufficient internal controls for managing people and other resources.
With regard to the CSB, we took the rare step of invoking the Inspector
General's "7-day letter" authority to compel the production of documents
requested as part of an investigation.
The OIG's Strategic Plan goals guided our examination of the agencies'
programs and operations. As illustrated by the examples below, we contributed
to improved human health, safety and the environment, as well as to improved
business practices and accountability, and were responsible stewards of
, ,, T 11 r- i". ' i . " i • • • i Arthur A. Elkins Jr.
taxpayer dollars. In all of our actions, we stnved to achieve our remaining goal:
Be the best in public service. In this comprehensive report, you will read about specific findings - some
high-profile - and the recommendations we provided.
Fraud, Waste and Abuse
Three cases epitomized an absence of basic internal controls or oversight that resulted in substantial fraud,
waste and abuse.
An OIG investigation led to a guilty plea by a former EPA senior policy adviser to multiple frauds,
including cheating the federal government out of nearly $900,000 in pay and expenses over more than a
dozen years. John C. Beale collected pay for time he did not work, claimed expenses for personal travel,
and received inappropriate bonuses, among other issues.
In another matter, OIG auditors found at the EPA's headquarters warehouse in Landover, Maryland, an
inadequate record-keeping system; unusable, inoperable and obsolete items; multiple unauthorized and
hidden personal spaces, or "man caves," as widely described by the news media; a large area with
unauthorized exercise equipment for workers' personal use; potential safety hazards; unsecured
personally identifiable information; and deplorable hygienic conditions. Shortly after we briefed the
agency on our findings, the EPA issued a stop work order to the contractor operating the warehouse and
also initiated an agencywide review of all of its warehouse and storage facilities.
Additionally, we participated in a multiagency investigation that ended with Halliburton Energy Services
Inc. pleading guilty to destroying evidence pertaining to the 2010 Deepwater Horizon oil spill in the Gulf
of Mexico. The company was fined the statutory maximum of $200,000.
Business Practices of Concern
During the reporting period, an audit conducted in response to a congressional request did not yield any
evidence that the EPA had used, promoted or encouraged the use of private non-governmental email
accounts to circumvent records management responsibilities. However, although not improper, we found
that secondary EPA email accounts present risks to records management efforts, as the agency had not
provided guidance and regular training to appropriate personnel on preserving such records.
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Semiannual Report to Congress April 1, 2013—September 30, 2013
In another audit, we found that oversight practices varied for the EPA's 41 external customer service lines
reviewed, resulting in limited assurance that those lines achieved the desired results.
In two other audits, we found deficiencies in the EPA's financial management system for a St. Louis,
Missouri, grantee, resulting in our questioning $1.6 million in funding; and deficiencies in the financial
management system for a San Francisco, California, grantee, resulting in our questioning nearly $250,000.
As an outcome of our ongoing investigative efforts regarding two Superfund sites, a New Jersey jury
convicted a former project manager for a prime contractor for his central role in conspiracies that spanned
7 years and involved kickbacks in excess of $1.5 million at the sites; to date, nine individuals and three
companies have been convicted or pleaded guilty in this investigation.
Human Health, Safety and the Environment
During program evaluations, we found various areas in which the EPA can better protect human health
and the environment.
For example, we noted that it does not have adequate information to ensure effective management of
electronic waste to protect public health and conserve valuable resources.
Also, while the agency has implemented a number of activities to promote the security of drinking water
systems, we determined that strategic planning and internal controls need to be strengthened to allow it to
measure program performance and progress.
Another evaluation concluded that companies were using a mold index tool to evaluate homes for indoor
mold even though the EPA had not validated or peer reviewed the tool for public use, which could cause
the public to be misled into believing the tool was approved by the agency.
Further, we found that the EPA did not meet planned corrective-action milestones for completing a
comprehensive toxicity assessment of asbestos to determine the cleanup level at the Libby, Montana,
Superfund site.
7-Day Letter to CSB
Section 5(d) of the Inspector General Act states that the Inspector General shall report immediately to the
head of the establishment involved any particularly serious or flagrant problems, abuses or deficiencies
relating to the administration of programs and operations of the establishment. Because the CSB refused to
produce records requested in connection with an OIG law enforcement investigation involving CSB
operations, we issued a "7-day letter" to that agency's Chairperson, identifying the refusal to produce the
records as a particularly flagrant problem.
By adding value and transparency, the OIG will continue to promote economy, efficiency and
effectiveness, and prevent and detect fraud, waste and abuse, at the EPA and the CSB. Our bottom line is
simple: to assist both agencies in their missions of safeguarding the health of the American people and
protecting the environment.
Arthur A. Elkins Jr.
Inspector General
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Semiannual Report to Congress April 1, 2013—September 30, 2013
Table of Contents
About the EPA and Its Office of Inspector General
U.S. Environmental Protection Agency 1
EPA Office of Inspector General 1
Furthering the EPA's Goals and Cross-Cutting Strategies 2
Scoreboard of Results 3
Significant OIG Activity 5
Former High-Level EPA Employee Pleads Guilty 5
Problems at Landover Warehouse 7
Halliburton Pleads Guilty Regarding Oil Spill 9
Congressionally Requested Reviews 10
Human Health and the Environment 12
Agency Business Practices and Accountability 26
Investigations 40
Other Activities 47
U.S. Chemical Safety and Hazard Investigation Board 51
Statistical Data 54
Profile of Activities and Results 54
Audit, Inspection and Evaluation Report Resolution 55
Hotline Activity 57
Summary of Investigative Results 58
Appendices 59
Appendix 1—Reports Issued 59
Appendix 2—Reports Issued Without Management Decisions 63
Appendix 3—Reports Wth Corrective Action Not Completed 70
Appendix 4—Peer Reviews Conducted 71
Appendix 5—OIG Mailing Addresses and Telephone Numbers 72
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Semiannual Report to Congress
April 1, 2013—September 30, 2013
About the EPA and Its
Office of Inspector General
U.S. Environmental Protection Agency
The mission of the U.S. Environmental Protection Agency (EPA) is to protect
human health and the environment. As America's steward for the environment since
1970, the EPA has endeavored to ensure that the public has air that is safe to breathe,
water that is clean and safe to drink, food that is free from dangerous pesticide residues,
and communities that are protected from toxic chemicals.
EPA Office of Inspector General
The Office of Inspector General (OIG), established by the Inspector General Act of 1978,
as amended, 5 U.S.C. App. 3, is an independent office of the EPA that detects and
prevents fraud, waste and abuse to help the agency protect human health and the
environment more efficiently and cost effectively. OIG staff are located at headquarters
in Washington, B.C.; at the EPA's 10 regional offices; and at other EPA locations,
including Research Triangle Park, North Carolina, and Cincinnati, Ohio. The EPA
Inspector General also serves as the Inspector General for the U.S. Chemical Safety and
Hazard Investigation Board (CSB).
Our vision, mission and goals are as follows:
Be the best in public service and oversight for a better environment tomorrow.
Mission
Promote economy, efficiency, effectiveness, and prevent and detect fraud,
waste, and abuse through independent oversight of the programs and
operations of the EPA and CSB.
1. Contribute to improved human health, safety, and environment.
2. Contribute to improved EPA and CSB business practices and accountability.
3. Be responsible stewards of taxpayer dollars.
4. Be the best in government service.
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Semiannual Report to Congress
April 1, 2013—September 30, 2013
Furthering the EPA's Goals
and Cross-Cutting Strategies
When conducting our audit and evaluation work during fiscal year (FY) 2013, we took into account the
EPA's five strategic goals as well as its five cross-cutting strategies. The table and graphic below show
how many of our audit and evaluation reports aligned with each of the agency's goals and strategies so
that we could better enable the EPA to carry out its mission of protecting human health and the
environment. These goals and strategies had been set by former EPA Administrator Lisa Jackson. Some
reports addressed more than one goal and/or strategy.
EPAqi
1. Taking action on climate change and improving air quality
2. Protecting America's waters
3. Cleaning up our communities and advancing sustainable development
4. Ensuring the safety of chemicals and preventing pollution
5. Enforcing environmental laws
EPA cross-cutting strategy
6. Expanding the conversation on environmentalism
7. Working for environmental justice and children's health
8. Advancing science, research, and technological innovation
9. Strengthening state, tribal, and international partnerships
10. Strengthening EPA's workforce and capabilities
No. of
related reports
13
12
15
4
5
No. of related
reports
1
3
7
2
23
10
Following her appointment during the current semiannual reporting period, new EPA Administrator
Gina McCarthy outlined seven themes for the EPA to follow. During FY 2014, we will measure our work
based on those themes.
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Semiannual Report to Congress
April 1, 2013—September 30, 2013
Scoreboard of Results
Scoreboard of OIG FY 2013 Performance Results
Compared to FY 2013 Annual Performance Goal Targets
Our work is designed to help the EPA reduce risk, improve practices and program operations, and save
taxpayer dollars so that the agency can better protect the environment. The information below shows the
taxpayers' return on investment for the work performed by the EPA OIG. All results reported in FY 2013,
from current and prior years' work, are based on the annual performance goals and plans established
through implementation of the Government Performance and Results Act.
Annual Performance Goal 1:
Environmental and business outcome actions taken or realized by the EPA (based on OIG recommendations)
Target: 256 (adjusted)
Reported: 215
(84% of goal)
Supporting measures
194 Environmental and management actions implemented or improvements made
19 Critical congressional and public concerns addressed
2 Legislative or regulatory changes made
Annual Performance Goal 2:
OIG environmental and business output recommendations, awareness briefing or testimony (for agency action)
Target: 654 (adjusted)
Reported: 1,003
(153% of goal)
Supporting measures
624 Environmental and management recommendations or referrals for action
309 Environmental and management certifications, verifications and validations
1 1 Environmental and management risks and vulnerabilities identified
59 External awareness briefings, training or testimony given
Annual Performance Goal 3:
Monetary return on investment (ROI) - potential monetary ROI as percentage (125%) of budget
Target: 125% ROI
Reported: $122 million*
(248% ROI)
Supporting measures (dollars in millions)
$37.55 Questioned costs
$83.10 Recommended efficiencies, costs saved
$1.34 Fines, penalties, settlements and restitutions *
Annual Performance Goal 4:
Criminal, civil and administrative actions reducing risk or loss/operational integrity
Target: 90
Reported: 256
(284% of goal)
Supporting measures
19 Criminal convictions
34 Indictments, informations and complaints
4 Civil actions
90 Administrative actions (other than debarments or suspensions)
92 Suspension of debarment actions
17 Allegations disproved
* Does not include $4.4 billion in criminal settlement from the Office of Investigations' joint-effort work on the BP oil spill.
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Semiannual Report to Congress April 1, 2013—September 30, 2013
Other (no targets established)
Savings and recommendations sustained from current and prior periods:
• $6.39 million in questioned costs sustained (17% of costs questioned)
• $17.30 million in cost efficiencies sustained or realized (21% of cost efficiencies claimed)
• 402 recommendations sustained (65% of recommendations issued)
Total reports issued: 431
• 70 reports issued by OIG
• 361 issued by Single Auditors
American Recovery and Reinvestment Act of 2009 Activity Results - Cumulative from 2/09 through 9/13
Recovery Act funds expired on 9/30/12 but OIG oversight work continued throughout FY 2013
• 47 Recovery Act reports issued
• 175 Recovery Act awareness briefings/outreach sessions
• 92 Recovery Act complaints received
• $47.9 million in potential monetary benefits (questioned costs, fines, savings)
Sources: OIG Performance Measurement and Results System and Inspector General Enterprise Management System.
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Semiannual Report to Congress
April 1, 2013—September 30, 2013
Significant OIG Activity
Former High-Level EPA Employee Pleads Guilty
Former EPA Senior Policy Adviser Pleads Guilty to Theft
That Cost Government Nearly $900,000
John C. Beale, a former senior policy adviser for the EPA, pleaded guilty
September 27, 2013, to a federal charge stemming from a long-running scheme
in which he cheated the government of nearly $900,000 in pay and expenses.
For more than a dozen years, Beale lied to the U.S. government to avoid
performing his job at the EPA.
The guilty plea, in the U.S. District Court for the District of Columbia, was announced by
U.S. Attorney Ronald C. Machen Jr. and EPA Inspector General Arthur A. Elkins Jr. The
case was investigated by the EPA OIG.
Beale admitted that he kept collecting pay from the EPA after claiming he was working
on a project for the Central Intelligence Agency (CIA) and on other efforts that kept him
out of the office. In fact, Beale was not working for the CIA or the EPA on the many
days he was away. All told, between January 2000 and April 2013, Beale was absent
from his duties at the EPA for about 21A years in which he was drawing a salary and
benefits.
Beale, 64, of New York, New York, pleaded guilty to theft of government property. The
parties have agreed that, under federal sentencing guidelines, the likely range is a prison
sentence of 30 to 37 months and a fine of up to $60,000. In addition, Beale has agreed to
pay a total of $886,186 to the EPA in restitution and to a forfeiture money judgment of
another $507,207.
"The details of this remarkable story are unfathomable - and yet they happened. An
absence of even basic internal controls at the EPA allowed an individual to commit
multiple frauds over a long period of time," said Inspector General Elkins. "Thanks to the
diligence of the special agents on this case, monetary restitution finally will be paid to the
taxpayers. Hopefully, exposing the lax agency practices that enabled Mr. Beale to
construct and prosper from a web of lies also will lead to swift reforms so such abuses
can never recur."
According to a statement of offense, signed by the defendant as well as the government,
Beale was employed by the EPA from 1989 until April 30, 2013. He was assigned to the
Office of Air and Radiation. For much of his time at the EPA, Beale was a senior policy
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Semiannual Report to Congress April 1, 2013—September 30, 2013
adviser. His duties included assisting in the planning, policy implementation, direction
and control of EPA programs. He also attended and participated in several international
conferences, many in foreign countries. In August 2000, Beale was promoted to a senior-
level employee, making him among the highest-paid non-elected federal government
employees.
From in or around 2000 through 2013, Beale failed to report to work for extended periods
of time and to submit required requests for leave for these absences. Rather, Beale falsely
claimed that he was working on a project at the CIA and other matters, such as a research
project for the EPA.
The statement of offense further details payments of $57,235 to reimburse travel
expenses for five trips to the Los Angeles, California, area. For EPA business, Beale did
not need to travel to California, where he visited family members. He could have done
the research work at home or at his EPA office. In fact, he never produced any written
work regarding the research project, which was never completed.
In or around May 2011, Beale announced that he was retiring from the EPA. In
September 2011, he and two other long-term EPA employees celebrated a retirement
party on a dinner cruise on the Potomac River. However, Beale remained on the payroll.
In or around June 2000, Beale had been awarded a 25 percent retention incentive bonus
for 3 years. The purpose of the bonus was to ensure that Beale remained with the EPA. It
was supposed to expire after 2003, but Beale continued to receive the bonus through
2013.
In or around January 2002, Beale claimed that, because he had contracted malaria while
serving in the U.S. Army in Vietnam, he needed a parking space for work. He was
awarded a parking spot, and the EPA subsidized payment for it at a rate of about $200 a
month. In fact, Beale never served in Vietnam and never contracted malaria. He held onto
and used the parking spot until about June 2005, at a cost of about $8,000 to the EPA.
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Semiannual Report to Congress
April 1, 2013—September 30, 2013
Problems at Landover Warehouse
Major Problems Found at EPA Warehouse in Landover, Maryland
Our review at the EPA's warehouse in Landover, Maryland, found significant
areas of concern, including a large space allotted for exercise equipment, hidden
personal space, unprotected personally identifiable information, obsolete items
and deplorable hygienic conditions.
The EPA leased a warehouse in Landover from the U.S. General Services Administration
to store inventory for its headquarters locations, but the warehouse was operated by a
contractor. We found:
• An incomplete and inaccurate record-keeping system.
• Considerable amounts of unusable, inoperable and obsolete items.
• Multiple unauthorized and hidden personal spaces, with such items as televisions.
• A large area with unauthorized functioning exercise equipment for personal use.
• Potential safety hazards, such as exposed wires.
• Unsecured personally identifiable information, such as passports.
• Deplorable hygienic conditions, including
corrosion, vermin feces and mold.
As a result, EPA property at the warehouse was
vulnerable to theft and abuse, property was not properly
maintained, the EPA may not have received sufficient
value for funds paid for the warehouse operation, and
warehouse workers were subjected to unsafe conditions
for which the EPA could be held liable.
Clockwise, from top right: An unauthorized personal space, a gym area in the warehouse, improperly stored
passports. (EPA OIG photos)
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Semiannual Report to Congress
April 1, 2013—September 30, 2013
Subsequent to our briefing of EPA officials, the agency issued a stop work order to the
contractor, ensuring there will be no further access to the site by contractor personnel and
that no further costs will be incurred under the contract. Further, the agency completed a
warehouse inventory, identified and segregated surplus furniture, reviewed background
investigations on warehouse employees, removed flammable materials, and addressed
personally identifiable information. In addition to taking action at the Landover facility,
the EPA initiated an agencywide review of all of its warehouse and storage facilities.
(Report No. 13-P-0272, Early Warning Report: Main EPA Headquarters Warehouse in
Landover, Maryland, Requires Immediate EPA Attention, May 31, 2013)
Clockwise, from top left: An outside view of the warehouse, a cubicle space at the warehouse for personal use,
moldy computer bags, unbound and unopened boxes still on pallets that are beginning to collapse and presenting
a health hazard, refrigerators received in 2007 still being stored at the warehouse. (EPA OIG photos)
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Semiannual Report to Congress
April 1, 2013—September 30, 2013
Halliburton Pleads Guilty Regarding Oil Spill
Halliburton Pleads Guilty to Destruction of Evidence in
Connection With Deepwater Horizon Oil Spill
Halliburton Energy Services Inc. pleaded guilty on September 19, 2013, in the
U.S. District Court, Eastern District of Louisiana, to destroying evidence
pertaining to the 2010 Deepwater Horizon oil spill in the Gulf of Mexico. The
company was sentenced to the statutory maximum fine of $200,000 and a 3-year
probationary period.
In addition, a criminal information of one count of destruction of evidence was filed
against a former Halliburton manager, Anthony Badalamenti, of Katy, Texas.
"These announcements mark the latest steps forward in the Justice Department's efforts
to achieve justice on behalf of all those affected by the Deepwater Horizon explosion, oil
spill and environmental disaster," said Attorney General Eric Holder. Previously,
BP Exploration and Production Inc. and Transocean Deepwater Inc. were sentenced to
pay more than $4.4 billion in criminal fines and penalties in connection with the
April 2010 oil well blowout and subsequent spill, which caused 11 deaths and extensive
environmental damage.
According to court documents, in May 2010, following the Macondo well blowout (the
source of the spill), modeling was done by Halliburton to compare the 21 centralizers
Halliburton had recommended BP use prior to the blowout versus the six centralizers BP
ultimately used. Centralizers are metal devices that can help keep casings centered in a
wellbore away from the surrounding walls, and centralizing can be significant to the
quality of subsequent cementing around the bottom of casings.
Simulations conducted by Halliburton indicated there was little difference between using
six and 21 centralizers on the Macondo well. Badalamenti directed the program manager
to destroy those results, and the program manager did so. In June 2010, after additional
simulations, similar evidence was destroyed as a result of Badalamenti's instructions.
This investigation was conducted by the Deepwater Horizon Task Force, which includes
investigators from the Federal Bureau of Investigation, U.S. Department of the Interior
OIG, National Oceanic and Atmospheric Administration Office of Law Enforcement,
U.S. Coast Guard, U.S. Fish and Wildlife Service, Louisiana Department of
Environmental Quality, EPA Criminal Investigation Division and EPA OIG.
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Semiannual Report to Congress
April 1, 2013—September 30, 2013
Congressionally Requested Reviews Conducted
During the semiannual reporting period, the Inspector General issued two reports in
response to congressional requests.
No Evidence Found of Improper Use of Private or Alias Email
Accounts
We found no evidence that the EPA used, promoted or encouraged the use of
private "non-governmental" email accounts to circumvent records management
responsibilities or reprimanded, counseled or took administrative actions against
personnel for using private or alias email accounts for conducting official
government business.
We conducted this audit in response to a congressional request for information about the
EPA's practices when using private and alias email accounts to conduct official business.
EPA senior officials said that they were aware of agency records management policies
and, based only on discussions with these officials, we found no evidence that they had
used private email to circumvent federal record-keeping responsibilities. The previous
EPA Administrator and the then acting EPA Administrator who followed each were
issued two EPA email accounts; one was available to the public to communicate with the
EPA Administrator and the other was used to communicate internally with EPA
personnel. This practice also had been common for previous Administrators. It is widely
used within the agency and is not limited to senior EPA officials.
Although not improper, these secondary EPA email accounts present risks to records
management efforts. The agency had not provided guidance on preserving records from
private email accounts or ensured consistent and regular training on records management
responsibilities. Inconsistencies in employee out-processing procedures pose risks that
federal records are not identified and preserved before an employee departs the agency.
We recommended that the EPA develop and implement oversight processes to update
agency guidance on the use of private email accounts, train employees and contractors on
records management responsibilities, strengthen relationships between federal records
preservation and employee out processing, and deliver a system to create federal records
from the new system. The EPA either has completed recommended actions or plans to
take corrective actions to address our findings.
(Report No. 13-P-0433, Congressionally Requested Inquiry Into the EPA's Use of
Private and Alias Email Accounts, September 26, 2013)
10
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Semiannual Report to Congress April 1, 2013—September 30, 2013
EPA Can Better Document Clean Air Federal Advisory Committees'
Independence
The EPA has adequate procedures for identifying potential ethics concerns—
including financial conflicts of interest, independence issues and appearances of
a lack of impartiality—for appointment of members to its clean air federal
advisory committees. However, the EPA can better document its selection of
members with independence and partiality concerns, allowing for greater
transparency.
In response to a congressional request about the EPA's management of the Clean Air
Scientific Advisory Committee (Committee) and the Advisory Council on Clean Air
Compliance Analysis (Council), we sought to determine whether the EPA has complied
with applicable laws, regulations and guidance pertaining to (1) potential conflicts of
interest, (2) appearances of a lack of impartiality, (3) rotation of members, (4) balance of
committee viewpoints and perspectives, and (5) peer review.
In general, the EPA managed the Committee and Council in accordance with applicable
statutes and regulations. These regulations allow agencies discretion in choosing federal
advisory committee members and achieving balance. However, better documenting of
decisions on selecting members when there are independence and partiality concerns
would allow for greater transparency, thus providing assurance that the Committee and
Council provide independent and objective advice to the Administrator on such important
decisions as setting ambient air standards. We also noted that the EPA's National Center
for Environmental Assessment did not have a formal process for determining whether
certain analyses were subject to Office of Management and Budget peer review
requirements and EPA guidance.
We recommended that the EPA instruct staff on the proper process for addressing
potential conflicts of interest, develop procedures to document decisions and mitigating
actions regarding independence and partiality concerns, and implement a process to
determine whether its scientific work products are influential scientific information that
require peer review. The agency either agreed with each of our recommendations or
proposed an acceptable alternative corrective action.
(Report No. 13-P-0387, EPA Can Better Document Resolution of Ethics and Partiality
Concerns in Managing Clean Air Federal Advisory Committees, September 11, 2013)
11
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Semiannual Report to Congress
April 1, 2013—September 30, 2013
Human Health and the Environment
Indoor Mold Tool Not Validated by EPA for Public Use
Companies were using the Environmental Relative Moldiness Index tool to
evaluate homes for indoor mold even though the EPA had not validated or peer
reviewed the tool for public use.
The EPA developed the index as a way to objectively describe the mold burden present in
a home. These mold values were determined using an EPA-patented technology called
mold specific quantitative polymerase chain reaction (MSQPCR). As of January 2013,
the EPA had 10 active licenses of the MSQPCR technology. A hotline complaint raised
the issue of whether companies were using a tool not validated by the EPA for public use.
Licensees were marketing MSQPCR to the public as part of the index tool, but we
believe one current and one past licensee's advertising could mislead the public into
thinking that the research tool is an EPA-approved
methods for evaluating indoor mold. The license
agreements stipulate that the licensee should not
state or imply that the EPA endorses MSQPCR.
In addition, information on an EPA Web page
suggested that the EPA validated and endorsed
MSQPCR for public use. Consequently, there is a
risk that the public may make inappropriate
decisions regarding indoor mold. Because of the
numerous questions the EPA received from the
public regarding the index tool, the agency drafted
a fact sheet, but it has not finalized or published
Extensive mold contamination of a ceiling. (EPA photo) ^s fac^ S\^QQI
We recommended that the EPA periodically review licensee advertising of the MSQPCR
tool to determine whether licensees have violated the terms of the license agreement and
take appropriate actions as necessary. We also recommended that the EPA remove or
clarify potentially misleading statements on its Web page, and finalize the fact sheet. The
agency generally agreed with our report and recommendations. It already has removed
the Web page.
(Report No. 13-P-0356, Public May Be Making Indoor Mold Cleanup Decisions Based
on EPA Tool Developed Only for Research Applications, August 22, 2013)
12
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Semiannual Report to Congress
April 1, 2013—September 30, 2013
Discarded cell phones.
(EPA photo)
EPA Needs Better Information on Electronic Waste
The EPA does not have adequate information to ensure effective management of
electronic waste (E-waste) to protect public health and conserve valuable
resources. Further, the EPA lacks complete information on E-waste disposition,
which hinders the effective use of its resources and hampers the EPA's ability to
effectively collect relevant information and set goals.
E-waste includes devices such as computers, televisions and cell phones. E-waste
contains toxic materials that pose hazards to human health and the environment if not
properly disposed of or recycled. The EPA encourages reuse and recycling of electronics
over land-filling and incineration. To that end, the EPA manages E-waste via
federal regulations and various voluntary programs.
EPA enforcement is hampered by the lack of complete information on cathode
ray tube exporters in the United States, which hinders the EPA's ability to set
enforcement targets. The EPA also does not have a practical process to determine
the hazardous nature of other E-waste. Potentially toxic E-waste could be
disposed of in municipal landfills or incinerated without potential hazards being
identified as required. Further, the EPA has limited knowledge of the extent of
compliance by certified recyclers with regulations. In addition, federal
information collection restrictions and a lack of resources hamper efforts.
We recommended that the EPA: (1) develop a consistent approach for defining E-waste,
(2) develop a practical process to address hazards, (3) evaluate implementation of the
certification programs for used electronics, (4) evaluate resource needs for E-waste
management, and (5) evaluate methods for gathering the information needed.
The EPA concurred with all recommendations.
(Report No. 13-P-0298, Improved Information Could Better Enable EPA to Manage
Electronic Waste and Enforce Regulations, June 21, 2013)
Air Quality Objectives for Baton Rouge Area Not Met
The Railroad Research Foundation has not complied with the requirements of its
cooperative agreement with the EPA involving the Baton Rouge, Louisiana, area,
and we noted $2.9 million that should be recovered.
Emissions from diesel exhaust can lead to serious health conditions like asthma and
allergies; can worsen heart and lung disease; and can damage plants, animals, crops and
water resources. Under the authority of the American Recovery and Reinvestment Act of
2009, the EPA awarded almost $3 million to the Railroad Research Foundation to reduce
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Semiannual Report to Congress
April 1, 2013—September 30, 2013
diesel emissions by repowering five locomotives to operate in the Baton Rouge ozone
nonattainment area.
We found that the five locomotives repowered under the agreement were not operating in
the Baton Rouge area as originally proposed and expected by the EPA. As a result, the
inhabitants in the Baton Rouge ozone nonattainment area were not receiving the benefits
of the lower diesel emissions. We further noted the charging of unallowable and
unsupported indirect costs.
We recommended that Region 6 recover $2,904,578 unless the foundation provides a
verifiable and enforceable remedy to reduce diesel emissions in the Baton Rouge ozone
nonattainment area. In the event that all federal funds are not recovered under that
recommendation, the region still needs to recover $21,126 in inappropriate costs. The
foundation did not agree with our recommendation to repay all federal funds, and
proposed a remedy to achieve compliance with the agreement. EPA Region 6 agreed with
our recommendations and is seeking appropriate cost recoveries.
(Report No. 13-R-0297, Air Quality Objectives for the Baton Rouge Ozone
Nonattainment Area Not Met Under EPA Agreement 2A-96694301 Awarded to the
Railroad Research Foundation, June 20, 2013)
EPA Can Improve Strategic Planning for Drinking Water Security
The EPA has implemented a number of activities to promote the security of
drinking water systems. However, strategic planning and internal controls for the
water security program need to be strengthened to allow the agency to measure
the program's performance and progress in drinking water systems'
preparedness, prevention, response and recovery capabilities.
The September 11, 2001, terrorist attacks prompted a national effort to secure critical
infrastructure and resources. These include drinking water. The EPA is authorized to
assist drinking water systems in protecting the nation's drinking water supply under the
Bioterrorism Act of 2002.
A drinking water facility in Washington,
D.C. (EPA photo)
The EPA's strategic planning in this area is hampered by its
limited authority over water security, the voluntary nature of its
water security activities and concerns related to protecting
information. These impediments could be overcome by the water
security program utilizing available data; using alternative
methods to gather data; and seeking additional authority from
Congress to collect, protect and utilize information from water
systems. The EPA should also expand its internal controls to meet
Federal Managers' Financial Integrity Act requirements.
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Semiannual Report to Congress April 1, 2013—September 30, 2013
The EPA has taken corrective actions based on recommendations in prior evaluations but
still needs to: develop a comprehensive strategic plan, assess water security by gathering
available data and incorporating measures into national guidance, and improve internal
controls by developing a program review strategy and a multi-year review plan. The EPA
also should seek additional authority from Congress and utilize the authority, if granted, to
develop a baseline and outcome measures. The EPA has agreed to take necessary
corrective actions based on our recommendations.
(Report No. 13-P-0349, EPA Can Better Address Risks to the Security of the Nation's
Drinking Water Through New Authorities, Plans, and Information, August 21, 2013)
EPA Needs to Improve Measuring Oil and Grease in Wastewater
The EPA's handling of the proposed alternative method for measuring oil and
grease in wastewater adhered to applicable laws, regulations, policies,
procedures and guidance, but we identified management control weaknesses.
The Clean Water Act requires the EPA to establish and approve methods to measure
pollutants in water and wastewater. Oil and grease is a regulated pollutant cited in
hundreds of thousands of permits. Regulators determine compliance by using test
methods approved by the EPA. Oil and grease differs from many other pollutants in that
it is a "method-defined analyte" - a pollutant defined solely by the method used to
measure it. We received a hotline complaint regarding the EPA's handling a proposed
alternative method for measuring oil and grease in wastewater, called ASTM D7575.
Because requests to consider alternative methods for method-defined analytes have been
rare, the EPA did not have established procedures for reviewing such methods. As such,
the agency faced unique challenges in reviewing ASTM D7575. Although the EPA took
appropriate steps to make an informed decision on ASTM D7575, management control
weaknesses contributed to confusion and delays, and fostered concerns among some
stakeholders about fairness, transparency and preferential treatment for the ASTM D7575
developer. Specific EPA management control weaknesses included the lack of a formal
procedure for reviewing proposed methods, clearly defined "cut off dates for method
submissions, and communications issues.
We recommended that the EPA establish a formal procedure for reviewing proposed
methods for method-defined analytes, establish procedures for designating official cut-off
dates for future proposed methods update rules, and clarify on the agency's website the
different routes for method review and approval. The agency generally agreed with our
report and provided corrective actions.
(Report No. 13-P-0317, EPA 's Handling of a Proposed Alternative Method for
Measuring Oil and Grease in Wastewater Met Requirements But Controls Need to Be
Strengthened, July 11, 2013)
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Semiannual Report to Congress
April 1, 2013—September 30, 2013
Enbridge Spill Impacted Funding for Oil Well Cleanups
but Not Emergency Spills
According to EPA staff, the Enbridge pipeline spill has not impacted the EPA's
ability to respond to classic emergency spills. However, EPA Regions 2 and 4
staff said that the spill has impacted the agency's ability to respond to abandoned
oil wells and caused cleanup delays in their regions.
On July 26, 2010, the Enbridge pipeline spill released 800,000 gallons of oil into the
Kalamazoo River in Michigan. The responsible party, Enbridge Energy Partners LLC, is
cleaning up the spill. As of February 24, 2013, the EPA's costs to oversee the cleanup
totaled more than $50 million. These costs are
reimbursed by the Oil Spill Liability Trust Fund
administered by the U.S. Coast Guard. An OIG
hotline complaint questioned the EPA's management
of emergency oil spill funding for the Enbridge spill.
The OIG found that the EPA had requested
additional funding for the Enbridge spill, but did not
request additional funding for abandoned oil well
removals. Limited funding resulted in cleanup delays
at abandoned oil wells. The OIG determined that the
EPA lacks technical guidance on oil spills, which results in emergency responders using
their discretion to develop and execute response actions. While this practice may be
adequate and sufficient for typical emergency oil spills, the large-scale release of tar
sands oil in the Enbridge spill had not been encountered before by the EPA.
An excavation of oil-contaminated
soil from the overbank area at the
Enbridge spill site. (EPA photo)
Oil Spill Budget Summary
I Enbridge
Inon-Enbridge
The EPA's annual oil spill budget, FYs 2008-2012.
(Source: The EPA's Office of Emergency Management
budget data and Enbridge spill situation reports)
We recommended that the EPA establish risk-
based priority criteria to be used by the regions
in their requests to EPA headquarters for
Oil Spill Liability Trust Funds and when
implementing oil spill responses. We also
recommended that the EPA develop a process
for sharing lessons learned from large or
unprecedented oil spills such as Enbridge. The
agency agreed with both recommendations.
(Report No. 13-P-0370, Limited Oil Spill
Funding Since the Enbridge Spill Has Delayed
Abandoned Oil Well Cleanups; Emergency Oil
Responses Not Impacted, September 4, 2013)
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Semiannual Report to Congress April 1, 2013—September 30, 2013
Improvements in Monitoring Renewable Fuel Standard Program
Needed
The EPA worked with external Renewable Fuel Standard program stakeholders
to develop additional controls to reduce fraud in the program and has
implemented a number of control activities through regulations. However, the
agency does not meet the control standard for monitoring some of these
activities.
According to the EPA, the Renewable Fuel Standard program lays the foundation for
achieving significant reductions in greenhouse gas emissions from the use of renewable
fuels. The agency estimates that the program will reduce greenhouse gas emissions by
138 metric tons by 2022.
The EPA did not track submission of third-party engineering reviews or annual attest
engagements because the agency lacks an electronic monitoring system for these reports.
As a result, the agency cannot be sure that program participants complied with applicable
regulations. We could not determine whether overlap existed in parties completing third-
party engineering reviews and attest engagements. Current and proposed regulations do
not preclude the same third party from completing multiple requirements as well as other
reporting responsibilities for renewable fuel producers or importers, allowing for possible
overlap. If the same third party completed multiple reporting requirements, the party
could potentially review its own work, which could result in a conflict of interest.
We recommended that the EPA modify existing electronic systems to track the
submission of reporting requirements to ensure that all participants comply with
applicable Renewable Fuel Standard program regulations. To assist with tracking, we
recommended requiring electronic submittal of all reporting requirements for the
program, particularly third-party engineering reviews and attest engagements. We also
recommended that the office determine whether potential conflicts of interest exist from
allowing the same third party to complete multiple reporting requirements and monitor
potential conflicts. The agency agreed with our recommendations and is taking steps to
address them.
(Report No. 13-P-0373, The EPA Should Improve Monitoring of Controls in the
Renewable Fuel Standard Program, September 5, 2013)
Chemical Fume Hood Testing Improvements Needed
The EPA complied with applicable regulations and guidance in procuring both
chemical fume hood retrofit kits and fume hood testing contracts for laboratories
in Research Triangle Park, North Carolina. However, we found that the testing
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April 1, 2013—September 30, 2013
done by the subcontractor was not always sufficient, resulting in health risks for
laboratory workers.
Laboratory fume hoods minimize chemical exposure to laboratory workers and are
considered the primary means of protection from inhalation of hazardous vapors, mists
and particulate matter.
In response to a hotline complaint, we found that the EPA complied with procurement
regulations but we noted safety concerns. The EPA relied on the prime contractor to ensure
that the subcontractor's fume hood testing met all requirements, and did not retest any of
the hoods without a user's specific report of a problem. However, the subcontractor rated
hoods as pass when (a) not all of the EPA requirements were met, (b) controllers or
monitors were not functional, and (c) testing results did not include all required
documentation. As a result, the EPA has limited assurance as to the safety of the chemical
fume hoods, and there is a risk to the health and safety of the laboratory workers.
We recommended that the agency increase oversight and analysis of contractor testing
results, ensure that when a monitor is reported as not functioning or inaccurate it is timely
repaired or replaced, establish a practice of retesting a sample of the chemical fume
hoods annually to verify the subcontractor's testing results, and work to revise and update
the EPA's 2009 testing protocol criteria. The agency agreed to take corrective action for
all recommendations.
(Report No. 13-P-0363, Chemical Fume Hood Testing Improvements Needed to Reduce
Health and Safety Risk to EPA Employees, August 28, 2013)
Corrective-Action Milestones Not Met at the Libby, Montana,
Superfund Site
The EPA did not meet planned corrective-action milestones for completing a
comprehensive toxicity assessment of asbestos to determine the cleanup level at
the Libby, Montana, Superfund site.
In 1999, the EPA began investigating local concerns about
asbestos contamination in Libby. The EPA designated the
Libby site a national priority in the Superfund program in
2002. In December 2006, the EPA OIG recommended that
the EPA perform a comprehensive toxicity assessment of
amphibole asbestos at Libby to determine the safe level for
human exposure.
EPA action officials did not complete planned corrective
actions under the agency's Libby Action Plan in a timely
Exterior removal of contaminated soil from a
residential area. (EPA photo)
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Semiannual Report to Congress
April 1, 2013—September 30, 2013
manner because the scope of the work was larger than originally thought; there was no
established charter; and there were contracting delays, competing priorities, unanticipated
work and poor communication with stakeholders. Consequently, the agency twice revised
its estimates for completing actions in response to the OIG's December 2006 report.
Also, the toxicity assessment is part of the health risk assessment for determining cleanup
levels at Libby, and in December 2011 the EPA informed us that the health risk
assessment would be substantially delayed. This delay was significant because the former
EPA Administrator had declared a public-health emergency at the Libby site in 2009, and
the agency had spent more than $400 million on cleanup.
We recommended that the EPA: (1) require action officials to disclose risks to
completing corrective-action plans, (2) establish a charter to define project roles and
responsibilities, (3) direct the Science Advisory Board to determine whether the EPA
sufficiently followed guidance, (4) ensure that future contracts issued through
interagency agreements are within the scope of those agreements, and (5) develop a
priority list for pending and ongoing research work. The agency agreed to comply with
all recommendations.
(Report No. 13-P-0221, Better Planning, Execution and Communication Could Have
Reduced the Delays in Completing a Toxicity Assessment of the Libby, Montana,
Superfund Site, April 17, 2013)
EPA Needs a Policy for Pesticide and Chemical Enforcement
Penalty Reductions
The EPA regions differed in how they documented decisions and justified
reductions of pesticide and chemical enforcement penalties.
The Federal Insecticide, Fungicide and Rodenticide Act regulates the distribution, sale
and use of pesticides. The Toxic Substances Control Act provides the EPA with authority
to require reporting, record-keeping and testing
requirements; and restrictions to chemical substances and
mixtures. Both laws provide enforcement tools and allow
for good faith reduction and ability to pay penalties.
EPA regions did not consistently determine and document
reductions in proposed penalties based on good faith of the
violators, and in some regions reductions appeared
automatic without adequate justification. This situation
creates a risk that violators may not be treated equitably and
that the EPA may lose opportunities to fully collect all
penalties due. Further, the EPA lacks a sufficient policy to
address violators who are unable to pay penalties. The
> ^'^
A farmer mixes herbicide prior to application; the
farmer wears complete protection while using the
chemicals. (U.S. Department of Agriculture's
National Resources Conservation Service photo)
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Semiannual Report to Congress April 1, 2013—September 30, 2013
current "ability to pay" model and policy limit the EPA's ability to evaluate claims;
inadequate guidance exists for applying non-monetary penalty alternatives such as public
service when cash is not available.
We recommended that the EPA provide adequate guidance for determining a good faith
reduction, develop a systematic approach to ensure that justifications for good faith
reductions are documented, revise the EPA's ability to pay penalty policy and evaluate
the individual violator model, and provide regional staff with updated training for case
development. The agency agreed to take sufficient corrective actions on all
recommendations.
(Report No. 13-P-0431, EPA Needs to Update Its Pesticide and Chemical Enforcement
Penalty Policies and Practices, September 26, 2013)
Improvements Needed Regarding Scientific Integrity Policy
The EPA has not developed or implemented a program to instruct the EPA's
employees on the requirements and standards of scientific integrity even though an
agencywide training program is required by the agency's Scientific Integrity Policy.
In March 2009, the President instructed each agency to implement rules and procedures
for ensuring the integrity of its scientific process. The EPA enacted its Scientific Integrity
Policy in February 2012. The EPA policy describes the role of an agencywide committee
of scientific integrity officials to implement this policy. We reviewed the EPA's actions
in response to a hotline complaint.
As a result of the EPA committee's lack of progress in implementing these requirements,
the EPA is less equipped to:
• Provide leadership for the agency on scientific integrity.
• Promote agency compliance with the Scientific Integrity Policy.
• Keep EPA senior leadership informed on scientific integrity status.
• Detect violations of scientific integrity.
We recommended that the EPA's Deputy Administrator direct the Scientific Integrity
Committee to develop and implement agencywide training on the policy, and issue an
annual report on the status of EPA scientific integrity in the agency. The agency has
initiated corrective actions that meet the intent of our recommendations.
(Report No. 13-P-0364, Quick Reaction Report: EPA Must Take Steps to Implement
Requirements of Its Scientific Integrity Policy, August 28, 2013)
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Semiannual Report to Congress April 1, 2013—September 30, 2013
Environmental Impact Statement Process Improved but
Verification Needed
Federal agencies are making changes to Environmental Impact Statements to
mitigate or eliminate potential environmental risks based on the EPA's comments.
However, the EPA currently only measures the prospective impact of mitigation
and has no formal or systematic process to determine actual mitigation outcomes.
As required by the National Environmental Policy Act and Clean Air Act, the EPA
reviews Environmental Impact Statements that evaluate the anticipated environmental
impacts of proposed major federal actions. Projects covered by the statements include
renewable energy, major highway, and oil and gas development projects.
The EPA's goal was to mitigate at least 70 percent of the environmental impacts
identified in its reviews of Environmental Impact Statements, and for 2012 the EPA
reported it exceeded its goal and obtained a 75-percent result for substantive comments
addressed by the federal agency. This measure captures the prospective impact of the
EPA's proposed mitigation measures. However, it does not measure the federal agency's
actual mitigation actions or outcomes (i.e., impacts), nor is there a system in place to do
so. Therefore, the EPA does not conduct follow-up actions designed to examine these
impacts.
We recommended that the EPA conduct, on a selected basis, follow-up activities on final
Environmental Impact Statements and document the results of these reviews. The agency
concurred with our findings and recommendation, and indicated that it will work to
develop a plan by December 1, 2013, to conduct these follow-up activities.
(Report No. 13-P-0352, The EPA 's Comments Improve the Environmental Impact
Statement Process but Verification ofAgreed-Upon Actions Is Needed, August 22, 2013)
Concerns at Tribal Drinking Water Plant Not Being Addressed
Because of limitations under the Safe Drinking Water Act, the EPA was not sure
it had the authority to require a tribal organization to address the agency's plan
and specification review concerns regarding a tribal drinking water plant receiving
grant funds from the EPA.
In response to a hotline complaint, we sought to determine whether the EPA followed
applicable criteria in awarding American Recovery and Reinvestment Act of 2009 funds
to the Fort Belknap Indian Community Drinking Water Treatment Plant in Montana, and
whether the EPA met its responsibility under the Safe Drinking Water Act.
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Semiannual Report to Congress
April 1, 2013—September 30, 2013
Corrosion in the chemical room at the
Fort Belnap Indian Community Drinking
Water Treatment Plan approximately
7 months after the plant went
operational. (EPA photo)
In 2007, prior to providing funding to the project, the EPA had
the plan and specification reviewed by a contractor, and Region 8
provided comments to the Indian community regarding key
concerns. Despite the plan and specification review comments,
the EPA contributed $572,700 toward the project. EPA Region 8
staff said that, due to a limitation under the National Primary
Drinking Water Regulations, they did not have the authority to
require the tribe to address the EPA's concerns. The plant went
operational in March 2010 but continued to not be in compliance
with the Safe Drinking Water Act. We found that the EPA
believed—based on an incorrect interpretation of its authority
under the act—that it could not require tribes to address plan and
specification review comments prior to awarding funds.
We recommended that the EPA's Office of Water re-examine its interpretation of the
pertinent drinking water regulations, and if it still determines that the limitation exists, the
office should pursue a regulatory or guidance change to address it. The agency concurred
with the recommendation and determined that it can require tribes to address plan and
specification review comments prior to grant awards. The EPA plans to include language
to reinforce this authority in guidelines currently under revision.
(Report No. 13-P-0308, Limitations on the EPA 's Authority Under the Safe Drinking Water
Act Resulted in Unaddressed Concerns at a Tribal Drinking Water Plant, July 2, 2013)
EPA Should Assess Utility of Watch List
The EPA should assess the utility of the Watch List—a management tool used to
identify long-standing significant violations—to determine whether its use should
be continued.
Used by the EPA since 2004, the Watch List is designed to provide EPA regions and
states with a list of facilities that are in significant violation of environmental laws and
appear not to have been addressed by timely and appropriate enforcement. The Watch
List initially was just used as an in-house management tool, but in 2011 the EPA made its
data available to the public.
We found that use of the Watch List differs among headquarters and regional
enforcement programs. Further, trends in the number of facilities on the Watch List differ
among enforcement programs. In addition, the public version of the Watch List has
limited search capabilities and information. Without a proper assessment of the Watch
List, the agency runs the risk of maintaining a management tool that does not assist in
tracking facilities with long-standing significant violations, has limited transparency and
utility to the public, and does not meet the needs of EPA users.
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Semiannual Report to Congress April 1, 2013—September 30, 2013
We recommended that the EPA Office of Enforcement and Compliance Assurance assess
the Watch List's utility as a management tool and take various corrective actions if it
determines that the tool is useful. The agency agreed to assess the Watch List and to act on
the remainder of our recommendations if it determined the Watch List should be retained.
(Report No. 13-P-0435, The EPA Should Assess the Utility of the Watch List as a
Management Tool, September 30, 2013)
Improved Public Notice Needed for Thermal Variance Permits
The EPA oversight process on the quality of permits on thermal discharges
generally has been effective, but we found issues concerning public notices.
The Clean Water Act requires National Pollutant Discharge Elimination System permits
for facilities with cooling water intake structures to ensure that location, design,
construction and capacity minimize harmful impacts on the
environment. Withdrawing surface waters at power plants can pull
in and kill fish and other aquatic organisms, while the discharge of
cooling waters can also have negative impacts.
A permitting authority may issue a variance under the Clean Water
Act to allow facilities to discharge cooling waters at an alternative,
less stringent thermal effluent limit that is still protective of aquatic
life, and we found that the EPA's Permit Quality Review process
for such variances generally has been effective. However, none of
Brayton Point Power Facility, Somerset, the public notices we reviewed contained all the required
Massachusetts. (EPA photo) information, and we recommended that the agency develop and
implement oversight mechanisms that will help states and regions consistently comply
with public notice requirements. The agency agreed with our recommendation.
(Report No. 13-P-0264, EPA Oversight Addresses Thermal Variances and Cooling Water
Permit Deficiencies but Needs to Address Compliance With Public Notice Requirements,
May 23, 2013)
Gulf of Mexico Program Office Needs Improved Controls
Two of the Gulf of Mexico Program Office's performance measures are
unrealistic in that they do not reflect what the office was set up to achieve.
Due to its size and rich biodiversity, the Gulf of Mexico is critically important for the
nation's environmental and economic well-being. Recent environmental disasters, such
as Hurricane Katrina and the BP Deepwater Horizon oil spill, have focused national
attention on the Gulf region.
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Semiannual Report to Congress April 1, 2013—September 30, 2013
The two unrealistic measures involve reducing the size of the hypoxic zone and
improving the National Coastal Condition Report Index. Further, one strategic objective
(environmental education) is not being measured. This omission occurred because the
program office had not performed a required assessment of its strategic objectives and
performance measures. As a result, some of the functions that the Gulf of Mexico
Program Office performs are not being properly measured and, thus, the office's
resources might not be used in the most efficient or effective way. Also, the office did not
ensure that its local area network was secure, did not have primary information security
controls in place, and did not ensure that the contractor met the security requirements in
its contact. Further, the Gulf of Mexico Program Office's Web page displayed some
inaccurate information for more than 18 months.
We recommended that the Gulf of Mexico Program Office conduct a risk assessment of
its strategic objectives and measures, and work with the Office of Water to adjust those
measures as needed. We recommended that the program office and Region 4 officials
correct the local area network security controls deficiencies, and complete actions to
establish an office Web content review process. EPA agreed with 12 of our 13
recommendations and proposed a satisfactory alternative corrective action for the
remaining recommendation.
(Report No. 13-P-0271, Improved Internal Controls Needed in the Gulf of Mexico
Program Office, May 30, 2013)
EPA's Office of International and Tribal Affairs Needs Improved
Strategic Planning Guidance
The EPA's Office of International and Tribal Affairs needs additional strategic
planning guidance to better manage anticipated environmental outcomes of
foreign and international grants.
The EPA has the legal authority to award international and foreign grants. For FY 2012,
the Office of International and Tribal Affairs allocated more than $3.5 million in
appropriated funds for international grants.
Although the EPA's Office of International and Tribal Affairs collects environmental
outcome/output information, the office has not incorporated the information into a
comprehensive strategic planning document. Also, the allocation of resources for planned
activities is not described within the office's current strategic planning documents.
Improvements in these areas would help ensure that the office's grants align with the
EPA's goals of advancing public health and environmental improvement, and EPA
resources are properly allocated.
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Semiannual Report to Congress April 1, 2013—September 30, 2013
We recommended that the EPA develop strategic planning guidance to document how the
Office of International and Tribal Affairs links its achieved outcomes for international
and foreign grant activities to its strategic plan goals, the process used by the office to
allocate resources, and how the office's international and foreign grant activities align
with the EPA's overall goals. The agency agreed with our recommendation.
(Report No. 13-P-0386, EPA 's International Program Office Needs Improved Strategic
Planning Guidance, September 9, 2013)
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Semiannual Report to Congress
April 1, 2013—September 30, 2013
Agency Business Practices and Accountability
EPA Did Not Effectively Monitor STAR Grant Recipients
The EPA's project officers did not monitor STAR (Science to Achieve Results)
grant recipients in a manner consistent with agency policy and guidance.
Consequently, project officers increased the risks that issues would not
be corrected in a timely manner and projects might not meet specified goals.
The STAR competitive grant program is the primary vehicle through which the EPA
funds research at universities and nonprofit groups. From FYs 2010 through 2012, the
EPA funded 220 projects totaling $150 million through the STAR grant program.
The OIG found that EPA project officers did not:
• Take action when STAR grant recipients submitted annual reports late.
• Follow baseline monitoring guidance.
• Routinely follow up when disclaimers about EPA's endorsement were not
included in published articles.
During administrative advanced-monitoring reviews, the EPA did not ensure costs were
allocable to the grant and did not request certified effort reports. The OIG reviewed
drawdowns totaling $639,045 and found $53,854 in costs that were not allowable.
Project officers also did not actively monitor STAR grant recipients for
potential research misconduct, which put grant funds at risk.
We recommended that the EPA provide mandatory training to STAR
grant project officers. For incrementally funded grants, we
recommended that the EPA enforce the terms and conditions that allow
withholding of funds for late or missing reports. We also recommended
that the EPA require grant recipients to submit corrections to
publications when acknowledgement of EPA funding and disclaimers
of EPA endorsement are missing from articles. The EPA's completed
and planned corrective actions addressed all of the OIG's
recommendations.
A mass spectrometer in a research
laboratory is an example of
equipment that can be used to
analyze samples during STAR
grant research (EPA OIG photo)
(Report No. 13-P-0361, EPA Needs to Improve STAR Grant Oversight,
August 27, 2013)
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Semiannual Report to Congress April 1, 2013—September 30, 2013
EPA's Customer Service Lines Lack Specific Guidances and
Standards
Oversight practices varied for the 41 EPA external customer service lines
reviewed. Without guidance or procedures in place to ensure consistent
oversight of the lines, there is limited assurance that the approximately
$5.7 million of funds used to operate 30 of the lines in FY 2011 achieved the
desired results (costs were not available for the other 11 lines).
The EPA has a variety of resources—including telephone hotlines, Web-based
clearinghouses, and other online reference information—which the OIG has categorized
as customer service lines. Members of the public can use these lines to seek help with
environmental problems.
The EPA's 41 external customer service lines reviewed have oversight practices that
vary; there are no specific EPA or governmentwide guidances or standards for operating
and managing customer service lines. In addition, customer service line information on
the agency's website is incomplete. The agency lacks specific guidance regarding the
identification, presentation and management of Web-based customer service line
information. As a result, the quality of customer service is negatively affected. The
EPA's regions and program offices also do not properly identify, present and manage
customer service line information on the Web; therefore, customers using the Internet
may not be able to access relevant environmental information in a timely manner.
We recommended that the EPA's Deputy Administrator develop agencywide guidance
for the monitoring and oversight of the agency's customer service lines and review
external lines to determine their cost efficiency. The EPA agreed with the draft report's
message and is seeking input from the Assistant, Associate and Regional Administrators
in order to develop and implement necessary improvements.
(Report No. 13-P-0432, Controls and Oversight Needed to Improve Administration of
EPA 's Customer Service Lines, September 26, 2013)
Examination Questions $1.6 Million Awarded to St. Louis Grantee
The financial management system for the Grace Hill Settlement House in
St. Louis, Missouri, did not meet federal requirements in relation to funds
received from the EPA under a cooperative agreement, and we questioned
$1.6 million of the $2.2 million in funding it received.
The Grace Hill Settlement House received funding from the EPA under the American
Recovery and Reinvestment Act of 2009 to provide emission reduction technology for
delivery trucks, long-haul trucks, school buses, tugboats, fire engines, ambulances,
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Semiannual Report to Congress
April 1, 2013—September 30, 2013
A school bus retrofitted under the
agreement. (EPA OIG photo)
airport support equipment, dump trucks and street sweepers. This project was expected to
reduce the use of diesel fuel as well as the amount of air pollution, resulting in benefits to
the health of residents in the St. Louis area.
We found that Grace Hill's financial management system did not meet federal
requirements. In particular, procurements by Grace Hill did not meet federal competition
or cost and price analysis requirements, the grantee's contract
administration system did not meet requirements, allowable costs
were not segregated and financial management data were not
properly supported, labor charges did not comply with regulations,
and cash draws did not meet immediate cash needs requirements.
We recommended that Region 7 disallow questioned costs of
$1,615,343 and recover $1,423,028 of that amount. We also
recommended that, prior to any future EPA awards to Grace Hill,
the region verify that Grace Hill has adequate controls. In addition,
we recommended that the region verify that Grace Hill reported the
number of jobs created and retained, and verify that the vehicles Grace Hill reported as
retrofitted were completed in accordance with the workplan. Grace Hill disagreed with
our recommendations, asserting that no costs should be recovered with an exception to a
limited amount of personnel costs. Region 7 did not comment on the draft report.
(Report No. 13-R-0367, Examination of Costs Claimed Under American Recovery and
Reinvestment Act Cooperative Agreement 2A-97706701 Awarded to Grace Hill
Settlement House, St. Louis, Missouri, August 30, 2013)
Tennessee's Meeting Grant 'Buy American' Requirements Questioned
The Tennessee Department of Transportation (TDOT) followed most applicable
laws, regulations, and terms and conditions pertaining to the procurement and
monitoring of contracts for its truck stop electrification facilities, except for the Buy
American requirements of the American Recovery and Reinvestment Act of 2009.
The EPA awarded cooperative agreement 95425709 and provided $2 million of Recovery
Act funds for the installation of a network of truck stop electrification facilities at select
interstate highway truck stops. The facilities (electrified parking spaces) are designed to
reduce long-term idling of certain trucks. According to the EPA, reducing emissions from
diesel engines is one of the most important air-quality challenges facing the United States.
TDOT did not determine whether trusses used in the construction of truck stop
electrification facilities by one contractor qualified as substantial transformation. The
reason is that, subsequent to the contract awards, the EPA incorrectly determined that the
Buy American requirements did not apply to the project.
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Semiannual Report to Congress
April 1, 2013—September 30, 2013
Truck stop electrification equipment
at a truck stop in Holladay, Tennessee.
(EPA OIG photo)
In addition, while TDOT complied with requirements and satisfied Region 4's
requirements for projecting emission reductions results, TDOT overstated these results.
We found that TDOT used significantly overestimated usage
assumptions in its projections rather than current usage. As a
result, TDOT does not have reasonable assurance that the project
will achieve projected emissions reductions, and the expected
environmental results and human health benefits.
We recommended that the EPA disallow and recover Recovery
Act funds totaling $1,623,049, unless TDOT can certify that the
project fully complied with Buy American requirements. For
those items that TDOT cannot certify, we recommended that the
EPA follow applicable regulations to resolve the noncompliance.
For TDOT's potential overstatement of project results, we
recommended that the EPA review TDOT's assumptions used to
calculate projected results and work with TDOT to develop more
accurate projections of project results, if needed. The EPA and
TDOT disagreed with our recommendations pertaining to the
Buy American requirements but agreed with the recommendation related to project
results and are working to use post-project usage data to produce updated information.
(Report No. 13-R-0321, Projected Emission Reductions Overstated and Buy American
Requirements Not Met Under EPA Award to the Tennessee Department of
Transportation, July 19, 2013)
Costs of $249,882 for San Francisco Lead Remediation Association
Questioned
The financial management system for the Lead Remediation Association of
America did not meet federal standards for funds received from the EPA under a
cooperative agreement, and we questioned and recommended recovery of the
$249,882 drawn under the grant.
The association received funding from the EPA to raise lead hazard awareness for
children and families in low-income communities in the San Francisco Bay Area. The
work plan required the association to produce and distribute lead safety work practice
DVDs, provide lead safety training and workshops, and distribute brochures. We initiated
our review at the request of the EPA's Office of Grants and Debarment, which had
concerns about the association's internal controls.
We found that the association's accounting system data did not meet federal financial
management requirements and was not updated timely. The association also made cash
draws and submitted its final federal financial report using the grant budget amounts
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Semiannual Report to Congress April 1, 2013—September 30, 2013
rather than actual costs incurred. The association did not maintain source documentation
to support the costs incurred or claimed. Also, the grantee did not meet the grant
objectives as outlined in the work plan.
We recommended that the EPA Office of Grants and Debarment recover $249,882 drawn
under the grant. We also recommended that the office verify the grantee has a financial
management system meeting the federal standards prior to any future awards. The
association generally agreed that it did not have the documentation to meet the federal
requirements but disagreed with our recommendation to make a repayment because it had
done work under the grant.
(Report No. 13-P-0341, Examination of Costs Claimed Under Grant AB-8 3 363 501
Awarded to Lead Remediation Association of America, August 6, 2013)
EPA Needs to Recover New Mexico Environment Department
Labor Charges
Three out of four New Mexico Environment Department (NMED) bureaus did not
always comply with federal requirements for charging labor to EPA grants.
As of February 27, 2012, NMED had approximately $95 million in active EPA
grants, and another $58 million in grants closed within the last 3 years that were
subject to the record-retention requirement.
We found that NMED did not always comply with federal labor-charging requirements.
NMED's Air Quality Bureau and Drinking Water Bureau charged labor, fringe benefits
and indirect costs to federal grants based upon budget allocations instead of actual
activities performed. In addition, personnel activity reports from the Surface Water
Quality Bureau to support charges for labor costs did not meet federal requirements.
We questioned $298,159 in labor, fringe benefits and related indirect costs claimed by the
Air Quality Bureau; $2,974,318 claimed by the Drinking Water Bureau; and $2,733,798
claimed by Surface Water Quality Bureau. We also identified an additional $486,305
charged to a Drinking Water Bureau-administered grant that had not yet been reported to
the EPA.
We recommended that Region 6 disallow and recover unsupported costs of $6,006,275,
unless NMED provides support that complies with requirements. We also
recommended that the region ensure NMED does not claim unallowable costs of
$486,305 under the Drinking Water Bureau grant unless it can provide support that it
complies with requirements. Further, we recommended that the region recover any
unsupported costs not covered in the OIG's cost-impact determination and ensure that
labor-charging practices at remaining NMED bureaus with EPA grants comply with
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Semiannual Report to Congress
April 1, 2013—September 30, 2013
federal requirements. Region 6 agreed with our findings and four of the five
recommendations.
(Report No. 13-4-0296, Labor-Charging Practices at the New Mexico Environment
Department, June 17, 2013)
Grantee Generally Met Federal Requirements and Exceeded
Expected Outcomes
Chelsea Collaborative Inc. generally complied with applicable American
Recovery and Reinvestment Act of 2009 requirements and had a financial
management system that supported funds drawn, but the system did not provide
timely financial information and reporting.
The EPA awarded about $2 million under two cooperative agreements to the
collaborative. The collaborative was to retrofit and upgrade city-owned vehicles and to
perform diesel retrofits for transportation refrigeration units at
the New England Produce Center in Chelsea, Massachusetts, as
part of efforts under the Diesel Emissions Reduction Act. We
noted that the collaborative exceeded the expected outcomes of
the agreements by repowering 98 diesel transportation
refrigeration units rather than the 79 originally proposed.
Old and new transportation refrigeration
units at the New England Produce Center
in Chelsea. (EPA OIG photo)
Although the Chelsea Collaborative ultimately supported
claimed amounts, it lacked established policies and procedures
for recording, processing and reporting federal funds, had
limited experience with federal grant requirements, and lacked
communication between its financial and associate executive
directors. As a result, there was limited assurance that the collaborative claimed all
eligible costs it incurred under the cooperative agreements or that its financial system and
reports reflected actual costs. Also, the collaborative did not accurately report the number
of jobs created or retained with Recovery Act funds because it included non-Recovery
Act-funded hours.
We recommended that Region 1 require the Chelsea Collaborative to establish the needed
controls for its financial management system and ensure that its calculations for jobs
created or retained as a result of the Recovery Act meet requirements. The region agreed
with our recommendations.
(Report No. 13-R-0353, Examination of Costs Claimed Under EPA Cooperative
Agreements 2A-96104501 and 2A-96107201 Awarded Under the Recovery Act to
Chelsea Collaborative Inc., Chelsea, Massachusetts, August 22, 2013)
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Semiannual Report to Congress
April 1, 2013—September 30, 2013
EPA Should Better Manage Time and Materials Contracts
Our review of a Region 9 time and materials contract found that the region needed
to improve management of the contract and recover more than $1.5 million paid
under an inappropriate clause that allowed the contractor to claim additional profit.
The government should only use a time and materials contract when it cannot accurately
estimate either the extent or duration of the work, or anticipate costs with any reasonable
degree of confidence, since such a pricing method provides no incentive to the contractor
for cost control or labor efficiency. For our review, we focused on Region 9's
management of contract EPS90804, which supports the EPA's responses to releases of
hazardous substances and counter-terrorism.
This facility treats sediment dredged
from the Spring Creek Arm of the
Keswick Reservoir at the Iron Mountain
Mine Superfund Site, Shasta County,
California. It was constructed under task
order 45 and operated under task order
50 of contract EPS90804. (Photo
courtesy of CH2M Hill, Inc.)
EPA Region 9 did not require its contracting personnel to verify
that personnel for the contractor had the qualifications necessary
to execute contract EPS90804. This problem may be EPA-wide
for time and materials contracts. In addition, Region 9 contracting
personnel did not consistently update the statement of work that
identifies work the EPA expects the contractor to perform;
document reviews of monthly progress, contractor performance
and quality of deliverables; and issue memorandums appointing
contracting officer representatives. These and other deficiencies
put the EPA at risk of not receiving the level or quality of service
for which it paid. Further, we noted that Region 9 personnel
negotiated an inappropriate clause in the contract, resulting in the
EPA improperly paying the contractor more than $1.5 million in
additional profit.
We recommended that Region 9 direct the contracting officer for
EPS90804 to require contracting officer representatives to
document oversight according to regulations and policies, which the region agreed to do.
We also recommended that the region recover funds for the prohibited clause, as well as
determine if the clause is in other contracts and recover funds under those contracts.
Further, we recommend that the Office of Administration and Resources Management
enforce the requirement for contracting officer representatives to ensure that contract
staff meet the qualifications identified in time and materials contracts, and review the
EPA's practices for paying contractors who perform similar activities. For the latter
recommendations, the EPA officials provided alternative corrective action without
completion dates or they disagreed.
(Report No. 13-P-0209, Opportunities for EPA-Wide Improvements Identified During
Review of a Regional Time and Materials Contract, April 4, 2013)
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Semiannual Report to Congress April 1, 2013—September 30, 2013
EPA Did Not Sufficiently Complete Corrections Actions on
Work Management
The EPA did not complete within planned timeframes the majority of the
corrective actions recommended in prior OIG reports relating to workload and
workforce management.
Deficiencies in workforce and workload management have been a longstanding issue at
the EPA. Recent budget cuts due to sequestration have highlighted the need for
improvement. The EPA OIG had issued three audit reports in the last 3 years containing
recommendations designed to improve the agency's workforce and workload
management.
Complex corrective action plans and implementing new workload and workforce
management initiatives contributed to delays in completing the corrective actions.
Delaying corrective actions resulted in unfinished improvements to the EPA's
management of its limited resources. We also found that the EPA did not update the
status of several of the corrective actions we reviewed in the agency's Management Audit
Tracking System.
We recommended that the EPA inform action officials that when corrective action dates
will be extended by more than 6 months, they must provide the OIG with written
notification and new milestone dates. We also recommended that training be provided on
updating the status of corrective actions. EPA agreed with our recommendations and
initiated corrective actions.
(Report No. 13-P-0366, The EPA Needs to Improve Timeliness and Documentation of
Workforce and Workload Management Corrective Actions, August 30, 2013)
Lessons Learned Noted for Hurricane Sandy Disaster Relief Funding
We found that the EPA had controls in place for the award and management of
Hurricane Sandy relief funds based on lessons learned from past reports
involving the American Recovery and Reinvestment Act of 2009.
On January 29, 2013, the President signed the Disaster Relief Appropriations Act, which
provided $608 million in aid to the EPA for Hurricane Sandy disaster victims and their
communities. The bulk of that funding was designated for the Clean Water and Drinking
Water State Revolving Funds.
We found that the EPA had controls in place to manage Sandy relief funds as described
in the agency's internal control plan, such as conducting transaction testing on cash
draws, performing semiannual administrative review of audits, and accelerating
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Semiannual Report to Congress April 1, 2013—September 30, 2013
resolution of open audits. We identified additional controls for the agency to consider
based on our prior report reviews: These included:
• Strengthen oversight of subrecipients.
• Work with states to make inspections part of routine oversight.
• Use information in recipient monitoring databases for progress reports.
• Include actions to identify states/projects at risk of not meeting deadlines.
• Update detection and reporting procedures for improper grant payments.
The OIG report made no recommendations. We encouraged the agency to consider
lessons we identified as the EPA moves forward with Sandy recovery activities, and the
EPA has plans in place to undertake many actions to address our suggestions.
(Report No. 13-P-0351, Internal Control Lessons Learned for Hurricane Sandy Disaster
Relief Appropriations Act Funds, August 22, 2013)
Region 8 Program for Senior Employees Needs Improved
Methodology
The two Region 8 program offices that jointly implement the Lead Renovation,
Repair and Painting Program do not have a methodology or agreement for
sharing Senior Environmental Employment funding, which has led to confusion
about respective roles and tasks.
We received a hotline complaint on funds utilization for work done by Region 8 Senior
Environmental Employment program grantees, focusing on the work plans for two
Region 8 program offices. We found that the region's Office of Partnerships and
Regulatory Assistance and Office of Enforcement, Compliance and Environmental
Justice do not have a methodology or agreement for sharing the funding. As a result,
most of the funding went to the Office of Partnerships and Regulatory Assistance, which
did not have a finalized work plan, and the other office had to cut its Senior
Environmental Employment staff to part time.
We recommended that Region 8 develop a strategy for implementing the Lead
Renovation, Repair and Painting Program that defines program goals, performance
measures, organizational responsibilities and a methodology for allocating Senior
Environmental Employment funding. Region 8 agreed with our recommendations and
has initiated efforts to address them.
(Report No. 13-P-0430, Implementation Plan With Cost Sharing Methodology Needed for
Region 8 Senior Environmental Employee Work on Lead Risk Reduction, September 24,
2013)
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Semiannual Report to Congress
April 1, 2013—September 30, 2013
«Ł»Ł
Region 4 Environmental Justice Grant Applicants Did Not
Receive Preference
The EPA's Region 4 Office of Environmental Justice had controls in place to
protect against bias, fraud and preselection of Environmental Justice Small
Grants recipients.
Our review, triggered by a hotline complaint, found that the Region 4 Office of
Environmental Justice followed policies and procedures when selecting Environmental
Justice Small Grants recipients during FYs 2010, 2011 and
2012. The goal of the EPA's Environmental Justice Small
Grants Program is to help communities build joint partnerships
to address environmental and public health issues.
I
The hydroponic garden at the Miami Science
Museum, for which the museum received
funding through an Environmental Justice
Small Grant. (EPA OIG photo)
The Region 4 Office of Environmental Justice did not ensure
that all review panelists were "knowledgeable in the field of
endeavor for which awards are being competed," as stipulated
by EPA's own internal requirements. However, we found no
evidence that grants applicants received preference or were
pre-selected. Additionally, we found no evidence that the
office's leadership supported or targeted a select audience for
grants. Inadequate review panelist training and a lack of
follow-up and communication on the final selection of grant recipients may have
contributed to perceptions that the Environmental Justice Small Grants review and
selection processes were improperly executed.
We recommended that the Region 4 Office of Environmental Justice provide adequate
training to ensure that review panelists are knowledgeable about environmental justice.
We also recommended that the office provide additional training on objectivity and the
definition of each ranking criterion, obtain feedback from review panelists, and notify
panelists when recipients are selected for awards. Region 4 agreed with our
recommendations and provided details on corrective actions planned.
(Report No. 13-P-0299, Review of Hotline Complaint Concerning the Region 4
EnvironmentalJustice Small Grants Selection Process, June 21, 2013)
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Semiannual Report to Congress April 1, 2013—September 30, 2013
EPA-Owned Research Facilities Need to Improve Protection of
IT Assets
Facilities management by the EPA's Office of Research and Development did not
consistently apply, or in some cases establish, controls to protect information
technology (IT) assets.
We found several instances where IT security practices at facilities did not meet minimal
recommended controls for securing IT assets. Chief among our findings were the
following:
• IT equipment was unprotected from and unmonitored for water damage.
• Access to server rooms was unrestricted.
• No continuity of operations plan existed for provisioning IT equipment.
• Backup data were not stored offsite.
Many security weaknesses occurred at Office of Research and Development facilities
because these facilities did not follow federal and agency guidance that prescribes
measures for securing IT assets. Further, Office of Research and
Development facilities did not consistently perform or, when necessary,
enhance security practices established to protect their facilities and the IT
resources within their custody.
OIG recommendations included requiring facilities management to install
locks on all wiring closets, formalize a process that restricts access to
server rooms, reconfigure local-area network security software to prevent
Unsecured thumb drives. . .
(EPA OIG photo) unauthorized device connection, strengthen encryption on all Office of
Research and Development wireless access points, and relocate data
backup tapes offsite to a secure location. The agency concurred with all 18 of the report's
recommendations.
(Report No. 13-P-0252, Improvements Needed to Secure IT Assets at EPA-Owned
Research Facilities, May 8, 2013)
EPA's Compass Financial System Controls Need to Be Improved
The EPA did not have processes in place to monitor performance of the third
party service provider of the Compass financial management system.
In October 2011, the EPA's Office of the Chief Financial Officer replaced its legacy
financial management system with a new system—Compass Financials. Compass was
developed and is hosted by a third party service provider. Compass replaced the agency's
Integrated Financial Management System.
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Semiannual Report to Congress
April 1, 2013—September 30, 2013
We found that processes were not in place to monitor performance of the third party
service provider of Compass. This lack of oversight inhibited the EPA's ability to achieve
agreed-upon performance levels and correctly pay for services rendered, and decreased
the likelihood that an effective security posture would be maintained. Further, disaster
recovery exercise plans did not include testing of data replication processes critical to
financial reporting, resulting in the EPA having no assurance that Compass will operate
as designed during a disaster.
We recommended that the Chief Financial Officer finalize internal procedures used for
reviewing the service provider's performance, continue to review service provider
performance on a monthly basis and document results, finalize the revised Quality
Assurance Surveillance Plan, and test inherent Compass financial reporting capabilities
during a functional disaster recovery exercise. The agency agreed with these
recommendations.
(Report No. 13-P-0359, Controls Over EPA 's Compass Financial System Need to Be
Improved, August 23, 2013)
EPA Needed Better Contract Administration for IT Support Contract
Based on our review of a Working Capital Fund contract with Customer
Technology Solutions for providing IT services, the EPA needs to improve its
contract administration to assist in managing similar contracts.
WCF Contracts (millions of obligations)*
• Netwoik Security and
New Custom Application
i C oni in eici ill-Off-Tli e-
Shelf
Customer Technology
Solutions
• Infrastructure
Hosting
Top five Working Capital Fund obligations as of May 2012.
(EPA OIG chart)
We conducted this audit to determine
whether the EPA implemented effective
contract administration for its Working
Capital Fund contract EPW08034. Although
the contract ended on September 30, 2012,
we sought to determine whether the agency
can apply lessons learned to similar
contracts.
The EPA did not use performance standards
to measure cost outcomes, complete any of
the required contractor performance
evaluation reports, or maintain required
contract administration documents for its
contract with Customer Technology
Solutions. The EPA's ineffective contract
administration may have hindered the ability
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Semiannual Report to Congress April 1, 2013—September 30, 2013
of EPA staff to ensure that the contractor successfully met agency needs, as well as its
ability to determine whether the EPA achieved the best value for the $85 million
expended on the contract.
We recommended that the EPA update its policies and procedures to ensure that contract
performance metrics and standards are linked to cost outcomes, oversight for linking
metrics to cost outcomes is improved, and the agency develops contract administration
procedures related to the transfer of documents when reassigning contract administrative
staff. The agency concurred with some but not all of our recommendations.
(Report No. 13-P-0398, Improved Contract Administration Needed for the Customer
Technology Solutions Contract, September 16, 2013)
Weaknesses in Information Security Program Noted
As part of our annual FY 2012 Federal Information Security Management Act
review of the EPA's information security program, we prepared a supplemental
report noting details on weaknesses found. This report supplements the Fiscal
Year 2012 Federal Information Security Management Act Report: Status of
EPA's Computer Security Program (13-P-0032), issued October 26, 2012.
Weaknesses regarding the agency's information security program involved continuous
monitoring management, configuration management, risk management, a plan of action
and milestones, and contractor systems. We made specific recommendations for
correcting the weaknesses noted, and the agency concurred with the recommendations
and provided high-level planned corrective actions.
(Report No. 13-P-0257, Briefing Report: Improvements Needed in EPA 's Information
Security Program, May 13, 2013)
Allegations Regarding Computer Center Contract Awards
Not Substantiated
We found no evidence to support hotline allegations that the EPA's National
Computer Center did not provide fair opportunities to vendors regarding network
security hardware contracts.
The OIG received a hotline complaint alleging that the EPA may have committed
improprieties in the bidding process for EPA network security hardware. The allegations
claimed that the center did not provide a fair opportunity to all vendors in the request for
proposals and EPA contractor personnel disclosed misleading information to a vendor
regarding the outcome of the selection process. We found no evidence to support the
allegations. We did determine that the EPA could improve communications with vendors
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Semiannual Report to Congress April 1, 2013—September 30, 2013
during pre-award activities. We recommended that the National Computer Center
develop disclosure language outlining communication protocols to include all written
communications with vendors during pre-award activities. The agency agreed and
developed the protocols.
(Report No. 13-P-0220, Review of Hotline Complaint on EPA 's Pre-Award Activities for
Multiple Award Contracts at the National Computer Center, April 15, 2013)
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Semiannual Report to Congress
April 1, 2013—September 30, 2013
Investigations
Significant Investigations
Former Project Manager Convicted for Role in Conspiracy Schemes
Involving Two EPA Superfund Sites in New Jersey
A New Jersey jury convicted a former project manager for his central role in
conspiracies that spanned 7 years and involved kickbacks in excess of
$1.5 million at two EPA Superfund sites in New Jersey.
On September 30, 2013, a jury returned guilty verdicts on 10 counts charged against
Gordon D. McDonald following a 2-week trial. McDonald, a former project manager for
a prime contractor, was convicted of engaging in separate bid rigging, kickback and/or
fraud conspiracies with three subcontractors at two New Jersey Superfund sites - Federal
Creosote in Manville and Diamond Alkali in Newark. He also was convicted of engaging
in an international money laundering scheme, major fraud against the United States,
accepting illegal kickbacks, obstruction of justice and tax violations. Sentencing is
scheduled for January 2014.
McDonald provided co-conspirators at Bennett Environmental Inc., a Canadian-based
company that treats and disposes of contaminated soil, with bid prices of their
competitors, which allowed them to submit higher bid prices and still be awarded the
subcontracts. In exchange, Bennett provided McDonald with more than $1.5 million in
kickbacks. McDonald also accepted kickbacks for the award of subcontracts from the
owner of JMJ Environmental Inc., a wastewater treatment and chemical supply company;
and the co-owner of National Industrial Supply LLC, an industrial pipes supplier. The
various conspiracies took place between 2000 and 2007.
To date, nine individuals and three companies have been convicted or pleaded guilty in
this ongoing investigation; five of the individuals have been sentenced to prison time
totaling over 10 years. Also, a total of more than $6 million in criminal fines and
restitution has been imposed.
This case is being conducted with the Internal Revenue Service Criminal Investigation
Division.
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Semiannual Report to Congress April 1, 2013—September 30, 2013
Four Former Contractor Employees Sentenced for Scrap Metal Theft
During April and May 2013, four former employees of an EPA contractor were convicted
and sentenced in U.S. District Court, Eastern District of Tennessee, for theft of
government property. Each former employee was sentenced to serve 5 years of probation
and ordered to pay a $5,000 fine and $8,725 in restitution. The four were involved in
stealing and selling scrap aluminum from the Smokey Mountain Smelters Superfund site
near Knoxville, Tennessee, and selling the aluminum for profit. This activity violated the
terms of the EPA contract, which required that any recovered scrap materials be sold to a
commercial salvage company and the payment applied as a credit to the EPA contract.
Man Sentenced for Theft of Government Computer
On May 1, 2013, a contract employee in the EPA regional office in Chicago, Illinois,
pleaded guilty in the Circuit Court of Cook County, Illinois, to theft. The contract
employee was sentenced to 2 years of probation and ordered to pay court fees of $699.
The employee had accessed a secured storage area in the EPA office, stolen a computer,
and concealed it in the front of his pants while exiting the facility. The employee then
electronically contacted the computer manufacturer for the purpose of trying to use the
computer, at which time he revealed his Internet Protocol address and contact
information. EPA OIG Special Agents were able to locate the employee, who confessed
to stealing the computer. The employee was arrested that same day with the assistance of
the Cook County Sheriffs Police Department. The computer was recovered.
Man Sentenced for Making a False Statement
On June 7, 2013, a man was sentenced in the U.S. District Court for Connecticut on one
count of false statements to an EPA OIG Special Agent. The man was sentenced to serve
24 months of probation and perform 50 hours of community service. The man provided
to another individual working on a possible real estate venture for a senior living facility
a letter which advised that the man's firm had been awarded $250 million from the EPA
for a "Go Green Project." In fact, the letter had not been authored by the EPA employee
and no grant money was available. During the OIG's investigation of the fictitious letter,
the man made a false statement to the OIG Special Agent, and he consequently was
charged and convicted for making that false statement.
Man Pleads to Misdemeanor Count for Making Threats
On July 3, 2013, an Idaho man pleaded guilty in district court for the State of Idaho,
Ada County, to one misdemeanor count of making a telephonic threat. The man was
sentenced to 24 months of probation, and ordered to perform 40 hours of community service
and pay a fine of $412. The man also was ordered to attend an anger management class. In
2002, he made several telephone threats to an EPA Superfund Site Coordinator in Boise,
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Semiannual Report to Congress April 1, 2013—September 30, 2013
Idaho, attributing tumors removed from the leg of his son to heavy metal contamination in
the area surrounding his residence. The man claimed that although the EPA had cleared the
area he thought it was still contaminated. A warning letter was issued to the man advising
him that it was inappropriate to try to motivate the EPA to pressure the site's owner to give
him a monetary settlement for his son's pain and suffering and the devaluation of his
property. In April 2012, another EPA employee received a threatening voice mail message
from the man wherein the man discussed his "desire to kill others" as the result of his
continued frustration regarding the site.
Civil Settlement Reached for Violation of Davis-Bacon Act
On May 25, 2013, Southeast Pipe Survey Inc. entered into a $100,000 civil settlement
with the U.S. Attorney's Office, Eastern District of North Carolina, to settle allegations
that it submitted false claims related to its compliance with the requirements of the
Davis-Bacon Act. American Recovery and Reinvestment Act of 2009 funds were
awarded to the North Carolina towns of Carolina Beach, Kure Beach and Roxboro for
water quality infrastructure projects. The Recovery Act requires that contractors and any
subcontractors hired by the prime contractor comply with provisions of the Davis-Bacon
Act, which requires payment of the prevailing wage to workers. The towns each awarded
contracts to Southeast Pipe, and the company periodically submitted requests for payment
to each of the towns. Those requests contained a signed certification that the work was
completed in accordance with requirements of the Davis-Bacon Act when the company
did not actually comply with the requirements.
Civil Settlement Reached in Air Sampling Case
Without an admission of liability and in the interest of resolving issues, Eastern Research
Group Inc. entered into a $97,508 civil settlement with the U.S. Attorney's Office, Eastern
District of North Carolina. The company held an EPA contract to analyze air monitoring
samples under the Air Toxic Monitoring Initiative. The air samples originated from air
monitors located nationwide, including around schools. The company self-reported to the
EPA that one of its analysts had manually integrated continuing calibration verifications so
that the scientific instruments used to conduct the analysis would pass quality control
requirements. The improper manual integrations allowed Gas Chromatograph/Mass
Spectrometer instruments to pass quality control requirements while analyzing the air
samples.
Political Appointee Investigated for Misconduct
The OIG Hotline received a complaint regarding allegations of employee misconduct by
a political appointee. The OIG investigated a total of eight allegations, six of which were
unsubstantiated. Regarding the two allegations substantiated, the employee accepted a
gift of travel and a flight in a private jet from a registered lobbyist. Prior to the OIG
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Semiannual Report to Congress
April 1, 2013—September 30, 2013
receiving the aforementioned allegations and conducting an investigation, an Office of
General Counsel career employee counseled the appointee regarding these matters. As a
result of this investigation, the appointee was requested to review the counseling advice
that the appointee previously had received, and no additional actions were taken.
Presidential Appointee Counseled for Violations of Ethics Pledge
The OIG received an allegation that a presidential appointee violated the ethics pledge,
signed pursuant to Executive Order 13490, which restricts presidential appointees from
participating in any matters, substantially or directly, related to a former employer. It was
alleged that the employee was copied on EPA emails that involved two organizations
with which the employee previously was involved. The investigation disclosed
13 incidences in which the employee violated the ethics pledge obligations by having
communications and/or meetings relating to the performance of official duties with the
two organizations prior to the expiration of the 2-year post-employment ban on such
activity. The employee was counseled regarding this matter.
Closed Employee Integrity Cases
Statistics on employee integrity investigation cases closed during the semiannual
reporting period, as well as summaries of the cases, follow.
Pending 4/1/13
Open
Closed
Pending 9/30/13
Political
appointees
4
3
1
6
SES
4
2
0
6
GS-14/15
20
4
6
18
GS-13 and
below
36
13
13
36
Misc
4
2
1
5
Total
68
24
21
71
I Political Appointees
ISES
14/15
113 and below
Misc
Pending Employee Misconcuct Cases as of 9/30/13
"Misc" includes unknown subjects and contractor employees.
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Semiannual Report to Congress April 1, 2013—September 30, 2013
Weapons Possession: While on official government travel, a GS-13 EPA employee was
arrested by the Transportation Security Administration for attempting to board a flight with
a small knife secreted in one of his shoes. The employee pleaded guilty to possession of a
dangerous weapon in a secure airport area, paid a monetary fine and was sentenced
to 180 days of probation. The employee's supervisor discussed proper travel procedures
with the employee to preclude recurrence.
Release of Procurement Information: A GS-15 employee allegedly made an unauthorized
release of procurement-sensitive information to one or more EPA employees and a senior
executive of a major corporation. This release of information to the corporation was intended
to give it an unfair advantage over its competition in the contractor-selection process, which
is a violation of the Procurement Integrity Act. The allegation was substantiated, but the
U.S. Attorney's Office declined criminal prosecution. One EPA employee was suspended
for 60 days and another was reprimanded; the GS-15 employee, who was promoted to the
SES during the investigation, retired in lieu of termination. The corporation was suspended
from government contracting for 7 days, and the corporation reimbursed EPA more than
$285,000 in attorney fees it had charged during an earlier fraudulent contract appeal process.
Also, two corporate executives were terminated.
Presidential Appointee Reprimanded for Violations of Ethics Pledge. The OIG
received an allegation that a presidential appointee violated the recusal provisions of the
ethics pledge established in Executive Order 13490. The appointee allegedly interacted
with a former employer regarding official EPA business during the period in which the
appointee was recused. The investigation disclosed that on more than one occasion the
appointee openly discussed EPA programs and projects with a representative of the
former employer; accepted, reviewed and then forwarded a document belonging to the
former employer to a member of the appointee's current EPA staff; and forwarded an
"all-hands" email from then EPA Administrator Jackson to EPA employees to three
employees of the appointee's former employer. The appointee received a verbal
reprimand as a result of the investigation.
Misrepresentation: Without permission and authority, a GS-13 EPA employee allegedly
shifted old EPA grant funds toward new projects. In addition, the employee allegedly
misrepresented himself as a state employee and signed four state requests for
reimbursement forms as a state project officer. The allegations were substantiated, but the
U.S. Attorney's Office declined criminal prosecution. As a result of the investigation, the
employee was suspended for 14 days. The last 7 days of the suspension will be held in
abeyance in return for the employee's compliance with the terms of an abeyance agreement
that includes the employee's retirement in early 2014.
Conflict of Interest: A former GS-13 EPA employee allegedly accepted employment with
a subcontractor on an EPA contract. The employee was formerly the contracting officer's
representative on the aforementioned contract. The investigation developed sufficient
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Semiannual Report to Congress April 1, 2013—September 30, 2013
information to believe that the employee had negotiated for employment with the
subcontractor while still employed by EPA and serving as the contract's contracting
officer's representative. However, the investigation did not develop sufficient information
that either the employee or subcontractor inappropriately benefited. Consequently, the
U.S. Attorney's Office declined criminal prosecution of this case based on insufficient
evidence showing willful conduct, as well as the fact that the employee is no longer
employed with the federal government.
Computer Misuse: A GS-13 EPA employee allegedly used an unauthorized EPA laptop
computer at his residence for personal and family use. It was later learned that the
employee may have been allowing others to use his network administrator password to use
the computer, potentially putting EPA networks at risk. The employee admitted he used the
EPA computer for various personal activities, including his wife's business, family photos,
college course work and paying personal bills online. The employee also admitted that his
13-year-old son would use the laptop with the employee's network administrator password.
The employee was placed on administrative leave, barred from the EPA facility and
allowed to resign from his position.
Improper Possession of Credentials: A former GS-12 EPA employee was arrested for an
incident unrelated to his employment with EPA. At the time of his arrest, the ex-employee
was allegedly in possession of photocopies of EPA enforcement credentials. Subsequently,
the ex-employee was deemed unfit to stand trial and released, and reportedly was living on
the street. Extensive attempts to locate the employee to retrieve the credentials were
unsuccessful, and the case was closed.
Firearm in a Federal Facility: A contractor employee was arrested for possessing a
firearm in a federal building. The employee was terminated from the position with the
contractor and barred from EPA facilities. At the subsequent trial, the employee was found
not guilty on all charges. In accordance with the laws of the District of Columbia, the
firearm was confiscated and not returned.
Assault: A GS-14 EPA employee allegedly physically assaulted another employee. The
investigation revealed evidence that one employee held another employee's arm/wrist and
did not release it until a document was signed. The allegation was substantiated, but the
U.S. Attorney's Office declined criminal prosecution. The employee was orally counseled.
Solicitation: A GS-13 EPA employee allegedly engaged in misconduct by soliciting a
financial contribution from a government contractor to support the employee's child's
sports team. The investigation disclosed that the employee discussed the sponsorship
opportunity with the contractor because the employee's relationship with the contractor's
representative had evolved into a close personal friendship after 20 years of business and
personal interactions. The contractor contributed $150 to the team to have its company
name on a banner. Neither the employee nor the contractor received any direct financial
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Semiannual Report to Congress April 1, 2013—September 30, 2013
gain from this contribution. The allegation was substantiated, but the U.S. Attorney's
Office declined criminal prosecution. The employee received ethics counseling relative to
this matter.
False Police Report: A GS-13 EPA employee alleged that the employee's residence had
been broken into and EPA litigation documents were stolen from a personal computer by a
local police officer. The police department conducted an internal investigation that
determined the employee had lied to the police. The employee subsequently pleaded guilty
to filing a false police report, a misdemeanor. The employee's supervisor issued the
employee an official reprimand due to the employee's actions.
False Statements to OIG Agents: It was alleged that a GS-15 EPA employee used a
telephonic device to listen in on the phone calls of co-workers. The investigation found that
there was a telephonic device configured in a way that would enable the employee to listen
in on other employees' phone calls. However, the allegation was unsubstantiated in that the
investigation did not find any direct evidence that the employee had used the device to
intercept phone calls. However, during the course of the investigation, the employee
provided false oral statements on two occasions to OIG Special Agents. The U.S.
Attorney's Office declined criminal prosecution. The employee received a written warning
for making false statements and was advised to correct the conduct. The employee
subsequently was promoted to the SES.
Threats: A former GS-8 EPA employee allegedly made threats of bodily harm upon
receiving a Notice of Removal. The allegation was substantiated, but the U.S. Attorney's
Office declined criminal prosecution. The employee already had been terminated from
employment.
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Semiannual Report to Congress
April 1, 2013—September 30, 2013
Other Activities
FY 2013 Management Challenges Presented to Agency
On July 1, 2013, the EPA OIG provided to then acting Administrator Bob Perciasepe
a list of management challenges confronting the EPA. According to the Government
Performance and Results Act Modernization Act of 2010, major management challenges
are programs or management functions that have greater vulnerability to waste, fraud,
abuse and mismanagement, and a failure to perform well could seriously affect the ability
of an agency to achieve its mission or goals. The FY 2013 challenges were based
primarily on our audit, evaluation and investigative work. Those challenges are:
• Oversight of delegations to states. The EPA may authorize states to implement
environmental laws and regulations, and it relies heavily on authorized states to
do so. However, the EPA does not abrogate its oversight responsibility. While
the EPA has made strides to improve its oversight of states, it has not completed
its actions.
• Safe reuse of contaminated sites. The EPA increasingly has emphasized the
reuse of contaminated or once-contaminated properties but continues to face
challenges in this area. The EPA needs new strategies to address the challenges
of providing needed information and resources, and having the authority to
ensure long-term safety of reused sites.
• Enhancing IT Security to Combat Cyber Threats. The EPA's decentralized
structure to implement security controls makes it increasingly important for EPA
executives to adopt IT and cyber security strategies that ensure these practices are
fully integrated throughout the agency.
• The EPA's framework for assessing and managing chemical risks. Given the
vast number of chemicals for which the EPA needs to perform risk assessments
and management, we continue to identify challenges to the EPA's ability to
manage chemical risks.
• Workforce planning. The EPA has not developed sufficient analytical methods,
nor does it collect the data needed, to sufficiently measure its workload and the
corresponding workforce levels needed to carry out that workload.
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Semiannual Report to Congress April 1, 2013—September 30, 2013
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 review drafts of Office of
Management and Budget (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 12 proposed changes to legislation, regulations,
policy, procedures or other documents that could affect the EPA or the Inspector General,
and provided comments on six. Details on two significant items follow.
Proposed OMB Memorandum, Protecting Privacy While Reducing Improper
Payments With the Do Not Pay Initiative. The proposed OMB memorandum implements
Section 5 of the Improper Payments Elimination and Recovery Improvement Act of 2012
and provides guidance to help federal agencies protect privacy while reducing improper
payments with the "Do Not Pay" Initiative. We commented that the proposed OMB
memorandum, which discusses computer matching agreements (CMAs), is inconsistent
with the plain language and intent of the act and infringes on Inspector General
independence.
Section 5(e)(2)(A) of the act provides that "... each Inspector General and the head of
each agency may enter into CMAs with other Inspectors General and agency heads that
allow ongoing data matching (which shall include automated data matching) in order to
assist in the detection and prevention of improper payments." However, we believe
OMB's proposed interpretation that "[although Inspectors General may take the
initiative in proposing a matching program, all CMAs shall be written at the departmental
or agency level ..." is not consistent with the statutory language and would make the
statutory language meaningless. The statute's use of "and" means that both Inspectors
General and agency heads may enter into CMAs. We believe Section 5(e) was designed
to make it less burdensome for Inspectors General and agencies to conduct CMAs when
the purpose was to detect or prevent improper payments than it would be under the
normal requirements for the Computer Matching Act provisions in the Privacy Act.
OMB's interpretation is also an impediment to Inspector General independence. The
Inspector General Act provides the Inspector General the authority "to request such
information or assistance as may be necessary ... from any Federal ... agency
(Section 6(a)(3) and "... to enter into contracts and other arrangements for audits, studies,
analyses, and other services with public agencies ... as may be necessary to carry out the
provisions of this Act." In addition, Section 6(b)(l) of the Inspector General Act provides
that "upon request of an Inspector General for information or assistance ..., the head of
any Federal agency involved shall, insofar as is practicable ... furnish to such Inspector
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Semiannual Report to Congress April 1, 2013—September 30, 2013
General, or to an authorized designee, such information or assistance." OMB's language
appears to undercut Inspector General authority and independence.
Proposed EPA Order 3145, Position Management Program. The EPA's Office of
Human Resources proposed the establishment of Order 3145 to strategically align and
leverage the EPA's Position Management Program with the workforce planning and
budget process, and with diversity initiatives. This order also was intended to address the
OIG's recommendations in a February 2011 evaluation report examining agencywide
controls over staff resources. We provided a number of comments to help strengthen and
clarify the order, including:
a) Identifying more appropriate authorities and references to be included or replaced
in the order.
b) Specifically identifying proper roles and responsibilities of those involved.
c) Adding a subsection to specifically identify who is responsible for position
management in the OIG since the OIG is independent of the agency's position
management program.
Additionally, we provided a list of position management criteria to assist agency
management in determining whether position management was considered in
organizational and individual position design and in workforce planning, and to facilitate
using position management and organizational design theories, tools and techniques.
EPA OIG Designates Whistleblower Protection Ombudsman to
Educate Agency Employees on Whistleblower Issues
In late 2012, Congress passed the Whistleblower Protection Enhancement Act of 2012,
bolstering the Whistleblower Protection Act of 1989. The EPA OIG has a great
appreciation for what whistleblowers bring to efforts to root out fraud, waste and abuse.
We applaud this act for its intent to ensure that whistleblowing employees be protected
from retaliation (e.g., removal, demotion, transfer). In response to the act, the EPA
Inspector General has designated an experienced practitioner of Inspector General law
from the OIG's Office of Counsel to serve as the EPA Whistleblower Protection
Ombudsman.
The act requires a broad outreach effort, and agency Inspectors General are required to
ensure that agency employees are adequately informed about relevant Whistleblower
issues. The act indicates that the Whistleblower Protection Ombudsman is to be
responsible for educating employees about Whistleblower protections, rights and
remedies. Therefore, while called "ombudsman" by the act, the Whistleblower Protection
Ombudsman is not a traditional ombudsman role. Rather, this ombudsman, as specifically
defined by the act, is limited to educational functions, and may not serve as a
representative or advocate for a Whistleblower employee.
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Semiannual Report to Congress April 1, 2013—September 30, 2013
The EPA Whistleblower Protection Ombudsman has ready access to, and the full support
of, the EPA Inspector General. The Inspector General has reached out to the EPA
workforce to introduce the existence of the Whistleblower Protection Ombudsman. As a
result of that introduction, several agency employees have sought guidance from the EPA
Whistleblower Protection Ombudsman on possible Whistleblower issues. The EPA OIG
will be making a focused effort to reach the EPA workforce through a variety of means to
ensure that the educational mandate of the act is carried out.
EPA OIG Surveys Staff and Stakeholders as Part of Outreach Efforts
The EPA OIG, as part of its constant efforts to directly involve its staff in the planning
and development of the OIG, conducted its biennial SWOT (strengths, weaknesses,
opportunities and threats) survey and analysis. More than 60 percent of OIG staff
members participated in the survey anonymously, providing more than 3,000 comments
to help leadership identify key issues, risks, perceived problems, successes and ideas for
changes and improvements. Additionally, as part of our external outreach, we asked
outside OIG stakeholders to give us direct feedback on their perceptions of the strengths
and potential areas for improvements for OIG products and services. This process of
self-reflection and assessment demonstrates the OIG's commitment to customer service,
integrity and accountability.
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Semiannual Report to Congress
April 1, 2013—September 30, 2013
U.S. Chemical Safety and Hazard Investigation Board
The U.S. Chemical Safety and Hazard Investigation
Board (CSB) was created by the Clean Air Act
Amendments of 1990. The 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 the CSB. As a result, the EPA OIG has the responsibility to audit, evaluate,
inspect and investigate the CSB's programs, and to review proposed laws and regulations
to determine their potential impact on the CSB's programs and operations. Details on our
work involving the CSB are available at http://www.csb.gov/service.default.aspx.
CSB Refused to Produce Records, Resulting in 7-Day Letter
Being Issued
The CSB refused to produce records requested by the OIG in connection with an OIG
law enforcement investigation involving CSB operations, which represents a violation of
Section 6(b)(2) of the Inspector General Act. The CSB asserted that producing the
records to the OIG would waive attorney-client privileges associated with the records. As
a result, the OIG issued a "7-day letter" to the CSB Chairperson on September 5, 2013,
identifying as a particularly flagrant problem the CSB's refusal to produce the records
requested by the OIG. Section 5(d) of the Inspector General Act states that the Inspector
General shall report immediately to the head of the establishment involved any serious or
flagrant problems, abuses or deficiencies relating to the administration of programs and
operations of the establishment. Section 5(a)(5) of the Inspector General Act requires an
OIG to provide a summary in its Semiannual Report to Congress on each report made to
the head of an establishment under Section 6(b)(2) during the reporting period, hence the
reporting of this issue here.
FY 2013 Management Challenges Presented to CSB
On September 9, 2013, the OIG presented the following three management challenges to
the CSB. The first two also had been noted in FY 2012 while the third one was new.
• Clarifying CSB's statutory mandate. The 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. The CSB believes it is
operating according to its statutory mandate and cites a lack of resources to
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Semiannual Report to Congress April 1, 2013—September 30, 2013
investigate the additional incidents cited. We will continue to report this issue as
a management challenge until the CSB seeks to close its investigative gap.
• Promulgating a chemical incident reporting regulation. The CSB has not
published a chemical incident reporting regulation as required in the Clean Air
Act. The CSB believes that it receives adequate incident notifications through
constant media and Internet searches, as well as existing federal sources. If the
CSB believes the reporting is no longer needed, it should seek repeal of the
requirement.
• Meeting goal related to timely investigations. The CSB has not fully
accomplished its strategic objective to complete timely, high quality
investigations. We attributed this fact to a lack of defined performance indicators,
a backlog, staff turnover, filing issues and a need for updated policies. The CSB
attributed the problem to workload and budgetary issues beyond its control and
did not think the issue should be listed as a challenge. While we agree workload
and budgetary issues are factors, we still believe that this is a challenge the CSB
needs to address.
CSB Needs to Complete More Timely Investigations
The CSB did not have an effective management system to meet its established
performance goal to conduct incident investigations and safety studies
concerning the releases of hazardous substances. The CSB had not fully
accomplished its related strategic objective to complete the investigations timely.
We identified five reasons why the CSB did not meet its objective to timely complete
investigations.
• A lack of defined performance indicators in the CSB's annual performance plan.
• A backlog of open investigations without documented plans for resolution.
• An average investigative turnover rate of 15 percent.
• Non-collocation of files and incorrectly classified or coded investigation files.
• A need for updated policies.
We made nine recommendations to the CSB, including that it develop and implement
performance indicators, revise and publish action plans, review and act on investigations
open for more than 3 years, review supporting documentation in files, and implement and
update the management policy for investigative records. The CSB agreed with six of the
nine recommendations, and resolution efforts are in progress for the remaining three.
(Report No. 13-P-0337, U.S. Chemical Safety and Hazard Investigation Board Needs to
Complete More Timely Investigations, July 30, 2013)
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Semiannual Report to Congress April 1, 2013—September 30, 2013
Weaknesses in CSB Information Security Program Noted
The review of the CSB's FY 2012 information security program determined that the
program seems to be functioning as designed but there are areas for improvement.
This review was performed by a contractor to assess the CSB's compliance with the
Federal Information Security Management Act. The review determined that the CSB takes
information security weaknesses seriously. However, it also identified areas in which the
CSB could improve upon its vulnerability scanning, patch and configuration management,
device encryption, scanning software configuration, and inventory of IT assets. The CSB
agreed with the recommendations.
(Report No. 13-P-0307, Evaluation of the U.S. Chemical Safety and Hazard Investigation
Board's Compliance with the Federal Information Security Management Act
(Fiscal Year 2012), June 28, 2013)
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Semiannual Report to Congress
April 1, 2013—September 30, 2013
Statistical Data
Profile of Activities and Results
Audit and evaluation operations
Reviews performed by OIG
($ in millions)
April 1,2013, to
September 30, 2013
Questioned costs * $1 2.9
Recommended efficiencies * $0.9
Costs disallowed to be recovered $0.1
Costs disallowed as cost efficiency $1 6.5
Reports issued by OIG 42
Reports resolved 1 32
(Agreement by agency officials
to take satisfactory corrective
actions) **
FY
2013
$17.9
$80.7
$0.2
$17.3
70
253
Audit and evaluation operations
Reviews performed by Single Audit Act auditors
($ in millions)
April 1,2013, to FY
September 30, 2013 2013
Questioned costs * $9.6 $19.6
Recommended efficiencies * $0.0 $0.0
Costs disallowed to be recovered $5.5 $6.2
Costs disallowed as cost efficiency $0.0 $0.0
Single Audit Act reviews 183 361
Agency recoveries $4.2 $6.9
Recoveries from audit and
evaluation resolutions of current
and prior periods (cash collections
or offsets to future payments) ***
Investigative operations
($ in millions)
April 1,2013, to FY
September 30, 2013 2013
Total fines and recoveries **** $0.3 $4,442.5
Cost savings $2.3 $2.4
Cost avoidances $0.0 $0.0
Civil settlements $0.2 $0.2
Cases open during period 64 119
Cases closed during period 60 159
Indictments/informations of persons 21 34
or companies
Convictions of persons or firms 10 19
Civil judgments/settlements/filings 2 2
Questioned costs and recommended efficiencies
are subject to change pending further review in the
audit resolution process.
Reports resolved are subject to change pending
further review.
Information on recoveries from audit resolutions is
provided by EPA's Office of Financial Management
and is unaudited. The recommended efficiencies for
FY 2013 include $1 million resulting from monetary
actions taken or resolved prior to report issuance
and not otherwise reported for resolution.
Fines and recoveries resulting from joint
investigations.
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Semiannual Report to Congress
April 1, 2013—September 30, 2013
Audit, Inspection and Evaluation Report Resolution
Status report on perpetual inventory of reports in resolution process
for semiannual period ending September 30, 2013
Report category
A. For which no management
decision was made by
April 1,2013*
B. Which were issued during the
reporting period
C. Which were issued during the
reporting period that required
no resolution
Subtotals (A + B - C)
D. For which a management
decision was made during the
reporting period
E. For which no management
decision was made by
September 30, 2013
F. Reports for which no
management decision was
made within 6 months of
issuance
No. of
reports
154
225
132
247
222
25
95
Report issuance
($ in thousands)
Questioned
costs
$45,460
22,599
0
68,059
28,431
39,627
17,028
Recommended
efficiencies
$75,518
871
0
76,389
42,054
34,335
33,515
Report resolution costs
sustained
($ in thousands)
To be
recovered
$5,805
0
0
5,805
5,612
192
0
As
efficiencies
$23,282
54
0
23,336
16,454
6,882
0
Any difference in number of reports and amounts of questioned costs or recommended efficiencies between this
report and our previous semiannual report results from corrections made to data in our audit tracking system.
Status of management decisions on OIG reports
This section presents additional statistical information that is required by the Inspector General Act of
1978, as amended, on the status of EPA management decisions on reports issued by the OIG involving
monetary recommendations. Tables 1 and 2 cannot be used to assess results of reviews performed or
controlled by the OIG. Many of the reports were prepared by other federal auditors or independent public
accountants. EPA OIG staff do not manage or control such assignments. Auditees frequently provide
additional documentation to support the allowability of such costs subsequent to report issuance.
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Semiannual Report to Congress
April 1, 2013—September 30, 2013
Table 1: Inspector General-issued reports with questioned costs for semiannual period ending
September 30, 2013 ($ in thousands)
Report category
A. For which no management decision was made by
April 1,2013**
B. New reports issued during period
Subtotals (A + B)
C. For which a management decision was made during the
reporting period:
(i) Dollar value of disallowed costs
(ii) Dollar value of costs not disallowed
D. For which no management decision was made by
September 30, 2013
Reports for which no management decision was made
within 6 months of issuance
No. of
reports
32
13
43
18
10
8
24
12
Questioned
costs *
$45,460
22,599
68,059
28,431
5,612
22,817
39,627
17,028
Unsupported
costs
$31,661
19,883
51,544
25,169
3,591
21,578
26,376
6,492
Questioned costs include unsupported costs.
Any difference in number of reports and amounts of questioned costs between this report and our previous
semiannual report results from corrections made to data in our audit, inspection and evaluation tracking system.
Table 2: Inspector General-issued reports with recommendations that funds be put to better use
for semiannual period ending September 30, 2013 ($ in thousands)
Report Category
A. For which no management decision was made by April 1 , 201 3 *
B. Which were issued during the reporting period
Subtotals (A + B)
C. For which a management decision was made during the reporting period:
(i) Dollar value of recommendations from reports that were
agreed to by management
(ii) Dollar value of recommendations from reports that were
not agreed to by management
(iii) Dollar value of nonawards or unsuccessful bidders
D. For which no management decision was made by September 30, 201 3
Reports for which no management decision was made
within 6 months of issuance
No. of
reports
12
2
14
2
2
2
0
8
6
Dollar
value
$75,518
871
76,389
42,054
16,454
25,600
0
34,335
33,515
Any difference in number of reports and amounts of funds put to better use between this report and our previous
semiannual report results from corrections made to data in our audit, inspection and evaluation tracking system.
Audits, inspections and evaluations with no final action as of September 30, 2013, over 365 days past
the date of the accepted management decision (including audits, inspections and evaluations in appeal)
Audits, inspections and evaluations
Program
Assistance agreements
Contract audits
Single audits
Financial statement audits
Total
Total
49
10
0
19
3
81
Percentage
61
12
0
23
4
100
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Semiannual Report to Congress
April 1, 2013—September 30, 2013
Hotline Activity
The following table shows EPA OIG hotline activity regarding complaints of fraud, waste and abuse
in EPA programs and operations during the semiannual reporting period and annual period ending
September 3 0,2013.
Issues open at the beginning of the period
Inquiries received during the period
Inquiries closed during the period
Inquiries pending at the end of the period
Issues referred to others:
OIG offices
EPA program offices
Other federal agencies
State/local agencies
Semiannual period
(April 1,2013 -
September 30, 2013)
110
135
113
132
79
29
12
15
Annual period
(October 1,201 2 -
September 30, 2013)
112
267
247
132
160
63
24
20
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Semiannual Report to Congress
April 1, 2013—September 30, 2013
Summary of Investigative Results
Summary of investigative activity during reporting period
Cases open as of April 1, 2013 *
Cases opened during period
Cases closed during period
Cases pending as of September 30, 201 3
213
64
60
217
* Adjusted from prior period.
Investigations pending by type as of September 30, 2013
Contract fraud
Assistance
agreement fraud
Employee integrity
Program integrity
Computer crimes
Threat
Retaliation
Other
Total
Superfund
12
0
3
4
0
0
0
3
22
Management
12
18
31
14
2
5
1
8
91
Split
funded
11
6
36
6
8
6
0
5
78
Recovery
Act
7
11
0
5
0
0
0
2
25
CSB
0
0
1
0
0
0
0
0
1
Total
42
35
71
29
10
11
1
18
217
Results of prosecutive actions
Criminal indictments/informations/complaints
Convictions
Civil judgments/settlements/filings
Deportations
Fines and recoveries (including civil)
Prison time
Prison time suspended
Home detention
Probation
Community service
EPA OIG only
3
7
2
0
$257,386
0 months
0 months
0 months
312 months
138 hours
Joint*
18
3
0
0
$200,125
0 months
0 months
6 months
36 months
0 hours
Total
21
10
2
0
$457,511
0 months
0 months
6 months
348 months
138 hours
' With another federal agency.
Administrative actions
Suspensions
Debarments
Other administrative actions
Total
Administrative recoveries
Cost avoidance
EPA OIG only
5
1
46
52
$403,710
$2,097,013
Joint*
6
7
0
13
$106,596
$214,449
Total
11
8
46
65
$510,306
$2,311,462
' With another federal agency.
58
-------
Semiannual Report to Congress
April 1, 2013—September 30, 2013
Appendices
The Inspector General Act of 1978, as amended, requires a listing, subdivided according to subject matter, of each report issued by
the OIG during the reporting period. For each report, where applicable, the Inspector General Act also requires a listing of the dollar
value of questioned costs and the dollar value of recommendations that funds be put to better use.
Questioned Costs
Report No.
Report Title
Federal
Ineligible Unsupported Unreasonable Recommended
Date Costs Costs Costs Efficiencies
PERFORMANCE REPORTS
13-P-0209
13-P-0220
13-P-0221
13-P-0252
13-P-0257
13-P-0264
13-P-0271
13-P-0272
13-P-0298
13-P-0299
13-P-0307
13-P-0308
13-P-0317
13-P-0337
13-P-0341
13-P-0349
13-P-0351
13-P-0352
13-P-0356
13-P-0359
13-P-0361
13-P-0363
13-P-0364
13-P-0366
13-P-0370
13-P-0373
13-P-0386
13-P-0387
13-P-0398
13-P-0430
13-P-0431
13-P-0432
13-P-0433
13-P-0435
Opportunities for Improvements for Time and Materials Contract
Hotline Complaint on Contracts at National Computer Center
Completing Toxicity Assessment of Libby, Montana, Superfund Site
Securing IT Assets at EPA-Owned Research Facilities
Improvements Needed in EPA's Information Security Program
Thermal Variance and Cooling Water Permit Compliance
Improved Internal Controls Needed in the Gulf of Mexico Program Office
Main EPA Headquarters Warehouse in Landover, Maryland
Managing Electronic Waste and Enforcing Regulations
Hotline Complaint on Region 4 Environmental Justice Small Grants
CSB Compliance with FISMA (Fiscal Year 2012)
Safe Drinking Water Act Authority at a Tribal Drinking Water Plant
Alternative Method for Measuring Oil and Grease in Wastewater
CSB Needs to Complete More Timely Investigations
Lead Remediation Association of America
Security of the Nation's Drinking Water
Internal Controls for Hurricane Sandy Relief
Environmental Impact Statement Process
Indoor Mold Cleanup Decisions Based on EPA Tool
Controls Over EPAs Compass Financial System
EPA Needs to Improve STAR Grant Oversight
Chemical Fume Hood Testing Oversight to Risk
Quick Reaction Report on Scientific Integrity Policy
Workforce and Workload Management Corrective Actions
Impact on Oil Spill Funding Since the Enbridge Spill
Monitoring of Controls in the Renewable Fuel Standard Program
Strategic Planning Guidance for International Program Office
Ethics/Partiality Concerns for Clean Air Federal Advisory Committees
Contract Administration for Customer Technology Solutions Contract
Region 8 Senior Environmental Employee Work Lead Risk Reduction
Pesticide and Chemical Enforcement Penalty Policies and Practices
Administration of EPA's Customer Service Lines
Congressionally Requested Inquiry Into Private/Alias Email Accounts
Utility of the Watch List as a Management Tool
TOTAL PERFORMANCE REPORTS = 34
Apr. 04, 2013
Apr. 15,2013
Apr. 17, 2013
May 08, 2013
May 13, 2013
May 23, 2013
May 30, 201 3
May 31, 201 3
Jun.21,2013
Jun.21,2013
Jun.28, 2013
Jul.02, 2013
Jul. 11,2013
Jul.30,2013
Aug. 06, 2013
Aug. 21, 2013
Aug. 22, 2013
Aug. 22, 2013
Aug. 22, 2013
Aug. 23, 2013
Aug. 27, 2013
Aug. 28, 2013
Aug. 28, 2013
Aug. 30, 2013
Sep. 04, 2013
Sep. 05, 2013
Sep. 09, 2013
Sep. 11,2013
Sep. 16, 2013
Sep. 24, 2013
Sep. 26, 2013
Sep. 26, 2013
Sep. 26, 2013
Sep. 30, 2013
$0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
$0
$0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
$0
$0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
$0
$0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
54,000
0
0
0
0
0
0
0
0
0
0
0
0
0
$54,000
SINGLE AUDIT REPORTS
13-3-0210
13-3-0211
13-3-0212
13-3-0213
13-3-0214
13-3-0215
13-3-0216
13-3-0217
13-3-0218
13-3-0219
13-3-0222
13-3-0223
13-3-0224
13-3-0225
The Nature Conservancy, Virginia - FY 2012
Montevallo, Alabama, Water Works and Sewer Board - FY 2012
Port Allen, Louisiana, City, of - FY 201 2
Oklahoma City, Oklahoma - FY 201 2
Washington College, Maryland - FY 2012
Barnum , Minnesota, City of - FY 201 1
Harrington, Delaware, City of - FY 201 1
Belle Vernon, Pennsylvania, Municipal Authority - FY 201 1
Millboro, Delaware, Town of- FY 2012
St. Johns, Arizona, City of- FY 2012
Laurel, Mississippi, City of- FY 2012
Moberly, Missouri, City of- FY 2011
Verdigre, Nebraska, Village of- FY 201 1
Houston, Missouri, City of- FY 2011
Apr. 12, 2013
Apr. 12, 2013
Apr. 12,2013
Apr. 12,2013
Apr. 12,2013
Apr. 12,2013
Apr. 12, 2013
Apr. 12, 2013
Apr. 12, 2013
Apr. 12, 2013
Apr. 23, 2013
Apr. 24, 2013
Apr. 24, 2013
Apr. 24, 2013
$0
0
0
0
0
0
0
0
0
0
0
0
0
0
$0
0
0
0
0
0
0
0
0
0
0
0
0
0
$0
0
0
0
0
0
0
0
0
0
0
0
0
0
$0
0
0
0
0
0
0
0
0
0
0
0
0
0
59
-------
Semiannual Report to Congress
April 1, 2013—September 30, 2013
Questioned Costs
Report No.
13-3-0226
13-3-0228
13-3-0229
13-3-0230
13-3-0231
13-3-0232
13-3-0233
13-3-0234
13-3-0235
13-3-0236
13-3-0237
13-3-0238
13-3-0239
13-3-0240
13-3-0241
13-3-0242
13-3-0243
13-3-0244
13-3-0245
13-3-0246
13-3-0247
13-3-0248
13-3-0249
13-3-0250
13-3-0251
13-3-0253
13-3-0254
13-3-0255
13-3-0256
13-3-0258
13-3-0259
13-3-0260
13-3-0261
13-3-0263
13-3-0265
13-3-0266
13-3-0267
13-3-0268
13-3-0269
13-3-0270
13-3-0273
13-3-0274
13-3-0275
13-3-0276
13-3-0277
13-3-0278
13-3-0279
13-3-0280
13-3-0281
13-3-0282
13-3-0283
13-3-0284
13-3-0285
13-3-0286
13-3-0287
13-3-0288
13-3-0289
13-3-0290
13-3-0291
13-3-0292
13-3-0293
13-3-0294
13-3-0295
13-3-0300
13-3-0301
13-3-0302
Report Title
Osage County, Missouri, Public Water Supply District No. 3 - FY 201 1
Ashland, Kentucky, City of - FY 201 2
Goodlettsville, Tennessee, City of- FY 2012
Wilmington, Delaware, City of- FY 2012
Mansfield, Louisiana, City of - FY 201 1
San Juan County, Washington - FY 201 1
Olivenhain Municipal Water District, California - FY 2012
California, University of- FY 201 2
Woonsocket, South Dakota, Municipality of- FY 201 1
Confederated Tribes of the Goshute Reservation, Utah - FY 2010
York, Nebraska, City of- FY 2011
Park County, Wyoming - FY 2012
Bear River Regional Joint Powers Board, Wyoming - FY 201 1
Scott's Run Public Service District, West Virginia - FY 201 1
Maddock, North Dakota, City of - FY 2012
Superior, Montana, City of- FY 2012
Ute Indian Tribe, Utah- FY 2011
Robinson Rancheria Band of Porno Indians, California - FY 2010
Santa Nella County Water District, California - FY 201 2
Kingman, Arizona, City of- FY2011
Cooks Endeavors DBA Fruitridge Vista Water Co., California - FY 201 1
Butte-Silver Bow, Montana, City and County - FY 2012
Missoula, Montana, City of- FY 2012
Timbisha Shoshone Tribe, California - FY 2008
Skagway, Alaska, Municipality of- FY2012
Colorado, State of -FY 2012
Tehachapi, California, City of - FY 2012
Arizona, State of- FY 2012
Florida, State of- FY 201 2
Maui, Hawaii, County of- FY 2012
Big Valley Rancheria Band of Porno Indians, California - FY 2010
Kentucky Infrastructure Authority- FY2012
Pennsylvania, Commonwealth of - FY 2012
Nevada, State of- FY 201 2
Delaware, State of- FY 2012
North Carolina, State of - FY 2012
New Mexico Environment Department - FY 2012
Nebraska, State of- FY 201 2
Hawaii , Department of Health - FY 201 2
New Hampshire, State of - FY 2012
Los Angeles, Port of, California - FY 201 1
New Jersey, State of- FY 2012
Texas, State of- FY 2012
Washington, State of -FY 2012
Wisconsin, State of -FY 2012
West Virginia, State of -FY 201 2
Davenport, Iowa, City of- FY 201 2
Ottumwa, Iowa, City of- FY 2012
Washington, Iowa, City of - FY 2012
Upper Explorerland Regional Planning Commission, Iowa - FY 2012
Albion , Nebraska, City of - FY 201 2
Coralville, Iowa, City of- FY 2012
Ogallala, Nebraska, City of- FY2012
Uniontown, Washington, Town of- FY 2010
Port Lions, Alaska, Native Village of - FY 2012
Clackamas County, Oregon - FY 2012
Clay Rural Water Systems, South Dakota - FY 2012
North Dakota Stockmen's Association, North Dakota - FY 2012
Rancho Cordova, California, City of- FY 2012
Winslow, Arizona, City of- FY 2012
Eureka, California, City of- FY 2012
Grass Valley, California, City of - FY 2012
Coeurd'Alene, Idaho, City of- FY 201 2
Orange County, California, Municipal Water District of- FY2012
Idaho, State of- FY 2012
Beatty Water and Sanitation District, Nevada - FY 2012
Ineligible
Date Costs
Apr. 24, 2013
Apr. 29, 2013
Apr. 29, 2013
Apr. 29, 2013
Apr. 29, 2013
Apr. 29, 2013
Apr. 29, 2013
Apr. 29, 2013
May 02, 2013
May 02, 2013
May 02, 2013
May 06, 2013
May 06, 2013
May 06, 2013
May 06, 2013
May 06, 2013
May 06, 201 3
May 06, 201 3
May 06, 2013
May 06, 2013
May 06, 2013
May 07, 2013
May 07, 201 3
May 07, 201 3
May 07, 201 3
May 08, 201 3
May 10, 2013
May 13, 2013
May 13, 2013
May 14, 2013
May 14, 2013
May 21, 201 3
May 21, 201 3
May 22, 201 3
May 28, 201 3
May 28, 2013
May 29, 2013
May 29, 2013
May 29, 2013
May 29, 201 3
Jun.06, 2013
Jun.07, 2013
Jun.07, 2013
Jun.07, 2013
Jun.07, 2013
Jun.07, 2013
Jun.07, 2013
Jun.07, 2013
Jun.07, 2013
Jun.07, 2013
Jun.07, 2013
Jun.07, 2013
Jun.07, 2013
Jun.07, 2013
Jun. 10, 2013
Jun. 10, 2013
Jun. 10, 2013
Jun. 10, 2013
Jun. 11,2013
Jun. 11,2013
Jun. 11,2013
Jun. 11,2013
Jun. 11, 2013
Jun. 24, 2013
Jun. 24, 2013
Jun. 25, 2013
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
Federal
Unsupported Unreasonable Recommended
Costs Costs Efficiencies
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
6,313,514
0
0
0
0
1,861,502
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
43,456
0
0
0
0
0
0
0
0
110,077
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
60
-------
Semiannual Report to Congress
April 1, 2013—September 30, 2013
Questioned Costs
Report No.
13-3-0303
13-3-0304
13-3-0305
13-3-0306
13-3-0310
13-3-0311
13-3-0312
13-3-0313
13-3-0314
13-3-0315
13-3-0316
13-3-0318
13-3-0319
13-3-0320
13-3-0322
13-3-0323
13-3-0324
13-3-0325
13-3-0326
13-3-0327
13-3-0328
13-3-0329
13-3-0330
13-3-0331
13-3-0332
13-3-0333
13-3-0334
13-3-0335
13-3-0336
13-3-0338
13-3-0339
13-3-0340
13-3-0342
13-3-0343
13-3-0344
13-3-0345
13-3-0346
13-3-0347
13-3-0348
13-3-0350
13-3-0354
13-3-0355
13-3-0357
13-3-0358
13-3-0360
13-3-0362
13-3-0365
13-3-0368
13-3-0369
13-3-0371
13-3-0372
13-3-0374
13-3-0375
13-3-0376
13-3-0377
13-3-0378
13-3-0379
13-3-0380
13-3-0381
13-3-0382
13-3-0383
13-3-0384
13-3-0385
13-3-0388
13-3-0389
13-3-0390
Report Title
Galena, Alaska, City of -FY 2012
Ouzinkie, Alaska, Native Village of- FY 2012
Boise, Idaho, City of- FY 201 2
Gold Beach, Oregon, City of- FY 2012
Taos, New Mexico, City of - 201 2
Houston, Texas, City of -2012
Clovis, New Mexico, City of - 2012
Donaldsonville, Louisiana, City of -2012
Harris County Municipal Utility District No. 148, Texas - FY 2012
Mandeville, Louisiana, City of- FY 2012
St. Francisville, Texas, Town of- FY2012
Westlake, Louisiana, City of- FY 2012
Bonham, Texas, City of - FY 2012
Cabazon Band of Mission Indians, California - FY 2012
Redway Community Services District, California - FY 2012
Galveston, Texas, City of- FY 2012
Killeen, Texas, City of- FY 2012
Nacogdoches, Texas, City of- FY 2012
Livonia, Louisiana, Town of - FY 2012
Plaquemine, Louisiana, City of- FY 2012
Monroe, Louisiana, City of - FY 2012
Leesville, Louisiana, City of - FY 201 2
Ward Two Water District of Livingston Parish, Louisiana - FY 2012
Alabama-Quassarte Tribal Town, Oklahoma - FY 2012
Robert Lee, Texas, City of- FY 2012
Springtown, Texas, City of- FY 2012
Grace Hill Settlement House, Missouri - FY 2011
Ohio, State of -FY 2012
Lamar County Water Supply District, Texas - FY 2012
Fort Dodge, Iowa, City of- FY 2012
Sac City, Iowa, City of- FY 2012
Picuris Pueblo, New Mexico - FY 2009
Treasure Coast Regional Planning Council, Florida - FY 2012
Era/in, Tennessee, Town of- FY 2012
Proctor, Vermont, Town of- FY 2012
Redlands, California, City of- FY 2012
Nogales, Arizona, City of - FY 201 2
Lower Elwha Klallam Tribe, Washington - FY 2012
St. Mary's, Alaska, City of -2011
Wells Band Council, Nevada - FY 2008, 201 1 and 2012
Illinois, State of -FY 2012
Guam Waterworks Authority, Guam - FY 2012
Oakdale, Louisana, City of - FY 201 1
LaCrosse, Kansas, City of - FY 2012
Maiden, Massachusetts, City of- FY2012
Gloucester, Massachusetts, City of- FY 2012
Newport Borough Water Authority, Pennsylvania - FY 201 1
El Dorado, Kansas, City of - FY 2012
Rhode Island and Providence Plantation, State of- FY 2012
Surprise, Arizona, City of - FY 2012
Corrales, New Mexico, Village of - FY 2012
Anaconda-Deer Lodge County, Montana - FY 201 2
Crow Creek Sioux Tribe, South Dakota - FY 201 1
Hughson, California, City of - FY 2012
Lemoore, California, City of- FY 2012
Clark County, Nevada -FY 201 2
Vacaville, California, City of -FY 2012
Eagar, Arizona, Town of - FY 201 2
Houston, Missouri, City of- FY 2012
Marin Municipal Water District, California - FY 2012
Bullhead City, Arizona, City of - FY 201 2
Ulster Municipal Authority, Pennsylvania - FY 2010
Raymore, Missouri, City of- FY2012
Rubidoux Community Services District, California - FY 2012
Kalispell Public Schools, Montana - FY 2012
Moorcroft, Wyoming, Town of - FY 2012
Date
Jun.25, 2013
Jun.25, 2013
Jun.25, 2013
Jun.25, 2013
Jul.03,2013
Jul.03,2013
Jul.08,2013
Jul.08,2013
Jul.09, 2013
Jul. 09,2013
Jul.09, 2013
Jul. 18,2013
Jul. 18,2013
Jul. 18, 2013
Jul. 22, 2013
Jul. 22, 2013
Jul. 22, 2013
Jul. 22, 2013
Jul. 22, 2013
Jul. 22, 2013
Jul. 23, 2013
Jul. 23, 2013
Jul. 23, 2013
Jul. 23, 2013
Jul. 23, 2013
Jul. 23, 2013
Jul. 24, 2013
Jul. 25, 2013
Jul. 25, 2013
Aug. 01, 2013
Aug. 01, 2013
Aug. 02, 2013
Aug. 08, 2013
Aug. 08, 2013
Aug. 08, 2013
Aug. 12, 2013
Aug. 12, 2013
Aug. 12, 2013
Aug. 12,2013
Aug. 21, 2013
Aug. 22, 2013
Aug. 22, 2013
Aug. 22, 2013
Aug. 22, 2013
Aug. 23, 2013
Aug. 28, 2013
Aug. 28, 2013
Aug. 30, 2013
Aug. 30, 2013
Sep. 04, 2013
Sep. 04, 2013
Sep. 05, 2013
Sep. 05, 2013
Sep. 05,2013
Sep. 06, 2013
Sep. 06, 2013
Sep. 06, 2013
Sep. 06, 2013
Sep. 06,2013
Sep. 09, 2013
Sep. 09,2013
Sep. 09,2013
Sep. 09, 2013
Sep. 09, 2013
Sep. 09, 2013
Sep. 09, 2013
Federal
Ineligible Unsupported Unreasonable Recommended
Costs Costs Costs Efficiencies
0
0
0
0
0
0
0
0
0
0
0
0
0
2,744
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
970,000
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
361,027
0
0
0
0
0
0
0
0
30,494
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
61
-------
Semiannual Report to Congress
April 1, 2013—September 30, 2013
Questioned Costs
Report No.
13-3-0391
13-3-0392
13-3-0393
13-3-0394
13-3-0395
13-3-0396
13-3-0397
13-3-0399
13-3-0400
13-3-0401
13-3-0402
13-3-0403
13-3-0404
13-3-0405
13-3-0406
13-3-0407
13-3-0408
13-3-0409
13-3-0410
13-3-0411
13-3-0412
13-3-0414
13-3-0415
13-3-0416
13-3-0417
13-3-0418
13-3-0419
13-3-0420
13-3-0421
13-3-0422
13-3-0423
13-3-0424
13-3-0425
13-3-0426
13-3-0427
13-3-0428
13-3-0429
Report Title
Flint Hills Resource Conservation and Development Area Inc., Kansas
Hildalgo Municipal Utility District No. One, Texas - FY 2012
West Union, Iowa, City of- FY 201 2
Portland, Tennessee, City of - FY 201 2
Charles Town Utility Board, West Virginia - FY 2012
Winchester, Kentucky, City of- FY 2012
Homer, Alaska, City of- FY 201 2
Aurora, Nebraska, City of - FY 2012
Blair, Nebraska, City of- FY 2012
Bridgeport, Nebraska, City of - FY 201 2
Humphrey, Nebraska, City of- FY 2012
Osceola, Nebraska, City of- FY 2012
Schoolcraft, Michigan, County of- FY 2012
Lenawee Conservation District, Michigan - FY 2012
Van Buren, Michigan, County of - FY 2012
Bois Forte Band of Chippewa, Minnesota - FY 2012
Dover, Delaware, City of - FY 201 2
Fairmont, West Virginia, City of- FY 2012
Huntington, West Virginia, City of- FY 2012
DuPage County, Illinois, Water and Sewerage System of
Bay-Lake Regional Planning Commission, Wisconsin - FY 2012
Cumberland Municipal Utility, Wisconsin - FY 2012
Stevens Point, Wisconsin, City of- FY 2012
Strum, Wisconsin, Village of- FY 2012
Dover Eyota St. Charles Area Sanitary District, Minnesota - FY 2012
Fairfax, Minnesota, City of- FY2012
Fosston, Minnesota, City of- FY 2012
Lester Prairie, Minnesota, City of- FY 2012
Mclntosh, Minnesota, City of - FY 2012
Wheaton, Minnesota, City of - FY 2012
Twin City Water & Sewer District, Ohio - FY 2012
Campbellsport, Wisconsin, Village of- FY 2012
Litchfield, Minnesota, City of - FY 201 2
Ottawa County Public Utilities System, Michigan - FY 201 2
Mecosta, Michigan, County of - FY 2012
Benson, Michigan, City of - FY 201 2
Jackson, Minnesota, City of- FY 2012
TOTAL SINGLE AUDIT REPORTS = 183
Date
Sep. 09, 2013
Sep. 09, 2013
Sep. 10,2013
Sep. 11,2013
Sep. 11,2013
Sep. 11,2013
Sep. 13,2013
Sep. 17,2013
Sep. 17,2013
Sep. 17,2013
Sep. 17,2013
Sep. 17,2013
Sep. 17, 2013
Sep. 17,2013
Sep. 17,2013
Sep. 17,2013
Sep. 17,2013
Sep. 17,2013
Sep. 17, 2013
Sep. 23,2013
Sep. 23,2013
Sep. 23,2013
Sep. 23,2013
Sep. 23, 2013
Sep. 23, 2013
Sep. 23, 2013
Sep. 23, 2013
Sep. 23,2013
Sep. 23, 2013
Sep. 24, 2013
Sep. 24, 2013
Sep. 24, 2013
Sep. 24, 2013
Sep. 24, 2013
Sep. 24, 2013
Sep. 24, 2013
Sep. 24, 2013
Ineligible
Costs
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
$972,744
Federal
Unsupported Unreasonable Recommended
Costs Costs Efficiencies
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
$8,720,070
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
$0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
$0
ATTESTATION REPORTS
13-4-0262
13-4-0296
SOL-HQ-1 2-00006 by Booz Allen Hamilton, Inc., McLean, Virginia
Labor-Charging Practices at the New Mexico Environment Department
TOTAL ATTESTATION REPORTS = 2
May 22, 201 3
Jun. 17,2013
$0
0
$0
$0
6,492,580
$6,492,580
$0
0
$0
$816,803
0
$816,803
NON-AUDIT REPORTS
13-N-0227 Compendium of Unimplemented Recommendations, March 31 2013
TOTAL NON-AUDIT REPORTS = 1
Apr. 30, 2013
$0
$0
$0
$0
AMERICAN REINVESTMENT AND RECOVERY ACT OF 2009 REPORTS
13-R-0297 Baton Rouge Ozone Nonattainment Area Railroad Research Found. Jun. 20,2013 $4,614 $2,921,090
13-R-0321 Tennessee Department of Transportation Jul. 19,2013 1,623,049 0
13-R-0353 Chelsea Collaborative Inc., Chelsea, Massachusetts Aug. 22, 2013 0 0
13-R-0367 Grace Hill Settlement House, St. Louis, Missouri Aug. 30,2013 91,554 1,523,809
13-R-0413 Yauco-La Jurada Community Distribution System, Yauco, Puerto Rico Sep. 23, 2013 0 0
TOTAL AMERICAN REINVESTMENT AND RECOVERY ACT $1,719,217 $4,444,899
OF 2009 REPORTS = 5
0
0
0
0
$0
0
0
0
0
$0
TOTAL REPORTS ISSUED = 225
$2,691,961 $19,657,549
$0
$870,803
62
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Semiannual Report to Congress
April 1, 2013—September 30, 2013
Appendix 2—Reports Issued Without Management Decisions
For Reporting Period Ended September 30, 2013
The Inspector General Act of 1978, as amended, requires a summary of each audit report issued before the
commencement of the reporting period for which no management decision had been made by the end of the
reporting period, an explanation of the reasons such management decision had not been made, and a statement
concerning the desired timetable for achieving a management decision on each such report. OMB Circular A-50
requires resolution within 6 months of a final report being issued. In this section, we report on audits with
no management decision or resolution within 6 months of final report issuance. In the summaries below, we note the
agency's explanation of the reasons a management decision has not been made, the agency's desired timetable for
achieving a management decision, and the OIG follow-up status as of September 30, 2013.
Report No. 10-P-0112, Results of Hotline Complaint Review of EPA Region 9 Hiring under the Federal Career
Intern Program, April 26, 2010
Summary: The hotline allegations against EPA Region 9 were unsubstantiated. We identified that the region
engaged in a prohibited personnel practice. Neither the Office of Personnel Management nor the EPA prohibits the
use of a job fair and registration code as recruiting and hiring methods. However, Region 9 engaged in a prohibited
personnel practice by giving four Federal Career Intern Program job fair participants improper advantages not
provided to others attending the job fair.
Agency Explanation: On September 17, 2013 the OIG contacted the Office of Administration and Resources
Management with some points of clarification on the recommendations. It is their intent to clarify these points before
moving forward with the response to the Corrective Action Plan. As of September 30, 2013, the OIG and Office of
Human Resources are working together to clarify this information.
OIG Follow-Up Status: No agency response provided.
Report No. 11-P-0722, EPA Should Prepare and Distribute Security Classification Guides, September 29, 2011
Summary: This report evaluated the scope and nature of the EPA's classified national security information
infrastructure and its ability to provide information to those who need it. The OIG found that the EPA has not
established any official classification guides even though EPA Administrators have taken original classification
actions. The EPA's National Security Information Handbook requires that a classification guide be developed for each
system, plan, program or project that involves classified information. The OIG recommended that the Administrator
ensure the preparation, review and approval of appropriate security classification guides that conform to the
requirements of Executive Order 13526, Classified National Security Information, and EPA's national security
information handbook. We also recommended that the Administrator ensure the distribution of classification guides to
users of the EPA's originally classified information and to program offices that work in related subject areas. The
Office of Administration and Resources Management, which responded on behalf of the agency, did not agree with
the report's conclusions and the recommendations are unresolved.
Agency Explanation: This audit is designated by the OIG as "resolution on hold - beyond agency control." Therefore,
an expected resolution date cannot be determined at this time.
OIG Follow-Up Status: Resolution on hold - beyond agency control.
Office of Grants and Debarment
Report No. 12-3-0007, Cascade Sierra Solutions, Eugene, Oregon - FY 2010, October 11, 2011
Summary: This review found that internal controls over project/customer file documentation are deficient. It was
difficult for the recipient to timely substantiate evidence of compliance for installation of verified technologies for EPA
and U.S. Department of Energy grants. The review also found that personnel had limited knowledge of generally
accepted accounting principles, specifically as they relate to accounting for financial receivables, loan fees and
allowance for losses. Due to the internal control findings reported by the single auditor and the inability of the
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Semiannual Report to Congress April 1, 2013—September 30, 2013
recipient's accounting system to ensure that federal costs are allowable under its grants, we questioned $2,767,077
in reported EPA federal expenditures.
Agency Explanation: Resolution is on hold and beyond agency control.
O/G Follow-Up Status: No agency response provided.
Report No. 12-3-0674, Galeton Area School District, Pennsylvania - FY 2011, August 16, 2012
Summary: This review found that the Galeton Area School District did not have documentation to substantiate certain
controls for purchasing goods and services. In addition, the district did not have adequate segregation of duties over
record-keeping and financial reporting functions.
Agency Explanation: The Office of Grants and Debarment is in the process of writing a management decision
regarding the acceptability of the district's correction action and hopes to issue a decision by March 31, 2014.
O/G Follow-up Status: No agency response provided.
Report No. 12-4-0224, Examination of Costs Claimed Under Cooperative Agreement X7-83325501 Awarded to
Kathleen S. Hill, January 23, 2012
Summary: We found that the recipient did not have a financial management system that met federal standards.
The recipient did not have adequate controls to ensure that costs claimed were in accordance with Code of Federal
Regulations requirements. The recipient's cash draws did not comply with 40 Part 30 requirements or the terms and
conditions of the cooperative agreement. As a result, we questioned $80,721 of the $726,587 claimed under the
cooperative agreement.
Agency Explanation: The Office of Grants and Debarment continues to work to come to agreement with the program
office and recipient in developing and issuing the agency's management decision to address the OIG findings listed in
the audit report on assistance agreement X7-83325501 awarded to Kathleen Hill. The Office of Grants and
Debarment hopes to issue its management decision by March 30, 2014.
O/G Follow-Up Status: No agency response provided.
Report No. 12-R-0749, Examination of Costs Claimed Under EPA Cooperative Agreement 2A-83440701
Awarded Under the Recovery Act to Cascade Sierra Solutions, Eugene, Oregon, September 4, 2012
Summary: Cascade Sierra Solutions' financial management system did not support that funds drawn are reasonable
and allocable in accordance with applicable laws and regulations. In particular, the grantee's financial management
system pertaining to cash draws, revolving fund accounting, project costs and progress reporting did not meet the
requirements of the Code of Federal Regulations, and procurements did not meet competition cost and price analysis
requirements. Reporting of the number of jobs created or retained with Recovery Act funds did not comply with the
OMB guidance. As a result, we were unable to provide an opinion on the financial resources, related liabilities,
revenue, expenses and residual balances. Therefore, we questioned the $9 million drawn as unallowable costs.
Agency Explanation: Resolution is on hold and beyond agency control.
O/G Follow-Up Status: No agency response provided.
Report No. 13-3-0062, El Cerrito, California, City of- FY 2011, November 28, 2012
Summary: City employees in charge of managing allowable grant expenditures for the Small Cities Climate Action
Partnership Project were not aware of OMB Circular A-87 and the policies it entails. Also, reimbursement requests for
the city's various grant-funded street and other related projects were not being prepared timely as evidenced by the
year-end fund balance deficit in the Capital Improvement Capital Projects Fund of $835,000.
Agency Explanation: The Office of Grants and Debarment has contacted the city to confirm that it has implemented
the appropriate corrective actions indicated in its response. Once received, the Office of Grants and Debarment will
evaluate the city's response and issue its management decision regarding its adequacy and acceptability. The Office
of Grants and Debarment hopes to issue that decision by March 30, 2014.
O/G Follow-Up Status: No agency response provided.
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Semiannual Report to Congress April 1, 2013—September 30, 2013
Report No. 13-3-0094, National Tribal Environmental Council, New Mexico - FY 2007, January 9, 2013
Summary: The single auditor reported five financial statement and three major program compliance findings related
to internal controls over cash, reconciliations, proper recording of direct costs, procurement, cash management,
allow/ability of costs, and reporting.
Agency Explanation: Resolution is on hold and beyond agency control.
O/G Follow-Up Status: No agency response provided.
Report No. 13-3-0121, Cascade Sierra Solutions, Eugene, Oregon - FY 2011, January 29, 2013
Summary: The single auditor reported growing concern regarding issues with the recipient. We continue to
recommend that the recipient maintain high risk status. We also questioned all EPA expenditures, totaling almost
$3 million, due to significant compliance issues, including the recipient's ability to account for its Clean Diesel
Revolving Loan expenditures.
Agency Explanation: Resolution is on hold and beyond agency control.
O/G Follow-Up Status: No agency response provided.
Financial Analysis and Rate Negotiation Service Center
Report No. 06-4-00165, National Academy of Sciences—FY 2006 Indirect/Other Direct Costs System,
September 27, 2006
Summary: In the Defense Contract Audit Agency's (DCAA's) opinion, the contractor's service centers cost system
and related internal control policies and procedures were inadequate in part. DCAA's examination noted certain
significant deficiencies in the design or operation of the Indirect/Other Direct Costs system process.
Agency Explanation: Resolution on hold. Resolution of audit results is not the EPA's responsibility but the responsibility
of the Department of Defense. Therefore, an expected resolution date cannot be determined at this time.
O/G Follow-Up Status: Resolution on hold pending receipt of additional information.
Report No. 07-1-00061, Lockheed Martin Services Group—FY 12/31/2004 I/C, April 10, 2007
Summary: DCAA questioned $34,708,911 in claimed direct costs and proposed indirect costs. Further, DCAA did not
audit $338,864,655 in claimed direct and indirect costs for assist audits not yet received or for received assist audit
reports, the impact of which on the contractor's cost objectives has not yet been calculated. Additionally, DCAA
upwardly adjusted $48,224,805 in claimed base costs. The EPA's share of the questioned costs totals $694,178.
DCAA did not provide any Cumulative Allowable Cost Work Sheet or Schedule of Allowable Costs by Cost Element
by Contract because the most current year with negotiated indirect rates is calendar year 1998. DCAA will issue a
supplemental audit report upon completion of its analysis of the assist audit results, and as the outstanding fiscal
years' indirect rates are negotiated, the requested Cumulative Allowable Cost Work Sheet and Schedule of Allowable
Costs by Cost Element by Contract will be provided.
Agency Explanation: Resolution on hold. Resolution of audit results is not the EPA's responsibility but the responsibility
of the Department of Defense. Therefore, an expected resolution date cannot be determined at this time.
O/G Follow-Up Status: Resolution on hold pending receipt of additional information.
Report No. 07-1-00080, Lockheed Martin Services, Inc.—FY 2005 Incurred Cost, August 6, 2007
Summary: DCAA questioned $595,792,539 in claimed direct costs and $10,982,460 in proposed indirect costs and
rates. None of the questioned direct costs are chargeable to any of the EPA contracts. A number of the EPA contracts
have indirect ceiling rates that are lower than the contractor's proposed indirect rates, and are not impacted by the
questioned indirect expenses and rates. However, there are EPA contracts/subcontracts that do not have indirect
ceiling rates and are impacted by the questioned indirect rates. EPA's share of questioned indirect costs totals
$133,069.
65
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Semiannual Report to Congress April 1, 2013—September 30, 2013
Agency Explanation: Resolution on hold. Resolution of audit results is not the EPA's responsibility but the responsibility
of the Department of Defense. Therefore, an expected resolution date cannot be determined at this time.
OIG Follow-Up Status: Resolution on hold pending receipt of additional information.
Report No. 09-1-0034, Lockheed Martin Services Group—FY 2006 Incurred Cost, November 24, 2008
Summary: DCAA questioned $23,672,344 in claimed direct and proposed indirect costs and rates. Of this, $381,582
is claimed direct costs and $23,290,762 is proposed indirect costs and rates. DCAA also did not audit $159,778,286
in claimed subsidiary and subcontracts costs. The EPA's share of the questioned costs is 3 percent, or $11,448 in
claimed direct costs and $698,722 in proposed indirect costs, a total of $710,170.
Agency Explanation: Resolution on hold. Resolution of audit results is not the EPA's responsibility but the responsibility
of the Department of Defense. Therefore, an expected resolution date cannot be determined at this time.
O/G Follow-Up Status: Resolution on hold pending receipt of additional information.
Report No. 13-4-0116, Agreed-Upon Procedures Applied to Proposal Submitted Under EPA Solicitation No.
SOL-HQ-12-00006 by Toeroek Associates, Inc., Lakewood, Colorado, January 23, 2013
Summary: The application of the agreed-upon procedures identified variances relating to the data manager rate
calculation, program management and profit. These results are provided to the Office of Acquisition Management for
contract negotiation purposes. The contracting officer should consider the variances noted and the potential impact
on the contract price during contract negotiations. In addition, we found that Toeroek and its subcontractor proposed
a method for charging program management that is not consistent with their disclosed or actual practices.
Agency Explanation: An award was made under this solicitation to Toeroek. The Office of Acquisition Management has
notified the OIG and anticipates closure by November 30, 2013.
O/G Follow-Up Status: No agency response provided.
Report No. 13-4-0125, Agreed-Upon Procedures Applied to Proposal Submitted Under EPA Solicitation No.
SOL-HQ-12-00005 by Advanced Environmental Management Group, Plymouth, Michigan, January 30, 2013
Summary: The application of the agreed-upon procedures identified variances relating to labor rates, fringe benefits,
general and administrative costs, program management, escalation and profit. The contracting officer should consider
the variances noted and the potential cost impact during the negotiation of the contract. The company did not bid
$114,154 of the proposed price in accordance with its actual cost practice. This amount represents the total program
management fee.
Agency Explanation: According to the contracting officer, solicitation SOL-HQ-12-00005 was the small-business
set-aside, which was canceled and not awarded due to sequestration and lack of funding. Since a contract was not
awarded to the offerer, this audit is closed. The Office of Acquisition Management submitted a closure request and
anticipates closure by November 30, 2013.
O/G Follow-Up Status: No agency response provided.
Report No. 13-4-0153, Office of Acquisition Management Request-Seagull Environmental, February 15, 2013
Summary: The application of the agreed-upon procedures identified variances relating to Seagull's indirect rate
calculation and Seagull's and its subcontractor's program management and profit. Seagull and its subcontractor
proposed a method for charging program management that is not supported by their disclosed or actual practices.
As a result, $44,393 of the proposed price was not bid in accordance with Seagull's and its subcontractor's cost
accounting practices.
Agency Explanation: The OIG performed a proposal review but the offerer was not awarded the contract. Since a
contract was not awarded to Seagull, the Office of Administration and Resources Management requested the OIG to
close out this audit. Closure is anticipated by November 30, 2013.
O/G Follow-Up Status: No agency response provided.
66
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Semiannual Report to Congress April 1, 2013—September 30, 2013
Report No. 13-4-0154, Office of Acquisition Management Request - SES Inc., February 15, 2013
Summary: The application of the agreed-upon procedures identified exceptions relating to labor rates, escalation
factors, indirect costs, program management fees, handling fees and profit. SES proposed a method for charging
program management that is not consistent with its actual practices. As a result, $19,201 of the proposed price was
not bid in accordance with SES's actual cost practices.
Agency Explanation: The OIG performed a proposal review but the offerer was not awarded the contract. Since a
contract was not awarded to SES, the Office of Administration and Resources Management requested the OIG to close
out this audit. Closure is anticipated by November 30, 2013.
OIG Follow-Up Status: No agency response provided.
Region 1—Regional Administrator
Report No. 12-3-0120, Southern New Hampshire Planning Commission - FY 2012, January 29, 2013
Summary: The New Hampshire Planning Commission received numerous grant awards from the EPA. At the time of
fieldwork, the single auditors were not provided with the following information required for federal reporting purposes:
federal award amount, grant number, Catalog of Federal Domestic Assistance number, and pass-thru agency.
Agency Explanation: Region 1 continues to work with the recipient on this audit. Region 1 anticipates closing this out by
October 31, 2013.
OIG Follow-Up Status: No agency response provided.
Region 2—Regional Administrator
Report No. 12-3-0198, Onondaga Environmental Institute, New York - FY 2009, January 12, 2012
Summary: This review found that the organization lacks sufficient internal controls over the financial records and the
preparation of the financial statements to prevent or detect errors in the financial data, including those which may be
material in relation to the financial statements. Assets and liabilities, along with related revenue and expense
accounts, were materially misstated and, in some instances, adequate supporting documentation was not available.
The review also found that the organization lacks adequate professional expertise and technical skill to maintain
complete and accurate financial records, along with adequate supporting documentation.
Agency Explanation: The grantee's corrective action plan is not fully satisfactory to Region 2. Region 2 is currently
reviewing documentation submitted to support grant expenses, but the documentation does not appear to comply with
EPA regulations. We continue to have dialogue with the grantee, and expect to issue a management decision by
December 31, 2013.
OIG Follow-Up Status: No agency response provided.
Report No. 12-3-0734, Onondaga Environmental Institute, New York - FY 2010, August 23, 2012
Summary: This review found that the organization lacked sufficient internal controls over the financial records and the
preparation of the financial statements to prevent or detect errors in the financial data. The institute lacked individuals
with adequate professional expertise and technical skill to maintain complete and accurate financial records. In
addition, supporting documentation was lacking in certain circumstances. The review also found that the institute did
not have controls, policies or procedures to minimize time elapsed between the transfer and disbursement. As a
result, advanced funds were used for general management. Similar findings were noted in the prior year audit report.
Agency Explanation: The grantee's corrective action plan is not fully satisfactory to Region 2. Region 2 is currently
reviewing documentation submitted to support grant expenses, but the documentation does not appear to comply with
EPA regulations. We continue to have dialogue with the grantee, and expect to issue a management decision by
December 31, 2013.
OIG Follow-Up Status: Incomplete response.
67
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Semiannual Report to Congress April 1, 2013—September 30, 2013
Report No. 13-3-0042, Onondaga Environmental Institute, New York - FY 2011, November 6, 2012
Summary: The grantee does not have sufficient internal controls over the financial records and the expertise needed
to prepare financial statements on the full accrual basis. This is a repeat finding from the prior year. We also found
that the grantee does not have controls, policies or procedures to minimize the time elapsing between the transfer of
funds from the U.S. Treasury and disbursement. The single auditor reported in Note 1 to the financial statements that:
amounts due to the EPA consist of expenses vouchered and reimbursed or reduced from the refundable advance
during 2009. These expenses had previously been reimbursed by the EPA and, as such, must be repaid or otherwise
reduced by allowable expenditures not claimed on other grants. Upon reviewing the financial statements, the grantee
identified $355,292 that is due to the EPA as a result of cash drawn in excess of previously reimbursed funds. This
amount should be refunded to the EPA.
Agency Explanation: The grantee's corrective action plan is not fully satisfactory to Region 2. Region 2 is currently
reviewing documentation submitted to support grant expenses, but the documentation does not appear to comply with
EPA regulations. We continue to have dialogue with the grantee, and expect to issue a management decision by
December 31, 2013.
O/G Follow-Up Status: Incomplete response.
Region 4—Regional Administrator
Report No. 12-4-0499, Costs Claimed by the North Carolina Rural Economic Center, Inc., Under EPA Grant
No. X96418405, May 23, 2012
Summary: This review found that the grantee did not comply with the Code of Federal Regulations regarding financial
management. The grantee 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. The grantee failed to properly
allocate the questioned costs primarily because the EPA provided incorrect guidance and inadequately monitored the
grant. The region 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. Additionally, the grantee was
unfamiliar with federal grant regulations. We recommended that Region 4 disallow all costs paid under the grant and
recover $1,192,500. Region 4 and the grantee disagreed with our draft findings and recommendation. We evaluated
the information contained in their responses to our draft report, but did not modify our findings or recommendation.
The recommendation is unresolved with resolution efforts in progress.
Agency Explanation: Two of the three corrective actions have been completed. The third corrective action required
Region 4 to request the grantee to submit the methodology for accounting for the allocation of costs among state and
federal funding sources for the full project costs. The region has reviewed the revised allocations and determined the
costs charged to the EPA were reasonable, allowable, supported by appropriate documentation and allocable to the
EPA. On September 5, 2013, Region 4 responded to the OIG with this additional information. Region 4 is awaiting its
review by the OIG. Region 4 expects resolution by December 2, 2013.
O/G Follow-Up Status: Response received and under review.
Region 8—Regional Administrator
Report No. 2007-4-00078, Cheyenne River Sioux Tribe, September 24, 2007
Summary: The tribe did not comply with the financial and program management standards under the Code of Federal
Regulations and OMB Circular A-87. We questioned $3,101,827 of the $3,736,560 in outlays reported. The tribe's
internal controls were not sufficient to ensure that outlays reported complied with federal cost principles, regulations
and grant conditions. In some instances, the tribe also was not able to demonstrate that it had completed all work
under the agreements and had achieved the intended results.
Agency Explanation: The Office of Grants and Debarment and the region are discussing contents of the proposed
final determination letter. Projected completion date is December 30, 2013.
O/G Follow-Up Status: Proposed response received in review process.
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Semiannual Report to Congress April 1, 2013—September 30, 2013
Report No. 13-3-0159, Summit Lake Paiute Tribe, Nevada - FY 2010, February 19, 2013
Summary: The tribe did not file or maintain documentation of compliance for annual reports. Also, the required
SF 425 report did not cover the correct period. A similar finding was noted in the prior year audit report. The tribe
recorded deferred revenues in the amount of $804,104 and only $150,416 in available cash. The single auditor
questioned $653,688. A similar finding was noted in the prior year audit report. The tribe's operating practices did not
reflect the processes described in the approved policies and procedures manual. The tribe did not properly reconcile
its SF 425 report to the general ledger for certain awards and the single auditor questioned $20,556. The single
auditor also questioned $76,216 involving amounts paid the General Assistance Program Director.
Agency Explanation: A management decision letter is pending resolution of appeal of the other three outstanding
audits (11-3-0150, 11-3-0151 and agreed-upon procedures). Region 9 anticipates a decision by December 31, 2013.
O/G Follow-Up Status: No agency response provided.
Report No. 13-3-0160, Summit Lake Paiute Tribe, Nevada- FY2011, February 19, 2013
Summary: The tribe did not file the quarterly narratives for the General Assistance Program. Furthermore, the tribe
was unable to locate documentation for two quarterly SF 425 reports. There were no formalized controls regarding
the security of the payroll stamp. Also, the single auditor noted issues related to pay rates. A similar finding was noted
in the prior year audit report. Budgets prepared excluded the carry-forward amounts from prior periods. Several
transactions were not supported by a purchase order or other type of approval prior to the expenditure being made.
One transaction charged to travel in the amount of $2,877 did not appear to be valid and appropriate for the granting
requirements, and the single auditors questioned that amount.
Agency Explanation: A management decision letter is pending resolution of appeal of the other three outstanding
audits (11-3-0150, 11-3-0151 and agreed-upon procedures). Region 9 anticipates a decision by December 31, 2013.
O/G Follow-Up Status: No agency response provided.
Total reports issued before reporting period for which
no management decision had been made as of September 30, 2013 = 25
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Semiannual Report to Congress
April 1, 2013—September 30, 2013
Appendix 3—Reports With Corrective Action Not Completed
In compliance with reporting requirements of Section 5(a)(3) of the Inspector General Act of 1978, as
amended, "Identification of Reports Containing Significant Recommendations Described in Previous
Semiannual Reports on Which Corrective Action Has Not Been Completed," and to help EPA and CSB
managers gain greater awareness of outstanding commitments for action, we developed a Compendium
of Unimplemented Recommendations. This separate document provides the information required in
appendix 3 to this Semiannual Report to Congress. This compendium (available upon request or at
http://www.epa.qov/oiq/reports/2014/20131115-14-N-0016.pdf) is produced semiannually for agency
leadership and Congress based on agency reports on the status of actions taken on OIG
recommendations and OIG selective verification of reported status.
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Semiannual Report to Congress
April 1, 2013—September 30, 2013
Appendix 4—Peer Reviews Conducted
The most recent peer review report on the EPA OIG was issued on May 9, 2012, by the U.S. Department
of Health and Human Services OIG. That review, covering the 3-year period ending September 30, 2011,
found that the EPA OIG system of quality control was suitably designed and complied with applicable
Government Auditing Standards. That report had given the EPA OIG a peer review rating of pass with
no deficiencies cited.
The EPA OIG completed an external peer review of the investigative operations of the U.S. Veterans
Administration and issued a quality assessment review report on August 23, 2013. We reviewed the
system of internal safeguards and management procedures in effect for the period October 1, 2011,
through September 30, 2012. The review was conducted in conformity with the Quality Standards for
Investigations and the Quality Assessment Review Guidelines established by the Council of the
Inspectors General on Integrity and Efficiency, and the Attorney General's Guidelines for Office of
Inspectors General with Statutory Law Enforcement Authority, as applicable. The review determined the
operations and controls were compliant with the applicable standards and guidelines.
The EPA OIG had completed an external peer review of the system of quality controls for the OIG audit
organization of the U.S. Department of Agriculture and issued a report on November 13, 2012. The
review, covering the period of April 1, 2009, through March 31, 2012, was conducted in accordance with
Government Auditing Standards and Council of the Inspectors General on Integrity and Efficiency
guidelines. The EPA OIG's system review report recognized that the U.S. Department of Agriculture OIG
audit organization's system of quality control was "suitably designed and complied with" to provide
"reasonable assurance of performing and reporting in conformity with applicable professional standards in
all material respects." The U.S. Department of Agriculture OIG audit organization received a peer review
rating of pass. The accompanying letter of comment identified areas for improvement and included three
recommendations. The U.S. Department of Agriculture OIG has completed corrective actions to address
our three recommendations.
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Semiannual Report to Congress
April 1, 2013—September 30, 2013
Appendix 5—OIG Mailing Addresses and Telephone Numbers
Headquarters
U.S. Environmental Protection Agency
Office of Inspector General
1200 Pennsylvania Ave., NW(2410T)
Washington, DC 20460
(202) 566-0847
Atlanta
U.S. Environmental Protection Agency
Office of Inspector General
61 Forsyth Street, SW
Atlanta, GA 30303
Audit/Evaluation: (404) 562-9830
Investigations: (404) 562-9857
Boston
U.S. Environmental Protection Agency
Office of Inspector General
5 Post Office Square, Suite 100 (OIG15-1)
Boston, MA 02109-3912
Audit/Evaluation: (617) 918-1470
Investigations: (703) 347-8740
Chicago
U.S. Environmental Protection Agency
Office of Inspector General
77 West Jackson Boulevard
13th Floor (IA-13J)
Chicago, IL 60604
Audit/Evaluation: (312) 353-2486
Investigations: (312) 353-2507
Cincinnati
U.S. Environmental Protection Agency
Office of Inspector General
26 West Martin Luther King Drive
Cincinnati, OH 45268-7001
Audit/Evaluation: (513) 487-2360
Investigations: (513) 487-2364
Dallas
U.S. Environmental Protection Agency
Office of Inspector General (6OIG)
1445 Ross Avenue, Suite 1200
Dallas, TX 75202-2733
Audit/Evaluation: (214) 665-6621
Investigations: (214) 665-2790
Offices
Denver
U.S. Environmental Protection Agency
Office of Inspector General
1595 Wynkoop Street, 4th Floor
Denver, CO 80202
Audit/Evaluation: (303) 312-6969
Investigations: (303) 312-6868
Kansas City
U.S. Environmental Protection Agency
Office of Inspector General
11201 Renner Boulevard
Lenexa, KS66219
Audit/Evaluation: (913) 551-7878
Investigations: (312) 353-2507
New York
U.S. Environmental Protection Agency
Office of Inspector General
290 Broadway, Room 1520
New York, NY 10007
Audit/Evaluation: (212) 637-3049
Investigations: (212) 637-3041
Philadelphia
U.S. Environmental Protection Agency
Office of Inspector General
1650 Arch Street, 3rd Floor
Philadelphia, PA 19103-2029
Audit/Evaluation: (215) 814-5800
Investigations: (215) 814-2367
Research Triangle Park
U.S. Environmental Protection Agency
Office of Inspector General
Mail Drop N283-01
Research Triangle Park, NC 27711
Audit/Evaluation: (919) 541-2204
Investigations: (919) 541-1027
San Francisco
U.S. Environmental Protection Agency
Office of Inspector General
75 Hawthorne Street (IGA-1)
7th Floor
San Francisco, CA 94105
Audit/Evaluation: (415) 947-4521
Investigations: (415) 947-8711
Seattle
U.S. Environmental Protection Agency
Office of Inspector General
12006th Avenue, 19th Floor
Suite 1920, M/SOIG-195
Seattle, WA 98101
Audit/Evaluation: (206) 553-6906
Investigations: (206) 553-1273
Washington
U.S. Environmental Protection Agency
Office of Inspector General
Potomac Yard
2733 Crystal Drive
Arlington, VA 22202
Investigations: (703) 347-8740
Winchester
U.S. Environmental Protection Agency
Office of Inspector General
200 S. Jefferson Street, Room 314
P.O. Box 497
Winchester, TN 37398
Investigations: (423) 240-7735
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Report fraud, waste or abuse
e-mail: OIG_Hotline@epa.gov
write: EPA Inspector General Hotline
1200 Pennsylvania Avenue NW
Mailcode2431T
Washington DC 20460
fax: 202-566-2599 • phone: 1-888-546-8740
www.epa.gov/oig/hotline.htm
It's your money
It's your environment
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