United States Office of Emergency and Publication: 9355.5-14 FS
Environmental Protection Remedial Response
Agency Washington, DC 20460 May 1990
EPA/USACE PAYMENT PROCESS
Direct Cite/Revised Reimbursement Methods
Office of Emergency and Remedial Response Quick Reference Fact Sheet
Hazardous Site Control Division OS-220
Introduction
This Quick Reference Fact Sheet announces a new procedure for paying the U.S. Army Corps of Engineers (USAGE)
for their Superfund related activities. This fact sheet will first describe the current procedure and then outline the
changes the Office of Emergency and Remedial Response (OERR), Office of the Comptroller, Office of Administra-
tion and USAGE are implementing.
Background
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The U.S. Army Corps of Engineers (USAGE) provides engineering and construction management services to assist
U.S. Environmental Protection Agency (EPA) in the implementation of the Superfund program. USAGE services
include remedial design, remedial action, oversight of potentially responsible parties, and technical assistance. These
services have been provided since 1982 through several Memorandums of Understanding.
Currently, USAGE costs incurred while performing Superfund related activities are paid from USAGE appropriations
which are then in turn reimbursed by EPA. Prior to reimbursement, payment requests received a lengthy review and
approval process within EPA. This process begins with the submission of a contractor's invoice for work accomplished
under a contract or a standard form (SF) 1080 for USAGE in-house activities. The contractor's invoice is reviewed and
approved by the USAGE Project Manager. The invoice is sent by the USAGE Project Manager to a USAGE Finance
Office for payment with USAGE appropriations. USAGE Finance Office then submits a SF1080 for reimbursement of
contract and in-house costs. The SF1080 is sent to the EPA Cincinnati Financial Management Center (CFMC). CFMC
in turn sends the SF1080 to the EPA Remedial Project Manager (RPM) for review and approval. The approved
SF1080 is returned to CFMC for EPA processing. Finally, CFMC sends the approved SF1080 to the Department of
the Treasury for reimbursement to USAGE. This reimbursement method is complex and significantly delays payment
to USAGE.
In an attempt to improve the payment process, a proposal entitled "Direct Cite/Modified Transfer Allocation Method for
Funding IAGS" was issued on October 14,1988. The direct cite method climates reimbursement to USAGE for
contractor costs by having EPA make payments directly to the contractor in conformance with the prompt payment
act based on USAGE certification of contractor invoices. This allows the Federal Agency with direct knowledge of con-
tractor performance to approve the invoices for payment. This method provides for the EPA review process to occur
after the payment is made and any corrective action taken on subsequent payment requests. A monthly transfer
allocation was proposed to cover USAGE in-house cost.
A demonstration project to test this method was conducted between January and June of 1989. The test was evalu-
ated in late June and results reported to the evaluation team members in July. The report recommended and the
evaluation team concurred that the direct cite process be initiated for all new USAGE Superfund projects. The team
wanted additional time to further assess the transfer allocation process for in-house costs before making any final
recommendations on this process. A revised reimbursement process was recommended as an interim payment
process for in-house USAGE costs.
Implementing these new payment processes between EPA and USAGE will reduce the complexity of the payment
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process and the resulting payment delays to USAGE. The new direct cite process provides a mechanism for payment
to contractors in conformance with the prompt payment act based on USAGE payment certification. A copy of the
certified pay request will be forwarded by the USAGE Project Manager to the RPM for review and possible reconcili-
ation. This change will reduce the stress on the RPM to take immediate action on a payment request.
New Payment Procedures
OERR Directive Memorandum 9295.2-04, "EPA/U.S. Army Corps of Engineers Payment Process, Direct Cite/Revised
Reimbursement Methods," dated March 21,1990, formally initiated new payment procedures for EPA/USAGE
Superfund activities.
New Projects: The following payment processes will be used for all new USAGE projects.
Figure 1
Direct Cite Payment Process for New Projects
CONTRACTOR
Submits Pay Request
EPA Regional Project Manager
Contractor Costs - In this direct cite process
(please refer to Figure 1) the remedial
design or remedial action contractor shall
submit a signed payment request to the
USAGE Project Manager. The request will
be reviewed and certified by USAGE and
forwarded to the EPA Cincinnati Financial
Management Center (CFMC). CFMC will
make payment directly to the contractor in
conformance with the prompt payment act
upon receipt of the USAGE certified pay-
ment request. Monthly, USAGE will send
copies of all certified payment requests to
the RPM for his review in conjuction with
the project status report. If the EPA RPM
detects any apparent discrepancies with the
payment request, the problem shall be dis-
cussed and resolved with the USAGE Proj-
ect Manager. Any changes required to sub-
sequent payment requests will be docu-
mented in a memorandum from the RPM to
the USAGE Project Manager. CFMC will be
sent a copy of this memorandum. RPM re-
view and approval shall be obtained by
CFMC prior to making to the final contract
payment.
USACE In-House Costs - Compensation for
^^^^^^^^^^™ USACE in-house costs will continue to be
handled under a revised reimbursement
process with the payment being made by CFMC upon receipt of a USACE certified request for payment (see Figure
2). In the monthly project status report, the USACE Project Manager shall provide a copy of the certified bill (SF
1080) submitted to CFMC for their in-house costs. A brief explanation of all costs will be included in the report. Reso-
lution of disagreements shall be handled in a similar fashion as the direct cite process. RPM review and approval shall
be obtained by CFMC prior to making the final project payment to USACE.
Existing Projects: To initiate the direct cite process for ongoing projects, USACE contracts would have to be
amended, along with existing lAGs. Although complete implementation has merit, the retrofitting of existing projects
could be difficult. For this reason, the revised reimbursement payment process shall be implemented for all payment
requests made by USACE for existing projects (please refer to Figure 3). USACE certified SF 1080 forms for reim-
bursement of contractor payments and in-house costs shall be sent directly to CFMC for payment. If the RPM dis-
agrees with a request, the problem shall be discussed and resolved with the USACE Project Manager. Any changes
required to subsequent pay requests will be documented in a memorandum from the RPM to the USACE Project
Manager. CFMC will be sent a copy of this memorandum. RPM review and approval shall be obtained by CFMC
USAGE Project Manager
Reviews & Certifies Pavmenl
Provided review copy of certified
payment request with project
status report.
Discuss and resolves any apparent
discrepancies with USACE Project
Manager.
Adjustments recommended by RPM
made on next voucher.
Payment to Contractor
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Figure 2
Revised Reimbursement Payment for USAGE In-House Costs
USAGE Project Manager
SubmitsCertified Pav Reauest
Reimbursement to USAC
EPA Regional Project Manager
Provided review copy of certified
payment request (SF-1080) with
project status report.
Discuss and resolves any apparent
discrepancies with USAGE Project
Manager.
Figure 3
Revised Reimbursement Payment for Existing Projects
CONTRACTOR
Submits Pay Request
USACE Project Manager
Reviews & Certifies Payment
EPA FINANCE
Reimburses USAGE!
1
EPA Regional Project Manager
Provided review copy of certified
payment request with project
status report.
Discuss and resolves any apparent
discrepancies with USACE Project
Manager.
Adjustments recommended by RPM
made on next voucher.
Reimbursement to USAC
J
prior to the final project payment to
USAGE.
Implementation
Interagency Agreement: For any
individual Interagency Agreement
(IAG), the inclusion of the following
clause implements the direct cite
methodology for that IAG:
a. Payment to USAGE contractors
is contingent upon receipt of a
USAGE certified payment request.
Reimbursement to USAGE for in-
house costs is contingent upon
receipt of a USAGE certified reim-
bursement request (SF1080).
Final project payments for spe-
cific contracts and in-house cost
shall be reviewed and approved
by the EPA Regional program
office.
This clause provides the authorized
mechanism to utilize the direct
cite and revised reimburse-
ment payment processes
and should be inserted into
the "Other EPA Involve-
ment" section of the IAG.
lAGs issued under the new
payment procedures should
indicate the dollar limina-
tions applicable to the direct
cite and reimbursable funds
available. This will assure
the funds are obligated
against the appropriate
funding method and not the
total amount of the IAG.
When funding levels are
exceeded for either portion
of the IAG, amendments will
be prepared increasing the
funding level for that
portion. A budget should
also be prepared by USAGE
and included in the IAG to
help in the management of
the project. Due to the
variability of Superfund
projects, strict adherence to
each line item should not be
a requirement; however,
line item variations should
not allow the total budget 1o
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be exceeded. Preparation and inclusion of a budget should be considered a management tool to identify potential
problems. This topic will be expanded upon later.
Financial Reporting from USAGE: In advising USAGE Project Managers of this new procedure, USAGE will direct
the Project Managers to provide a brief explanation of their cost to the RPM along with a copy of the payment
request(s) submitted to the EPA Cincinnati Financial Management Center. At a minimum the Project Manager should
discuss both USAGE in-house and contractor activities that comprise each item for which payment is requested.
Payment requests should be based on IAG budget and contract payment schedules. For this process to be success-
ful a good line of communication must be established and maintained between the RPM and the USAGE Project
Manager.
Monthly Project Status Report: On a monthly basis the USAGE Project Manager will provide a project status
report to the RPM. This report shall consist of:
• a one page narrative detailing project highlights, progress, problems and scheduled
meetings for the next month.
• copies of all certified payment requests submitted during the month.
• a brief explanation of the cost associated with each payment request.
Payment Discrepancies: Payment discrepancies should be discussed between the RPM and USAGE Project
Manager. If resolution cannot be reached at this level, the problem(s) should be referred up the chain of command.
When the resolution to the problem(s) requires a change in a subsequent payment request(s), the EPA RPM will
document the action(s) to be taken in a memorandum to the USAGE Project Manager with a copy to EPA Cincinnati
Financial Management Center.
Budget Control: Preparation and adherence to a budget is key to managing any project. The preparation of a
project budget and its inclusion in the IAG provides budget control over the project by managing against the estab-
lished project budget. The budget for a project should contain sufficient detail, without being burdensome, to enable
the EPA RPM to evaluate the progress and management of the project. The USAGE should be allowed to adjust
specific budget items as the project develops, as long as, they do not exceed the funding limits specified in the IAG.
For the EPA RPM, a budget can be used as a means to approximate project progress as well as an indicator to
highjlight potential problems. Deviations from the budget could indicate a change or unexpected problem in the
project that warrants a closer look.
Summary
The direct cite and revised reimbursement payment procedures will eliminate reimbursement to USAGE for contractor
costs and expedite payments to USAGE offices engaged in Superfund related activities. The procedures remove the
pressure from the RPM to do an immediate review of payment request. Project budget control will be maintained by
managing against the budget established in the IAG. Success of the procedures is dependent upon good communi-
cations between the RPM and USAGE Project Manager. The USAGE Project Manager must effectively communicate
the status of the relationship between project progress, budget, and payments to contractors and USAGE.
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