tfED STAf.
*. U.S. Environmental Protection Agency	13-P-0028
^	\ Office of Inspector General	October 22,2012
/ rn
I 1
^ At a Glance
Why We Did This Review
Since 2009, the President and
the Office of Management and
Budget (OMB) have issued
various memorandums and
directives requesting agencies
to identify ways to avoid costs
and achieve efficiencies and
savings. In August 2009, the
U.S. Environmental Protection
Agency's (EPA's) Office of
Administration and Resources
Management (OARM) issued
an electronic memorandum
titled "Management Reform
Agenda" to request input from
program offices and regions to
identify efficiency projects. EPA
program offices and regions
identified 72 projects.
We conducted an audit to
determine whether: (1) EPA's
efforts to identify and realize
savings have been effective,
and (2) EPA savings reported
to OARM were accurate and
This report addresses the
following EPA Goal or
Cross-Cutting Strategy:
• Strengthening EPA's
workforce and capabilities
For further information, contact
our Office of Congressional and
Public Affairs at (202) 566-2391.
The full report is at:
Improvements Needed in Estimating and
Leveraging Cost Savings Across EPA
What We Found
Regions 4 and 7, which were the focus of our review, did not apply reliable
methods for estimating savings and cost avoidances. Management is
responsible for assuring efficient and effective operations and reliable financial
reporting including development of savings or cost avoidance initiatives.
No EPA policy and procedures existed for Regions 4 and 7 to follow when
estimating savings or cost avoidances. EPA will not be able to accurately report
the results of its efficiency initiatives and influence internal and external
management decisions.
While OARM took the initiative to lead the identification of potential savings and
cost avoidances for all Agency programs and regions, it did not effectively follow
up on implementation to ensure EPA achieved the desired results (i.e.,
efficiencies, savings, and cost avoidances) or to determine whether the Agency
could realize greater savings by expanding results. Office of Management and
Budget Circular A-123 states that program managers should ensure results are
achieved. Sufficient follow-up did not occur because OARM and the Office of
the Chief Financial Officer viewed the projects as merely ideas for possible cost
savings. Nevertheless, without following up on the progress in achieving desired
and expected savings and efficiencies, EPA may have missed opportunities to
leverage and expand its cost-cutting efforts, apply best practices for gaining
greater efficiencies, and realize significant savings and cost avoidances
Recommendations and Planned Agency Corrective Actions
We recommend that the Chief Financial Officer develop a policy and procedures
for identifying and estimating cost savings, efficiencies, and avoidances. We
recommend that the Assistant Administrator for OARM develop a policy on
estimating savings and cost avoidances relating to contracts. We recommend
that Regions 4 and 7 recalculate identified cost avoidances based on prescribed
guidance and report the data as appropriate. We recommend that the Chief
Financial Officer determine whether significant projects from the 72 initiatives
resulted in significant efficiencies and publicly report the results as appropriate
for possible Agency-wide implementation.
The Office of the Chief Financial Officer, OARM, and Regions 4 and 7 did not
concur with the recommendations. Our recommendations remain unresolved.
Noteworthy Achievements
OARM took the initiative to involve EPA program offices and regions in
identifying potential efficiencies and savings initiatives on 72 projects with
potential estimated savings and cost avoidances of over $33 million—later
reduced to $21 million.