At a Glance: Fraud Controls for EPA's Contract Laboratory Program Are Adequate, but Can Be Strengthened With Formal Risk Assessment and Investigative Information Sharing


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* *- U.S. Environmental Protection Agency	17-P-0119
March 6, 2017
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At a Glance
Why We Did This Review
We conducted this review to
determine whether the U.S.
Environmental Protection
Agency's (EPA's) Contract
Laboratory Program (CLP) has
the controls to detect or prevent
fraudulent analytical services or
data produced by CLP
laboratories, and whether those
controls provide reasonable
assurance that the potential for
fraud is minimized. We also
sought to identify how the EPA
monitors laboratory fraud cases
across the agency to inform its
system of controls.
The CLP is a national network
of EPA-approved contract
laboratories whose primary
service is the provision of
analytical data of known and
documented quality. Since the
1980 inception of the CLP, 180
CLP labs have performed over
3.7 million analyses on
samples from more than
20,900 sites, at an expense of
approximately $431.5 million.
This report addresses the
following EPA goals or
cross-agency strategies:
•	Protecting human health
and the environment by
enforcing laws and
assuring compliance.
•	Embracing EPA as a high-
performing organization.
Send all inquiries to our public
affairs office at (202) 566-2391
or visit www.epa.gov/oia.
Listing of OIG reports.
Fraud Controls for EPA's Contract Laboratory Program
Are Adequate, but Can Be Strengthened With Formal
Risk Assessment and Investigative Information Sharing
The impacts of lab fraud
include risks to human
health and the
undermining of EPA
regulatory programs.
What We Found
The CLP has demonstrated the effectiveness of four
of five internal controls that provide reasonable
assurance that the potential for laboratory fraud is
minimized. One component—risk assessment—has
not been formally documented. Rather, one CLP
manager said they address fraud risks informally but
on a continual basis, which results in the development of new tools and updated
guidance documents. Formal risk assessment would provide the CLP assurance
that its controls address risks, as well as provide a clear picture of efforts to
address lab performance deficiencies.
Policies for EPA investigative offices do not require them to share information
with program offices, or explain how or why lab fraud occurred. According to
investigative units, there are additional reasons as to why they do not share
information: a small caseload of lab fraud for them to data-mine trends; the
inability to share sensitive information until a case closes; and resource
limitations. Stakeholders we interviewed agreed with the merit of having
investigative offices share relevant aspects of lab fraud findings, including
methods and techniques used to commit the fraud. Stakeholders also agreed that
investigative offices should share information to help program and regional
offices strengthen and update their internal control systems for preventing and
detecting lab fraud.
Recommendations and Planned Agency Corrective Actions
We recommend that the Assistant Administrator for the Office of Land and
Emergency Management (OLEM) conduct and document a formal risk assessment
of the CLP to determine whether additional internal controls are needed to mitigate
detected risks. We also recommend that the Office of Enforcement and
Compliance Assurance (OECA), and the Office of Inspector General (OIG), require
investigative units to share pertinent information from laboratory fraud findings with
relevant program and regional offices. Recommendations for OLEM and OECA are
agreed-to with corrective actions pending. The OIG completed its corrective action.
Noteworthy Achievements
OLEM developed an electronic laboratory data validation package—the
Electronic Data Exchange and Evaluation System (EXES)—that is being made
available to other agency programs via pilot implementations. A new version of
EXES is in the works, which will incorporate added controls based on a current
CLP lab fraud case. This demonstrates OLEM's view of EXES as a dynamic
system that will be periodically updated to reflect changes in the program.

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