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U.S. ENVIRONMENTAL PROTECTION AGENCY
OFFICE OF INSPECTOR GENERAL
Recipient Subawards to
Fellows Did Not Comply With
Federal Requirements and
EPA's Involvement in Fellow
Selection Process Creates the
Appearance EPA Could Be
Circumventing the Hiring Process
Report No. 14-P-0357
September 17, 2014
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Report Contributors: Jean Bloom
Safiya Chambers
Abbreviations
ASPH Association of Schools of Public Health
CA Cooperative Agreement
CFR Code of Federal Regulations
EPA U.S. Environmental Protection Agency
OIG Office of Inspector General
ORD Office of Research and Development
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„• V UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
| JUL z WASHINGTON, D.C. 20460
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pro"*4- THE INSPECTOR GENERAL
September 17, 2014
MEMORANDUM
SUBJECT:
FROM:
TO:
Recipient Subawards to Fellows Did Not Comply With Federal Requirements
and EPA's Involvement in Fellow Selection Process Creates the Appearance
EPA Could Be Circumventing the Hiring Process
Report No. 14-P-0357
Arthur A. Elkins Jr.
Howard F. Corcoran, Director
Office of Grants and Debarment
Office of Administration and Resources Management
This is our report on a cooperative agreement to the Association of Schools of Public Health conducted
by the Office of Inspector General (OIG) of the U.S. Environmental Protection Agency (EPA). This
report contains findings that describes the problems the OIG has identified and corrective actions the
OIG recommends. This report represents the opinion of the OIG and does not necessarily represent the
final EPA position. Final determinations on matters in this report will be made by EPA managers in
accordance with established audit resolution procedures.
The Office of Grants and Debarment, within the Office of Administration and Resources Management,
is responsible for grants management of cooperative agreements issued by EPA headquarters program
offices. The Office of Research and Development is the office that issued the cooperative agreement
reviewed.
Action Required
In accordance with EPA Manual 2750, the agency provided a corrective action plan for addressing the
recommendations with estimated milestone dates. Therefore, a response to the final report is not
required. The agency should track corrective actions in the Management Audit Tracking System until all
corrective actions have been completed.
This report will be available at http://www.epa.gov/oig.
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Recipient Subawards to Fellows Did Not Comply With 14-P-0357
Federal Requirements and EPA's Involvement in
Fellow Selection Process Creates the Appearance
EPA Could Be Circumventing the Hiring Process
Table of C
Purpose 1
Background 1
Responsible Offices 2
Scope and Methodology 2
Results of Review 2
Subawards Issued Under CA Contrary to Federal Requirements 3
Agency Involvement in Selection Process Creates the Appearance of
Circumventing the Hiring Process 3
Recommendations 4
Agency Comments and OIG Evaluation 5
Status of Recommendations and Potential Monetary Benefits 6
Appendices
A Agency Response to Draft Report 7
B Distribution 10
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Purpose
The U.S. Environmental Protection Agency (EPA), Office of Inspector General
(OIG), initiated an audit of Cooperative Agreement (CA) No. 83388101 awarded
to the Association of Schools of Public Health (ASPH). We sought to determine
whether the federal funds were used for their intended purpose and in accordance
with the CA terms and conditions and applicable government regulations. In
addition, we sought to determine whether the CA's objectives were met.
Background
The Clean Air Act, Section 103, and Clean Water Act, Section 104, authorize the
EPA to establish and maintain research fellowships in the EPA and at public or
nonprofit private educational institutions or research organizations. The applicable
regulatory provision for the CA is in the Code of Federal Regulations (CFR) at
40 CFR Part 30.
The EPA Office of Research and Development (ORD) awarded CA No. 83388101
to the ASPH on July 29, 2008. The purpose of the CA was to place recent
graduates of schools of public health in 1- to 2-year fellowships at the EPA.
Fellows were to gain practice-based training experiences and perform activities
under the mentorship of EPA experts in environmental health. ASPH expected to
place a minimum of 12 fellows per year during the performance period
September 1, 2008, to August 31, 2013.
Under the CA, the EPA agreed to cost share 100 percent of all approved budget
period costs incurred up to $4,284,350. The CA was closed on September 2, 2014,
with total federal expenditures of $4,043,436. In 2013, ASPH expanded
membership to include Council on Education for Public Health-Accredited
Programs of Public Health, and subsequently changed its name to the Association
of Schools & Programs of Public Health. The fellowship program is intended to
fulfill a public purpose and the EPA was not the primary or intended beneficiary
of the program.
According to ASPH, fellowships are awarded competitively, involving a
two-phase review process. In the first stage, the applications are reviewed by
two faculty members from schools of public health (other than the applicant's
institution) on the following criteria: quality of essay, strength of credentials,
previous professional experience, and letters of recommendation. Applicants
approved by the faculty review are invited to Washington, D.C., to interview for
the fellowship. The interview results, along with the faculty review comments, are
used to assess which candidates applying for individual projects are most suited
for the fellowship. Fellows receive a training stipend for living expenses during
the fellowship period. In addition, fellows have access to a general expense
allowance to cover health insurance premiums (including medical, dental and
vision premiums), travel and appropriate professional development expenses. To
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be eligible for a fellowship, candidates must have attained a masters or doctoral
degree within the last 5 years from an ASPH-member, accredited school of public
health. Applicants must also be U.S. citizens or hold visas permitting permanent
residence in the United States.
Responsible Offices
The Office of Grants and Debarment, within the Office of Administration and
Resources Management, is responsible for grants management of CAs issued by
EPA headquarters program offices. ORD is the office that issued CA No.
83388101. For CA No. 83388101, the Grant Specialist is in the Office of Grants
and Debarment and the Project Officer is in ORD.
Scope and Methodology
We conducted this audit from December 19, 2013, to June 13, 2014, in
accordance with generally accepted government auditing standards, issued by the
Comptroller General of the United States. Those standards require that we plan
and perform the audit to obtain sufficient, appropriate evidence to provide a
reasonable basis for our findings and conclusions based on our audit objectives.
We believe that the evidence obtained provides a reasonable basis for our findings
and conclusions based on our audit objectives.
To answer our objectives, we completed the following steps:
• Reviewed information in files provided by the Project Officer and Grant
Specialist.
• Conducted interviews with the EPA Project Officer and Grant Specialist to
obtain an understanding of their roles and responsibilities under the CA.
• Reviewed the limited scope review of ASPH conducted by a contractor in
2012 to identify issues that may have an impact on our audit. The review
was requested by the EPA as part of its oversight of administrative and
financial practices for grant recipients.
• Conducted interviews with ASPH personnel, current and past ASPH/EPA
fellows, and an ASPH/EPA mentor to gain an understanding of the
fellowship program's functionality and operations.
• Reviewed available Single Audit reports and ASPH annual reports for each
year under the CA.
Results of Review
Our audit did not identify anything that would indicate federal funds were being
used inappropriately by ASPH or that the objectives of the CA were not being
met. However, we did identify two areas under the CA that require improvement
by the EPA:
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• ASPH's subawards to fellows made under the CA are contrary to federal
requirements in that ASPH considers the fellows as subgrantees. This
occurred because of ASPH's interpretation of the federal regulations.
A different award vehicle is needed for the ASPH fellowship program to
protect the agency's interests and ensure performance accountability.
• The EPA's involvement in the selection process for fellowship candidates
creates the appearance that the agency could be circumventing the hiring
process and recruiting fellows in place of permanent employees.
Subawards Issued Under CA Contrary to Federal Requirements
ASPH's subawards to fellows made under the CA are contrary to federal
requirements under 40 CFR Part 30.5. Fellows receive a training stipend from the
ASPH for living expenses. Per the agreements between ASPH and the fellows, the
ASPH considers the fellows as subgrantees. Specifically, the agreement states:
For the purposes of this Agreement, the Fellow is considered a
sub-grantee, not an employee of ASPH.
However, 40 CFR Part 30.5, in connection with Office of Management and
Budget Circular A-l 10, states:
Unless sections of Circular A-l 10 specifically exclude
subrecipients from coverage, the provision of Circular A-l 10 shall
be applied to subrecipients performing work under awards if such
subrecipients are institutions for higher education, hospitals or
other non-profit organizations.
Per the regulations cited, fellows are ineligible as a subgrantee because they are
not an institution for higher education, a hospital or a non-profit organization.
Therefore, a different award vehicle is needed for the ASPH fellowship program.
If a different award vehicle is not identified and used, subawards under the CA
would not comply with applicable federal regulations. The proper award vehicle
must be determined to ensure that all parties are aware of and follow the
applicable regulations. Further, determination of the proper vehicle will protect
the agency's interest and ensure performance accountability.
Agency Involvement in Selection Process Creates the Appearance of
Circumventing the Hiring Process
The EPA's involvement in the selection process for fellowship candidates creates
the appearance that the agency could be circumventing the hiring process and
recruiting fellows in place of permanent employees for the direct benefit of the
EPA. EPA Order 5700.1 states that substantial involvement is anticipated where a
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project is expected to entail agency involvement in the selection of key recipient
personnel. The fellows are considered key recipient personnel.
The ASPH Director of Graduate Training verbally informed us that the EPA is
involved at two points during the fellowship candidate selection process:
• At the beginning of the process, the EPA Project Officer works with
ASPH to agree on the language to be included in the fellowship
announcement.
• After potential candidates have been vetted through the ASPH recruiting
process, the EPA host offices conduct phone interviews and make a
recommendation to the ASPH for fellowship placement.
The ASPH considers the EPA's recommendations when making final selections
and fellowship placement, although the final decision for placement of fellows is
ASPH's responsibility. ASPH does not maintain records of the recommendations
from the agency and the final placement of the fellow.
The purpose of the CA was to place recent graduates of ASPH member schools in
the EPA for 1 or 2 years, to fulfill a public purpose and provide mentorship. The
EPA was not the primary or intended beneficiary of the program. However, the
agency being directly involved in the selection process creates the appearance that
the EPA could be circumventing the hiring process and recruiting fellows in place
of permanent employees.
Although there is nothing that prohibits the agency from being involved in the
selection process, the agency must exercise care in appearance issues created by
its involvement. The EPA's Office of General Counsel is the chief legal adviser to
the EPA, providing legal support for agency rules and policies, case-by-case
decisions, and legislation. An Office of General Counsel opinion is necessary to
determine the extent to which the EPA should be involved in the selection of
fellows.
Recommendations
We recommend that the Director, EPA Office of Grants and Debarment:
1. Determine the proper vehicle to be used under CA No. 83388101 between
ASPH and the fellows and take the necessary action to ensure subawards
comply with applicable federal regulations.
2. Obtain an Office of General Counsel opinion on how the EPA should be
involved in the selection of fellows and, as needed, reduce the appearance
that the fellowship program is circumventing the hiring and recruiting
process.
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Agency Comments and OIG Evaluation
The OIG received comments from the Office of Grants and Debarment on
July 18, 2014, and those comments are included in appendix A. The Office of
Grants and Debarment agreed with the recommendations and provided a
corrective action plan with estimated completion dates.
For recommendation 1, the Office of Grants and Debarment indicated it will work
with ORD and ASPH to clarify the correct type of agreement between ASPH and
the fellows. In addition, the Office of Grants and Debarment indicated it will
work with ASPH to clarify the agreement terminology.
For recommendation 2, the Office of Grants and Debarment obtained an Office of
General Counsel opinion and indicated it plans to issue a memorandum to the
agency's Senior Resource Officials on the agency's role in selecting interns and
fellows under assistance agreements.
We held an exit conference with the agency on August 7, 2014, to discuss its
response to the draft report. We agree with the proposed actions and consider the
recommendations resolved and open with corrective actions ongoing.
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Status of Recommendations and
Potential Monetary Benefits
RECOMMENDATIONS
POTENTIAL MONETARY
BENEFITS (In $000s)
Planned
Rec.
Page
Completion
Claimed
Ag reed-To
No.
No.
Subject
Status1
Action Official
Date
Amount
Amount
Determine the proper vehicle to be used under
CA No. 83388101 between ASPH and the fellows
and take the necessary action to ensure
subawards comply with applicable federal
regulations.
Obtain an Office of General Counsel opinion on
how the EPA should be involved in the selection of
fellows and, as needed, reduce the appearance
that the fellowship program is circumventing the
hiring and recruiting process.
Director, EPA Office of 12/31/14
Grants and Debarment
Director, EPA Office of 12/31/14
Grants and Debarment
1 0 = Recommendation is open with agreed-to corrective actions pending.
C = Recommendation is closed with all agreed-to actions completed.
U = Recommendation is unresolved with resolution efforts in progress.
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Appendix A
Agency Response to Draft Report
July 18, 2014
MEMORANDUM
SUBJECT: Response to Office of Inspector General Draft Quick Reaction Report: Use of
Subctwards and Agency Involvement in the Selection Process Under Fellowship
Cooperative Agreements Impacts Compliance with Federal Requirements
(Project No. OA-FY14-0084, June 13, 2014)
FROM: Howard F. Corcoran /s/ 0ow»uim
Director, Office of Grants and Debarment
TO: Robert Adachi
Director of Forensic Audits
Office of Inspector General
The Office of Grants and Debarment (OGD) thanks you for the opportunity to respond to the
issues and recommendations in the subject Office of Inspector General (OIG) Draft Quick
Reaction Report (Report). Following is a summary of the Agency's overall position, along with
its position on each of the report recommendations. For those report recommendations with
which the Agency agrees, we have provided either high-level intended corrective actions and
estimated completion dates to the extent we can or reasons why we are unable to provide high-
level intended corrective actions and estimated completion dates at this time.
AGENCY'S OVERALL POSITION
As describe below, OGD generally agrees with the OIG's findings and recommendations.
The Report finds that the Association of Schools of Public Health (ASPH) mischaracterized
fellows receiving research training under Cooperative Agreement 83388101 as subawardees
because individuals are ineligible as subawardees under 40 C.F.R. 30.5. We agree with this
finding albeit for a different reason.
Consistent with Grants Policy Issuance 07-02 and EPA's Subaward Policy. ASPH fellows
should have been classified as "program participants" receiving stipends and other financial
assistance under the "participant support cost" provision of 2 C.F.R. Part 230 (OMB Circular
A-122), Appendix B, Item 33. The Agency's position is also supported by the definition of
"subrecipient" in 2 CFR 200.93 of the new OMB Super Circular, which provides that program
beneficiaries are not subrecipients.
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It should be noted, however, that the Agency has authority to award research and demonstration
grants and cooperative agreements directly to individuals under statutes such as section 104 of
the Clean Water Act, section 103 of the Clean Air Act, and section 8001 of the Solid Waste
Disposal Act. That authority may, in a proper case, support a subaward to an individual
provided the terms of the subaward require the individual to comply with regulations applicable
to subawards. See Office of General Counsel Legal Opinion, Subgrcmtees under EPA Assistance
Agreements (Attachment A). For example, a nonprofit organization that receives a grant from
EPA to conduct projects to conduct research and demonstrate innovative methods of preventing
water pollution may make a subawards to individual inventors to support technology
demonstration projects.
EPA's Subaward Policy expressly allows subawards to individuals provided the subaward is not
for a fellowship. This is because under 40 CFR 30.1, EPA's statutory authority to award grants
and cooperative agreements to individuals provides an exception to the exclusion of payments to
individuals in the definition of "award" at 40 CFR 30.2(e) and 40 CFR 30.2(ff). In this regard,
and as noted above, the exclusion of individuals from the definition of subrecipients at 2 CFR
200.93 is limited to program beneficiaries.
OGD will work with the Office of Research and Development (ORD) to determine the correct
type of agreement to be used between the cooperative agreement recipient, ASPH, and the
fellows. OGD and ORD will then work with ASPH to insure that it documents the process in all
of their internal policies and procedures.
The Report also found that EPA's involvement in the selection process for fellowship candidates
creates the appearance of circumventing the hiring process. OGD consulted with the Office of
General Counsel (OGC) to obtain an opinion on this issue. The award under review is a
cooperative agreement and, as such, it is expected that the EPA would have substantial
involvement, as opposed to the Agency's more limited involvement as it relates to a grant.
As noted in Attachment B, OGC concluded that, consistent with EPA Order 5700.1. there could
be a role for EPA to make recommendations on fellowship candidates as part of the substantial
involvement under a cooperative agreement. OGC suggested, however, that a better process
might be for the EPA office involved to provide more general recommendations such as
parameters or basic qualifications for potentially successful fellowship candidates. This
suggestion reaffirms the advice provided in the joint OGC-OGD memorandum, dated January
17, 2001, Interns Funded Under Cooperative Agreements, which states that EPA's role in the
placement of interns is limited to advising the recipient on the "fit" between a intern's interest
and qualifications and the training and research opportunities available in the program or
laboratory. Final decisions on intern selection must be made by the cooperative agreement
recipient. The January 17 memo makes clear that a greater EPA role would inadvertently create
the appearance that an intern/fellowship program is being used to circumvent personnel
ceilings. OGD agrees with the OIG of the importance of avoiding such an appearance, and will
issue updated guidance to the Agency's Senior Resource Officials on the limitations on EPA's
role in selecting interns.
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AGENCY'S RESPONSE TO REPORT RECOMMENDATIONS
No.
Recommendation
High-Level Intended
Corrective Action(s)
Estimated Completion
by Quarter and FY
1
Determine the proper vehicle
to be used under CA No.
83388101 between the ASPH
and the fellows and take the
necessary action to ensure
sub-awards comply with
applicable federal
regulations.
1.1 OGD will work with
ORD and ASPH to clarify
the correct type of
agreement used between
ASPH and the fellows. We
will then work with ASPH
to insure they clarify the
agreement terminology in
their internal guidance.
1st Quarter FY 2015
2
Obtain an Office of General
Counsel opinion on how the
EPA should be involved in
the selection of fellows and,
as needed, reduce the
appearance that the
fellowship program is
circumventing the hiring and
recruiting.
2.1 OGD consulted with
OGC and received an
opinion that has been
incorporated into this
response.
Completed. Also, in the
1st quarter FY 2015,
OGD will issue a
memorandum to the
Agency's Senior
Resource Officials
concerning the
limitations on EPA's
Role in selecting
Interns and Fellows
under assistance
agreements.
CONTACT INFORMATION
If you have any questions regarding this response, please contact me at (202) 564-1903.
Attachments
cc: Denise Polk
Jill Young
LaShaun Phillips
Wendel Askew
Jennifer Hublar
Tracy Bryant
Amy Battaglia
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Appendix B
Distribution
Assistant Administrator for Administration and Resources Management
Director, Office of Grants and Debarment, Office of Administration and Resources Management
Agency Follow-Up Official (the CFO)
Agency Follow-Up Coordinator
General Counsel
Associate Administrator for Congressional and Intergovernmental Relations
Associate Administrator for External Affairs and Environmental Education
Director, Grants and Interagency Agreements Management Division,
Office of Administration and Resources Management
Principal Deputy Assistant Administrator for Research and Development
Chief, Grants Management, Office of Research and Development
Grant Specialist, Office of Grants and Debarment, Office of Administration and
Resources Management (CANo. 83388101)
Project Officer, Office of Research and Development (CA No. 83388101)
Audit Follow-Up Coordinator, Office of Research and Development
Audit Follow-Up Coordinator, Office of Administration and Resources Management
Audit Follow-Up Coordinator, Office of Grants and Debarment, Office of Administration and
Resources Management
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