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U.S. ENVIRONMENTAL PROTECTION
OFFICE OF INSPECTOR GENERAL
EPA Should Improve
Oversight and Assure the
Environmental Results
of Puget Sound
Cooperative Agreements
Report No. 14-P-0317
July 15, 2014
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BOTTOMFISH, CRAB
AND SHELLFISH MAY
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DUE TO POLLUTION.
WARNING
Scan this mobile
code to learn more
about the EPA OIG.

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Report Contributors:	Eileen Collins
Kimberly Crilly
Janet Kasper
Madeline Mullen
LaTanya Scott
Abbreviations
CCMP	Comprehensive Conservation and Management Plan
CFR	Code of Federal Regulations
EPA	U.S. Environmental Protection Agency
FEATS	Financial and Ecosystem Accounting Tracking System
GMO	Grants Management Office
OGD	Office of Grants and Debarment
OIG	Office of Inspector General
OMB	Office of Management and Budget
QAPP	Quality Assurance Project Plan
Cover photos: Images of the state of Washington's Puget Sound (top) and the Duwamish River
that flows into Puget Sound (bottom left). A pollution-warning sign posted by
the Duwamish River (bottom right). (EPA OIG photos)
Hotline
To report fraud, waste or abuse, contact
us through one of the following methods:
email:	OIG Hotline@epa.gov
phone:	1-888-546-8740
fax:	1-202-566-2599
online:	http://www.epa.gov/oig/hotline.htm
write: EPA Inspector General Hotline
1200 Pennsylvania Avenue, NW
Mailcode 2431T
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.gov
phone:	1-202-566-2391
fax:	1-202-566-2599
online:	http://www.epa.g0v/0ig/c0ntact.html#Full Info
write: EPA Inspector General Hotline
1200 Pennsylvania Avenue, NW
Mailcode 2431T
Washington, DC 20460

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U.S. Environmental Protection Agency
Office of Inspector General
At a Glance
14-P-0317
July 15, 2014
Why We Did This Review
The U.S. Environmental
Protection Agency (EPA),
Office of Inspector General
(OIG), conducted this audit to
answer the following questions:
	Does the EPA ensure that
grantees are effectively
administering Puget Sound
grants throughout the life of
the grants?
	Does the EPA monitor
project progress and
collect data or indicators to
determine whether proposed
project outputs and
outcomes are achieved?
The Greater Puget Sound Basin
is defined as all watersheds
draining into the United States
waters of Puget Sound,
including the southern Georgia
Basin and the Strait of Juan de
Fuca. The Puget Sound is one
of the most ecologically diverse
ecosystems in North America.
This report addresses the
following EPA goals or
cross-agency strategies:
	Protecting America's waters.
	Embracing EPA as a
high-performing organization.
For further information,
contact our public affairs office
at (202) 566-2391.
The full report is at:
www.epa.aov/oia/reports/2014/
20140715-14-P-0317.pdf
EPA Should Improve Oversight and Assure
the Environmental Results of Puget Sound
Cooperative Agreements
What We Found
Overall, the OIG found that EPA Region 10 is effectively
administering cooperative agreements and monitoring
project progress to determine whether proposed outputs
and outcomes were achieved. However, we noted that
improvements should be made in both the administration
and monitoring of recipient activities. We found that
Region 10:
EPA should
improve the
administration and
monitoring of Puget
Sound cooperative
agreements.
Documented activities conducted but did not consistently ensure that Puget
Sound cooperative agreements met administrative requirements.
Was aware of subaward monitoring activities conducted by recipients, but
should improve oversight of subaward monitoring policies and activities,
and lead organization oversight of subawards.
Recommendations and Planned Corrective Actions
We recommend that the Region 10 Administrator meet with project officers and
grant specialists to discuss the results of this review and reinforce compliance with
agency policies for documenting, following up and resolving oversight activities.
We recommend that the Region 10 Administrator ensure that grant specialists and
project officers receive training on their responsibilities for subawards, collaborate
to periodically review subaward monitoring policies, and lead organizations'
monitoring activity records to protect federal funds. We also recommend that
Region 10 provide training to recipients regarding subaward monitoring
responsibilities, as well as evaluating Puget Sound resource allocations.
In addition, we recommend that the Assistant Administrator for the Office of
Administration and Resources Management (OARM) review existing grants
policies to determine whether policies need to be updated to clarify project officer
and grant specialist subaward responsibilities, and recipient responsibilities for
subaward monitoring.
The EPA agreed with all of the recommendations and provided corrective action
plans and completion dates to address all of the draft report's recommendations.
Noteworthy Achievements
Region 10 developed the Financial and Ecosystem Accounting Tracking System
report for the Puget Sound program. The reports enable project officers to more
easily determine the status of outputs and deliverables for tasks and subtasks, as
well as determine actions taken by the recipients. The reports also help to ensure
that negotiated work plan tasks are being accomplished and funds are being spent
in a timely manner and within the approved budget.

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| JHK \	UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
8 \AIA/ I	WASHINGTON, D.C. 20460
THE INSPECTOR GENERAL
July 15,2014
MEMORANDUM
SUBJECT: EPA Should Improve Oversight and Assure the Environmental Results of
Puget Sound Cooperative Agreements
Report No. 14-P-0317
FROM: Arthur A. Elkins Jr.
TO:	Dennis McLerran, Regional Administrator
Region 10
Craig E. Hooks, Assistant Administrator
Office of Administration and Resources Management
This is our report on the subject audit conducted by the Office of Inspector General (OIG) of the
U.S. Environmental Protection Agency (EPA). This report contains findings that describe 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.
EPA Region 10 offices responsible for implementing most of the recommendations are the Office of
Water and Watersheds, and the Office of Management Programs. The headquarters Office of Grants and
Debarment, within the Office of Administration and Resources Management, is responsible for
implementing one of the recommendations.
Action Required
In response to the draft report, the agency provided a corrective action plan that addresses the
recommendations and establishes milestone dates. Therefore, a response to the final report is not
required. The agency should track corrective actions not implemented in the Management Audit
Tracking System.
This report will be available at http://www.epa.gov/oig.

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EPA Should Improve Oversight and Assure
the Environmental Results of Puget Sound
Cooperative Agreements
14-P-0317
Table of C
Chapters
1	Introduction		1
Purpose		1
Background		1
Responsible Offices		2
Noteworthy Achievements		2
Scope and Methodology		2
2	File Documentation Should Be Improved		4
Documentation of Monitoring and Review Activities Is Required		4
Some Monitoring and Review Activities Are Not Complete		5
Documentation and Follow-Up Are Not Emphasized		6
Information Is Not Complete 		6
Recommendation		7
Agency Comments and OIG Evaluation		7
3	Oversight of Subawards Should Be Improved		8
Agreements Must Comply With Federal and EPA Requirements		8
Subaward Monitoring Policies Did Not Address All Required Elements		9
Project Officers Should Increase Awareness of Subaward Monitoring		11
Recipients Should Improve Subaward Oversight		11
Issues With Regional Resources Affect Oversight		12
Lack of Systematic Oversight of Subawards Increases Risk		13
Recommendations		14
Agency Comments and OIG Evaluation		14
Status of Recommendations and Potential Monetary Benefits		16
Appendices
A Puget Sound Cooperative Agreements Reviewed by the EPA OIG	 17
B Agency Response to Draft Report	 18
C Distribution	 23

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Chapter 1
Introduction
Purpose
The U.S. Environmental Protection Agency (EPA), Office of Inspector General
(OIG), conducted this audit in part due to the significant amount of federal funds
that EPA Region 10 has awarded for Puget Sound. Specifically, our audit
objectives were to answer the following questions:
	Does the EPA ensure that grantees are effectively administering Puget
Sound grants throughout the life of the grants?
	Does the EPA monitor project progress and collect data or indicators to
determine whether proposed project outputs and outcomes are achieved?
Background
According to Region 10, Puget Sound was given priority status in the 1987
amendments to the Clean Water Act and was included as one of the original
programs in the National Estuary Program. The goal of an estuary program is to
develop and implement a management plan, known as a Comprehensive
Conservation and Management Plan (CCMP), for the designated area. For Puget
Sound, the CCMP is called the Puget Sound Action Agenda (Action Agenda),
which was approved by the EPA in 2009. The Action Agenda describes actions
and priorities to restore and protect the Puget Sound by 2020, and it was updated
in 2012.
Since 2010, federal funds totaling approximately $110 million have been
specifically appropriated for Puget Sound and for the implementation of the
CCMP. Region 10 shifted to the lead organization model in 2010 due to the large
influx of appropriated funds for Puget Sound. Region 10 awarded federal funds to
seven lead organizations. The lead organizations implement targeted strategies
mainly through the issuance of subawards. The lead organizations focus on seven
areas:

Toxics and nutrients reduction and prevention.
Protection of at-risk watersheds.
Pathogen reduction and prevention.
Marine and nearshore habitat restoration and protection.
Recovery and actions of high tribal priority.
Overseeing the implementation of the 2020 Action Agenda for Puget
Sound recovery.
Outreach, education and stewardship.
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Responsible Offices
Region 10 offices responsible for implementing four of the recommendations are
the Office of Water and Watersheds, and the Office of Management Programs.
The headquarters Office of Grants and Debarment (OGD), within the Office of
Administration and Resources Management, is responsible for implementing one
recommendation.
Noteworthy Achievements
Region 10 developed the Financial and Ecosystem Accounting Tracking System
(FEATS) report. The EPA and the cooperative agreement recipients are
responsible for completing specific areas of information in the FEATS reports.
Specifically, recipients complete information related to:
	Funds spent to date.
	Funds drawn down from EPA.
	Issues or questions where response from the EPA is needed.
	Budget discrepancies.
	Date, status and remarks for tasks and subtasks.
	Challenges and solutions.
	Highlights, lessons learned and reflections.
The FEATS reports enable project officers to more easily determine the status of
outputs and deliverables for tasks and subtasks, as well as actions taken by the
recipient. The FEATS reports help to ensure that tasks in the negotiated work plan
are being accomplished and that funds are being spent in a timely manner and
within the approved budget.
Scope and Methodology
We conducted our performance audit from July 2013 through May 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.
As of July 2013, Region 10 had 69 open Puget Sound awards totaling more than
$125 million.1 We initially selected a sample of four Puget Sound awards,
randomly selecting two with obligations of $1 million or more, and two from the
remainder of the universe. During field work we focused on subaward monitoring
by the seven lead organizations. One of the seven lead organizations had been
1 The EPA awarded some grants using funds appropriated for the National Estuary Program.
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included in the initial sample selection. As a result, the total number of Puget
Sound awards we reviewed was 10 (appendix A).
To answer our audit objectives, we reviewed the project and Grants Management
Office (GMO) files maintained by project officers and grant specialists. Our
review included documentation of the FEATS reviews, FEATS feedback to the
recipient, and baseline and advanced monitoring reports. 2
We interviewed project officers and grant specialists to obtain an understanding
of the activities they conducted to: (1) ensure grantees are effectively
administering Puget Sound grants; and (2) monitor project progress and collect
data to ascertain whether project outputs and outcomes were achieved.
We also followed up on discrepancies or concerns noted during our review of the
project and GMO files. We interviewed project officers to determine their
knowledge of recipients' subaward monitoring activities and to determine if they
reviewed recipients' documentation for subaward monitoring activities.
We interviewed recipients to determine their interaction with Region 10 and to
determine whether subaward monitoring activities were conducted. In our sample
of 10 awards, one recipient did not have any subawards. We obtained and
reviewed the recipient subaward monitoring policies to determine if the policies
complied with the award's administrative condition for subawards, and with Title
40 of the Code of Federal Regulations (CFR) Parts 30 and 31. Then we reviewed
the semiannual FEATS reports for the period April 1 through September 30,
2013, to determine if recipients reported tasks, subtasks, outputs or deliverables as
being behind schedule, specifically those related to subawards.
We also met with Office of Grants and Debarment staff to discuss the EPA's
management expectations for: (1) recipients' subrecipient monitoring activities;
and (2) staff responsibilities for ensuring subrecipient monitoring.
There are no prior OIG or U.S. Government Accountability Office audits
impacting the objectives of this assignment.
2 Baseline monitoring is the minimum basic monitoring that ensures award terms and conditions are satisfied.
Advanced monitoring validates recipients' compliance with programmatic and financial statutes, regulations,
conditions and policies.
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Chapter 2
File Documentation Should Be Improved
Region 10's project officers and grant specialists generally documented activities
conducted but did not consistently follow up, resolve, or document issues or
concerns identified during baseline monitoring reviews. In addition, project
officers did not always document review of recipients' progress reports. The
assistance agreement files should include documentation so that a third party can
easily follow the sequence of events regarding the project, which includes the
project officers review of recipient progress reports. Region 10 management is not
emphasizing follow-up and documentation of activities conducted. The lack of
documentation results in incomplete information regarding decisions made and
instructions given to recipients during the life of the cooperative agreements.
Documentation of Monitoring and Review Activities Is Required
The EPA's Project Officer Manual states that the project officer is responsible for
maintaining the official technical project file and documenting all communication.
Monitoring activities, baseline and advanced, must be documented in the project
file. The assistance agreement files should include documentation so that a third
party can easily follow the sequence of events regarding the project. The grant
specialist is responsible for the development and maintenance of the official EPA
GMO file. Both the project and GMO files serve as collections of documents and
or items that provide programmatic and/or fiscal information on the purpose,
performance and history of an award to a specific recipient.
EPA Order 5700.7, Environmental Results under EPA Assistance Agreements,
Section 9, states project officers must review performance reports and document
this review in the official project file. The EPA Project Officer Manual goes a
step further and requires the project officer to provide comments to the recipient
regarding the progress report, even if everything looks satisfactory.
EPA Order 5700.6A2, Policy on Compliance Review and Monitoring, Section 10,
states that both the project officers and grant specialists are responsible for
maintaining appropriate file documentation. In addition, monitoring reports are to
be recorded in appropriate databases, such as the Post Award or Grantee
Compliance databases within the Integrated Grants Management System.
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Some Monitoring and Review Activities Are Not Complete
Region 10's project officers and grant specialists generally documented activities
conducted for Puget Sound cooperative agreements.3 However, we found that
grant specialists did not consistently follow up, resolve, or document actions
taken regarding issues or potential issues identified during baseline monitoring or
other contacts. In addition, all four of the project officers did not consistently
document their review of the semiannual FEATS reports or inform the recipient
that the reports were acceptable or needed improvements. One project officer did
not document oral approval of a sole-source contract, even though a Region 10
manager said documentation should be retained in the files for such approvals.
Although individually, these were minor issues, when viewed together, they
indicate that monitoring and review documentation should be improved.
We found the following unaddressed issues and concerns in the administrative
baseline monitoring reports conducted by the grant specialists for the four awards
reviewed:
	One grant specialist noted that two recipients had delinquent
Disadvantaged Business Enterprise reports. The recipients were notified
but resolution was not documented.
	Two grant specialists noted the EPA-related Office of Management and
Budget (OMB) Circular A-133 findings for two recipients. One grant
specialist initiated action but did not complete any follow-up actions, and
the other grant specialist did not document any action.
	One grant specialist noted concern about the small amount of Federal
Funding Accountability and Transparency Act Subaward Reporting
System reporting. Follow-up action was initiated but not completed.
We found the following issues with project officer monitoring activities:
	One project officer did not document phone calls with the recipient.
	Two project officers each had one baseline monitoring report that was
6 months late.
We found the following issues regarding project officer documentation for
FEATS progress reports:
	Project officers did not always document their review of recipients'
FEATS reports.
3 This section refers to the four cooperative agreements we reviewed during the preliminary research phase.
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o One project officer received five semiannual FEATS reports. We
found documentation that only one of the FEATS reports was
reviewed.
o Two project officers each received five semiannual FEATS reports.
We found documentation that only three reports were reviewed.
o One project officer received four semiannual FEATS reports. We
found documentation that only three reports were reviewed.
 Project officers did not consistently discuss the FEATS reports with the
recipients. Each of the four project officers documented some
communication with recipients for at least one submitted FEATS report.
Documentation and Follow-Up Are Not Emphasized
Region 10 staff does not consistently pay attention to the details of grant
administration by documenting actions that have been taken and following up
where needed. A grant specialist explained that there was no system for ensuring
follow-up would occur. A Region 10 manager stated that due to loss of staff, the
region has not been able to conduct follow-up. As a result, administrative
requirements not associated with the possible recovery of funds were
deemphasized.
In addition, Region 10 management is not emphasizing the requirement for
project officers to document the review of progress reports. One Region 10
manager stated that if the report was added to the FEATS share drive, this was
good enough for documenting the report had been reviewed. Another
Region 10 manager agreed that project officers should document that they
reviewed the submissions and that the submissions are acceptable. However,
due to time constraints, not everyone documents their reviews.
Information Is Not Complete
The lack of documentation results in incomplete information regarding decisions
made and instructions given to recipients during the life of cooperative
agreements. Documenting the reviews is important because project officers
frequently change during the life of the cooperative agreement. In addition, the
lack of follow-up can result in ongoing issues with recipients and potentially puts
federal funds at risk.
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Recommendation
We recommend that the Regional Administrator for Region 10:
1. Meet with project officers and grant specialists to discuss the results of
this review and reinforce compliance with agency policies for
documenting, following up and resolving oversight activities.
Agency Comments and OIG Evaluation
In response, Region 10 agreed with our recommendation. The Puget Sound
Program will commit staff time to develop in-house training and refresher materials
for project officers. After a meeting with the Region 10 Administrator, the Grants
and Interagency Agreements Unit will commit to providing a mandatory refresher
session for all grants specialists on baseline monitoring, including procedures for
following up on issues discovered when monitoring and documenting files. These
actions will be completed by December 31, 2014. When implemented, agency
actions should address the recommendation.
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Chapter 3
Oversight of Subawards Should Be Improved
Region 10 is generally aware of subaward monitoring activities conducted by
recipients, but project officers did not monitor oversight and activities for Puget
Sound cooperative agreements in a manner consistent with EPA policy and
guidance. In addition, project officers did not ensure that recipients were aware of
subaward monitoring expectations and did not review grant recipients' monitoring
records.
Puget Sound cooperative agreement recipients are responsible for the overall
management of subawardees and ensuring subawardees comply with applicable
federal and EPA requirements. Project officers emphasized overall progress rather
than compliance with specific subaward requirements. This emphasis on overall
progress increased the risk that project officers would not detect issues needing
corrective action that might impact the project meeting its goals.
Agreements Must Comply With Federal and EPA Requirements
Title 40 CFR Parts 30 and 31 provide requirements for subaward monitoring for
institutions of higher education, nonprofits, and governments and local entities.
	Title 40 CFR  30.51 (institutions of higher education and nonprofits)
states that recipients are responsible for managing and monitoring each
project, program, subaward, function or activity supported by the award.
Recipients shall monitor subawards to ensure subrecipients have met the
audit requirements as delineated in 40 CFR 30.26.
	Title 40 CFR 31,26(l)-(2) (governments and local entities) states that
state or local governments that provide federal awards to subgrantees that
expend $500,000 or more of federal funds in a fiscal year shall determine
whether:
o State or local subgrantees have met audit requirements and
whether subgrantees covered by OMB A-l 10 have met audit
requirements.
o Subgrantees spent federal assistance funds provided in accordance
with applicable laws and regulations.
	Title 40 CFR  31.40 states that grantees are responsible for managing
day-to-day operations of grant and subgrant supported activities. Grantees
must monitor grant and subgrant activities to ensure compliance with
applicable federal requirements, and ensure that performance goals are
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being achieved. Grantee monitoring must cover each program, function or
activity.
The EPA directs compliance requirements by attaching an administrative
National Term and Condition for Subawards, which states the recipient agrees to:
	Maintain primary responsibility for ensuring successful completion of the
EPA-approved project. (This responsibility cannot be delegated or
transferred to a subrecipient.)
	Ensure that any subawards comply with OMB Circular A-133, Sections
210 (a)-(d).
	Monitor the performance of subrecipients and ensure that they comply
with all applicable regulations, statutes, and terms and conditions which
flow down in the subaward.
Subaward Monitoring Policies Did Not Address All Required Elements
Although Region 10 is aware of recipients' progress through regular FEATS
reports, the region is not ensuring that recipients are aware of subaward
monitoring expectations. We found that for eight of the nine cooperative
agreements with subawards, recipients had subaward monitoring policies or
informal procedures. One recipient had no policy at all. None of the policies or
informal procedures addressed all of the elements from the CFR and the
administrative National Term and Condition for Subawards, as shown in table 1.
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Table 1: Cooperative agreement subaward monitoring policy or memo review
Subaward requirements
1
2
3
4
5
6
7
8
9
1. Require OMB Circular A-133
audits for subrecipients
expending $500,000 or more in
federal awards during the fiscal
year. Require additional
monitoring activities (e.g., review
an audit of the subgrantee to
ensure that appropriate corrective
action is taken; consider whether
the audit of the subgrantee
necessitates an adjustment of the
grantee's own records; and
require each subgrantee to permit
independent auditors to have
access to records and financial
statements).
No
Policy
X
X
X


X
X
X
2. Monitor the performance of
recipients and ensure they
comply with all applicable
regulations, statutes, and terms
and conditions.

X
X
X
X
X
X
X
X
3. Obtain the EPA's consent
before making a subaward to a
foreign or international
organization, and before making
a subaward to be performed in a
foreign country.









4. Ensure subawards to 501(c)(4)
organizations do not involve
lobbying activities.


X


X
X


5. Ensure subawards are
awarded to eligible subrecipients;
and that costs are necessary,
reasonable and allocable.

X
X
X



X
X
6. Maintain primary responsibility
for ensuring the successful
completion of the EPA-approved
project.







X
X
7. Ensure that any subawards
comply with the standards in
Sections 210 (a)-(d) of OMB
Circular A-133, and that the
subawards are not used to
acquire commercial goods or
services for the recipient.







X
X
Source: OIG analysis of policies or memos provided by recipients regarding subaward monitoring.
Note: Shaded area represents a missing requirement.
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Project Officers Should Increase Awareness of Subaward Monitoring
Region 10 project officers are generally aware of recipients' subaward monitoring
activities, but improvements can be made. During our interviews, we found that
project officers were generally aware of, or had knowledge of, the types of
subaward monitoring activities for seven of the nine cooperative agreements.
However, project officers had not reviewed recipients' monitoring records.
Although such a review is not required, it would be reasonable for Region 10 to
review such records on a periodic basis to ensure compliance with subaward
terms and conditions. This is especially important because Region 10's approach
is to have lead organizations implement strategies largely through subawards, and
the number of subawards could exceed 50.
We also found through our interviews with project officers that their knowledge
of subaward monitoring activities varied widely. Project officers for five of the
nine cooperative agreements stated that recipients were monitoring their
subawards through FEATS reports. Project officers for six of the nine cooperative
agreements identified additional monitoring activities that included meetings,
telephone calls or site visits. Two project officers were unsure of subaward
monitoring activities. Table 2 describes the results of our interviews dealing with
subaward oversight.
Table 2: Summary of project officer knowledge of subaward oversight
Cooperative
agreement
recipient
Project officer knowledge of some
subaward monitoring activities*
Project officer review of subaward
monitoring documentation
1
Yes
No
2
No
No
3
Yes
No
4
Yes
No
5
Yes
No
6
Yes
No
7
Yes
No
8
Yes
No
9
Yes
No
Source: OIG interviews with project officers.
Activities identified by project officers included communication, site visits, review of FEATS reports,
and Web postings.
Recipients Should Improve Subaward Oversight
Cooperative agreement recipients rely on telephone calls, site visits, FEATS
reports, and reviews of deliverables and invoices for subaward monitoring.
We found that recipients were not consistently documenting monitoring activities,
such as site visits, external audit reviews, etc. Two managers for one lead
organization had two different practices for documenting subaward monitoring.
One manager filled out an outline and put it in the database, but the other did not.
One lead organization stated that a list of site visits was not retained. Another lead
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organization told us monitoring activities such as site visits were not being
documented, but the organization did say it was creating a form to document
whether monitoring had occurred and that the form would be used going forward.
Table 3 shows monitoring practices and tracking for subawards varied.
Table 3: Summary of recipient subaward oversight interviews
Cooperative
agreement
recipient
Subaward monitoring activities described
Document
some activities
1
FEATS reports, team meetings and check-ins.
Yes
2
Correspondence, emails, telephone calls, periodic check-ins and
review of external audits.
No
3
Site visits (including photos), invoices, verbal communication,
spreadsheet tracking, and Quality Assurance Project Plan (QAPP)
reviews.
Yes
4
Review quarterly progress and QAPP reports, monthly
communication, emails, meeting attendance and notes taken, and
tracking spreadsheet.
Yes
5
Site visits in standardized format, review of deliverables, QAPPs,
technical reports and external audits.
Yes
6
Review of FEATS reports and deliverables, verbal and email
communications, and check-ins as needed.
Yes
7
Communication via email, telephone, and in person; tracking
spreadsheet; review of FEATS; QAPPs; deliverables; invoices;
A-133 audits; and documented site visits.
Yes
8
Site visits, review of progress reports, invoices and meetings on
deliverables.
No
9
Site visits, review of progress reports, invoices and meetings on
deliverables. '
No
Source: OIG interviews with cooperative agreements recipients.
1 Based on an interview with the recipient for cooperative agreement 8. The recipient did not have additional
information to provide regarding oversight activities for cooperative agreement 9.
In their FEATS reports to Region 10, we found that not all lead organizations are
reporting on subaward monitoring activities or when a subaward is behind
schedule. For example, we found:
	Only four of seven lead organizations' FEATS reports described activities
related to subaward monitoring such as meetings attended or sites visited.
	Although most subrecipients provided project updates through FEATS
reporting, only three of seven recipients reported on the status of individual
subawards within the lead organization FEATS reports.
	Three of seven lead organizations reported subawards that are behind
schedule, but we found four had subawards behind schedule.
Issues With Regional Resources Affect Oversight
Region 10 relies heavily on recipients, specifically lead organizations, to monitor
subawards and ensure project completion. Regional staffing resources have not
been sufficient to manage the large influx of Puget Sound funds. In 2010, funds
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totaling $50 million were appropriated for Puget Sound. However, according to
Region 10, staffing resources were not increased.
Also, Region 10 staff was not aware of an ongoing requirement to address
compliance with subaward monitoring, other than during advanced monitoring.
Because the region relies on lead organizations, ensuring compliance with
subaward terms and conditions should not be limited to advanced monitoring.
Since Region 10 was not emphasizing subaward monitoring expectations, such as
documenting subaward monitoring activities, lead organizations were not aware
of the importance of conducting and documenting such activities. During our
discussions with Region 10, staff stated that the Puget Sound team could provide
additional guidance for subawards.
Lack of Systematic Oversight of Subawards Increases Risk
A lack of systematic oversight of activities for cooperative agreements with
subawards (specifically lead organizations) potentially puts federal funds at risk
and could result in avoidable, no-cost time extension requests to complete
projects. These delays could result in environmental goals not being achieved.
When subaward reports received by recipients are not summarized accurately for
the region, projects that are behind schedule may not be addressed. We found that
a number of subaward tasks were either characterized inaccurately or actually
behind schedule.
	One recipient provided a spreadsheet showing subaward details reporting
the status of individual tasks as complete. However, additional remarks
were inconsistent with the completed status. For example:
o On-site sewage denitrification verification subaward stated that three
tasks had not been started.
o Pesticide use survey subaward showed three tasks were less than 100
percent complete.
o Outreach and workshops for preventing automobile leaks showed that
two tasks were making progress but were reported as complete.
	Another recipient's subaward involved recruiting local businesses and
providing technical advice. The subawardee was still recruiting businesses
and assessing technical needs, but the recipient did not report it as behind
schedule.
These difficulties result from challenges that lead organizations have managing a
large number of subawards and the need to summarize information for Region 10.
It is possible that subaward tasks that are behind schedule could be reduced if
recipients with subawards were providing more focused oversight and tracking.
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Recommendations
We recommend that the Regional Administrator for Region 10:
2.	Ensure that grant specialists and project officers receive training on their
responsibilities for subawards and collaborate to periodically review:
a.	Recipients' subaward monitoring policies for compliance with
terms and conditions.
b.	Lead organizations' monitoring activity records to ensure that
sufficient subaward monitoring is conducted to protect federal
funds.
3.	Provide training to recipients regarding subaward monitoring
responsibilities and periodically check on the execution of those
responsibilities.
4.	Evaluate whether the resources allocated to overseeing Puget Sound
cooperative agreements are sufficient to effectively achieve the Puget
Sound Program's needed environmental results.
We recommend that the Assistant Administrator for Administration and
Resources Management:
5.	Review existing grants policies to determine whether policies need to be
updated to clarify project officer and grant specialist responsibilities with
subawards, as well as recipient responsibilities for subaward monitoring.
Agency Comments and OIG Evaluation
In response to recommendation 2, Region 10 agreed with the recommendation.
Region 10 plans to conduct meetings or training to review requirements for
recipient subaward monitoring and what requirements need to be communicated
to lead organizations. The Puget Sound Program will commit staff time to
develop in-house training and refresher materials for project officers to use at a
training session. Grants specialists will be included in the meetings/trainings.
Puget Sound project officers will include a semiannual review of lead
organization subrecipient monitoring as part of their FEATS report review. This
additional aspect of the FEATS review for lead organizations will begin with the
reporting period ending September 30, 2014. These actions will be completed by
December 31, 2014. When implemented, agency actions should address the
recommendation.
In response to recommendation 3, Region 10 agreed with the recommendation
and will conduct training on subaward monitoring responsibilities for the
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Puget Sound Program's lead organizations. This will be completed by December
31, 2014. When implemented, the agency actions should address the
recommendation.
In response to recommendation 4, Region 10 agreed with the recommendation.
The Grants Streamlining Workgroup is finalizing and phasing in streamlined
grants processes. This will include making sure available resources are adequately
utilized to provide effective grant management and monitoring. These actions will
be completed by March 31, 2015. When implemented, agency actions should
address the recommendation.
In response to recommendation 5, the OGD agreed with the recommendation.
The OGD plans to review existing policies, guidance and regulations to
determine if further clarification is needed. This review will be completed by
September 30, 2014. If needed, the OGD will work with the grants management
community to provide policy updates or guidance, as appropriate, to both EPA
grants management staff and recipients concerning their respective
responsibilities regarding subawards. The OGD will ensure policy updates or
guidance are included in training for project officers and grants specialists. These
actions will be completed by September 30, 2015. When implemented, agency
actions should address the recommendation.
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Status of Recommendations and
Potential Monetary Benefits
RECOMMENDATIONS
POTENTIAL MONETARY
BENEFITS (In $000s)
Rec.
No.
No.
Subject
Status1
Action Official
Planned
Completion
Date
Claimed
Amount
Ag reed-To
Amount
7 Meet with project officers and grant specialists
to discuss the results of this review and
reinforce compliance with agency policies for
documenting, following up and resolving
oversight activities.
14 Ensure that grant specialists and project
officers receive training on their responsibilities
for subawards and collaborate to periodically
review:
a.	Recipients' subaward monitoring policies
for compliance with terms and
conditions.
b.	Lead organizations' monitoring activity
records to ensure that sufficient
subaward monitoring is conducted to
protect federal funds.
14 Provide training to recipients regarding
subaward monitoring responsibilities and
periodically check on the execution of those
responsibilities.
14 Evaluate whether the resources allocated to
overseeing Puget Sound cooperative
agreements are sufficient to effectively achieve
the Puget Sound Program's needed
environmental results.
14 Review existing grants policies to determine
whether policies need to be updated to clarify
project officer and grant specialist
responsibilities with subawards, as well as
recipient responsibilities for subaward
monitoring.
Regional Administrator,
Region 10
Regional Administrator,
Region 10
12/31/14
12/31/14
Regional Administrator,
Region 10
Regional Administrator,
Region 10
Assistant Administrator for
Administration and
Resources Management
12/31/14
03/31/15
09/30/15
O = 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
Puget Sound Cooperative Agreements Reviewed by the EPA OIG
Cooperative
agreement
number
Project period
EPA funding
Randomly
selected
Project and
GMO files
reviewed
Project
officer and
grant
specialist
interviewed
Subaward
monitoring
policy
reviewed
Lead
organization a
Number of
subawards b
00J15001
05/01/10
04/30/14
$600,000
X
X
X
No policy

3
00J30301
10/01/10
09/30/15
$4,359,784
X
X
X
X

4
00J20101
02/01/11 
06/30/17
$15,584,834


X
X
X
29
00J27601
02/01/11 
06/30/17
$18,662,237


X
X
X
52
00J32601
02/01/11 
01/31/17
$15,487,586


X
X
X
45
00J29801
02/01/11 
01/31/17
$15,489,806


X
X
X
29
00J32201
01/01/11 
09/30/15
$15,700,581


X
X
X
21
00J32101
07/01/11 
06/30/17
$12,269,999
X
X
X
X
X
26
00J17601
07/01/10
06/30/15
$6,000,000


X
X
X
52
00J13801
06/30/10-
06/30/13
$581,257
X
X
X
N/A

0
Total

$104,736,084
4
4
10
8
7
261
Source: OIG review of EPA and cooperative agreement recipient documents.
aThe lead organizations and grant numbers were confirmed by Region 10.
bThe number of subawards provided by lead organizations does not include contracts or internal awards.
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Appendix B
Agency Response to Draft Report
MEMORANDUM
SUBJECT: Response to Office of Inspector General Draft Report No. OA-FY13-0341 "EPA
Needs to Improve Oversight and Assure Environmental Results of Puget Sound
Cooperative Agreements" dated May 6, 2014
FROM: Dennis J. McLerran,
Regional Administrator
TO:	Janet Kasper, Director
Contact and Assistance Agreements Audits
Thank you for the opportunity to respond to the issues and recommendations in the subject audit
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. For those report recommendations with which the
agency does not agree, we have explained our position.
AGENCY'S OVERALL POSITION
We concur with the recommendations contained in this report and have already taken steps to
improve oversight and assure the environmental results of Puget Sound Cooperative Agreements.
However, we do not concur with all of the findings. For example, we do not concur with the
generalization that all areas need improvements to be made. We note and agree with the finding
presented in the opening statement of the "At a Glance" summary (page iii) where the first
paragraph starts with "Overall, the OIG found that EPA Region 10 is effectively administering
cooperative agreements monitoring project progress to determine whether proposed outputs and
outcomes were achieved." We believe that this finding warrants a rephrasing of the observation
that improvements need to be made. We think a more accurate observation would be that
improvements can be made.
Similarly the characterization of file documentation, consistency of monitoring activities, and
EPA Project Officer's awareness as characterized in the headings for the associated findings and
recommendations are overstated as being noteworthy deficiencies. We address each of these
statements separately in our responses. Finally, Region 10 does not concur with the final finding
in the report that states that funds are at risk. This finding is not supported by the text in this
report.
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OARM, Office of Grants and Debarment, agrees with the OIG recommendation that OARM
review existing grants policies to determine whether policies need to be updated to clarify project
officer and grant specialist responsibilities regarding subawards, as well as recipient
responsibilities for subaward monitoring. Prior to the Puget Sound audit, this was already
identified as an area to review as part of OGD's larger goal of improving assistance agreement
policies and updating EPA policies to be consistent with the newly published OMB Uniform
Guidance available at 2 CFR Part 200.
However, OGD would like to clarify that project officers and grant specialists do not monitor
subawards as suggested by the OIG's recommendation to Region 10 to "... ensure grant
specialists and project officers receive training on their responsibilities to monitor subawards.
As described in 40 CFR Parts 30, 31 and the newly published Uniform Guidance, progress under
an assistance agreement award is the prime recipient's responsibility. The recipient is responsible
for monitoring award activities, compliance and summarizing subrecipient progress for EPA
review. Furthermore, EPA does not have a fiduciary relationship or privity with subrecipients.
To that end, OGD will review existing policies, guidance and regulations to determine if further
clarification is needed and will provide such policy updates or guidance as appropriate to both
EPA grants management staff and recipients on their respective responsibilities regarding
subawards under EPA grants. OGD will also ensure the subject is included in its national training
program.
AGENCY'S RESPONSE TO REPORT RECOMMENDATIONS
No.
Recommendation
High-Level Intended Corrective
Action(s)
Estimated
Completion by
Quarter and FY
1.
The Region 10
Administrator meet with
project officers and
grants specialists to
discuss the results of this
review and reinforce
compliance with agency
policies for documenting,
following up and
resolving oversight
activities.
Region 10 Response: Region 10
concurs with this recommendation.
The Puget Sound Program will
commit staff time to develop in-
house training and refresher
materials for project officers to use at
a training session. After a meeting
with the Region 10 Administrator,
the Grants and Interagency
Agreements Unit will commit to
providing a mandatory refresher
session for all grants specialists on
baseline monitoring, including
procedures for following up on
issues discovered in the monitoring
and documenting the files.
1st Quarter FY 2015
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2.
The Region 10
Administrator ensure that
grants specialists and
project officers receive
training on their
responsibilities to
monitor subawards and
collaborate to
periodically review:
(a)	Recipients
sub award
monitoring polices
for compliance with
terms and
conditions.
(b)	Lead organizations
monitoring activity
records to ensure
that sufficient
sub award
monitoring is
conducted to protect
federal funds.
Region 10 Response: Region 10
concurs with this recommendation
and plans meetings/trainings to
review requirements for recipient
subaward monitoring and what
requirements need to be
communicated to Lead
Organizations. The Puget Sound
Program will commit staff time to
develop in-house training and
refresher materials for project
officers to use at a training session.
Grants specialists will be included in
the meetings/trainings. Puget Sound
project officers will include review
of Lead organization subrecipient
monitoring semi-annually, as part of
the semi-annual FEATS report and
review conducted for each Lead
Organization. This additional aspect
of the FEATS review for Lead
Organizations will begin with the
reporting period ending September
30, 2014, and continue thereafter for
the project period for Puget Sound
Lead Organization assistance
agreements.
1st Quarter FY 2015
3.
The Region 10
Administrator provide
training to recipients
regarding sub award
monitoring
responsibilities and
periodically check on the
execution of those
responsibilities.
Region 10 Response: The Puget
Sound Program will conduct a
specific training to Puget Sound
Program Lead Organization
assistance agreement recipients on
subaward monitoring
responsibilities.
Additionally, Puget Sound Program
project officers will include review
of Lead organization sub-recipient
monitoring semi-annually, as part of
the semi-annual FEATS report and
review conducted for each Lead
Organization. This additional aspect
of the FEATS review for Lead
Organizations will begin with the
reporting period ending September
30, 2014, and continue thereafter for
1st Quarter FY 2015
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the project period of Puget Sound
Lead Organization assistance
agreements.

4.
The Region 10
Administrator evaluate
whether the resources
allocated to overseeing
Puget Sound cooperative
agreements are sufficient
to effectively achieve the
Puget Sound Program's
needed environmental
results.
Region 10 Response: Region 10
concurs and the region's Grants
Streamlining Workgroup is
finalizing and phasing in streamlined
grants processes. This will include
making sure available resources are
adequately utilized to provide
effective grant management and
monitoring.
2nd Quarter FY 2015
5.
Review existing grants
policies to determine
whether policies need to
be updated to clarify
project officer and grants
specialist responsibilities
with subawards, as well
as recipient
responsibilities for
subaward monitoring.
1.1 OGD Response: Review
existing policies, guidance and
regulations to determine if
further clarification is needed.
4th Quarter FY 2014
1.2 If needed, work with the grants
management community to
provide policy updates or
guidance as appropriate to both
EPA grants management staff
and recipients on their respective
responsibilities regarding
subawards.
4th Quarter FY 2015
1.3 Ensure policy updates or
guidance is included in nation
training for project officers and
grants specialists.
4th Quarter 2015
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DISAGREEMENTS WITH FINDINGS
Finding
Agency Response
File Documentation Improvements are
Needed
Region 10 does not concur with the
generalized all inclusive statement of
"improvements are needed." Region 10
agrees that file documentation can and
should be improved.
Monitoring and Review Activities are Not
Consistent
Region 10 does not concur with the
implied condition that (all) monitoring and
review activities are not consistent. Rather,
some monitoring and review activities are
not complete.
Project Officers Need to Increase
Awareness of Subaward Monitoring
Region 10 does not concur with this
generalization. As noted in the report,
Region 10 project officers are generally
aware of subaward monitoring activities
conducted by recipients. Only two
exceptions are noted in the report, where
two project officers were unsure of
subaward monitoring activities. The two
project officers should improve awareness
of Subaward Monitoring.
Lack of Guidance and Oversight Puts Funds
At Risk
Region 10 does not concur. The statement
that implies funds are at risk is not
supported by the text in this report, nor are
there any amount of funds at risk indicated
on the "Status of Recommendations and
Potential Monetary Benefits" table on page
15 of this report. Based on the findings
contained in this report, it is inaccurate to
conclude that the conditions noted put
funds at risk.
If you have any questions about this response, please contact Rick Parkin, Puget Sound Program
Manager at 206-553-8574, Russell Harmon, Acting Manager, Region 10 Grants and Interagency
Agreements Unit regarding grants issues at 206-553-1793, Jennifer Hublar, Program Analyst,
OGD at 202-564-5294, or JoAnne Brendle, Acting Region 10 Audit Follow-up Coordinator at
206-553-6385.
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Appendix C
Distribution
Office of the Administrator
Assistant Administrator for Administration and Resources Management
Regional Administrator, Region 10
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
Director, Office of Policy and Resource Management,
Office of Administration and Resources Management
Deputy Director, Office of Policy and Resource Management,
Office of Administration and Resources Management
Deputy Regional Administrator, Region 10
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
Audit Follow-Up Coordinator, Region 10
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