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U.S. ENVIRONMENTAL PROTECTION AGENCY
OFFICE OF INSPECTOR GENERAL
Hotline Report: Spending Taxpayer Dollars
Management Alert:
Concerns Over Compliance,
Accountability and Consistency
Identified With EPA's Biweekly
Pay Cap Waiver Process
Report No. 17-P-0355 August 9, 2017
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Report Contributors: Angela Bennett
Darren Schorer
Abbreviations
EPA
U.S. Environmental Protection Agency
FY
Fiscal Year
GS
General Schedule
HRO
Human Resources Officer
OARM
Office of Administration and Resources Management
OCFO
Office of the Chief Financial Officer
OIG
Office of Inspector General
U.S.C.
United States Code
Cover image: Image regarding pay cap waiver, prepared by EPA OIG.
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U.S. Environmental Protection Agency
Office of Inspector General
At a Glance
17-P-0355
August 9, 2017
Why We Did This Audit
The U.S. Environmental
Protection Agency (EPA) Office
of Inspector General (OIG)
received a hotline complaint
alleging mismanagement by
EPA Region 10 of its biweekly
pay cap waiver process.
The OIG initiated an audit to
determine whether Region 10's
process meets federal
requirements and complies with
established agency policies
and procedures. The purpose
of this report is to alert the
agency on issues identified
during our work. The issues
identified pertain not only to
Region 10 but also to EPA
headquarters offices involved
in the waiver process. Audit
work is continuing.
This report addresses the
following EPA goal or
cross-agency strategy:
• 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.
Management Alert: Concerns Over Compliance,
Accountability and Consistency Identified With EPA's
Biweekly Pay Cap Waiver Process
What We Found
The OIG identified concerns over
compliance, accountability and consistency
We identified issues with
,, , ^ documentation of biweekly pay
with EPA Region 10s and headquarters Cap waivers at Region 10, as well
biweekly pay cap waiver process. as matters that pertained to EPA
headquarters offices. This
EPA Region 10 provided waiver requests management alert is for
for some but not most instances where consideration by the agency as it
employees exceeded the biweekly pay cap updates policies and procedures,
during fiscal years 2015, 2016 and 2017
(through January 7, 2017). In addition, 11 of 15 requests provided by Region 10
lacked adequate information to determine whether there was an emergency with
a threat to life and property, or whether that work was critical to the mission of the
agency. While all requests were approved by the Region 10 Regional
Administrator as required, only one request was approved by the Region 10
Human Resources Officer as required by EPA policy. This occurred because the
region did not have an internal policy or process in place to address review by
the regional Human Resources Officer, the need for sufficient justification, or the
retention of supporting documents. As a result, the potential exists that Region 10
employees could be overpaid or be paid for work that does not meet the intent of
premium pay requirements in 5 U.S.C. § 5547.
We also identified inconsistencies and a lack of accountability over the
processing of Region 10's waivers within the EPA's Office of Administration and
Resources Management (OARM) and Office of the Chief Financial Officer
(OCFO). Based on interviews with officials and personnel, we learned that there
is no clear line of responsibility to maintain documentation for waiver requests or
to track requests and approvals between the region, OARM and OCFO. Neither
OARM nor OCFO could provide a list of waivers for the period requested or
supporting documentation. Both offices denied responsibility for tracking the
waivers and maintaining the supporting documentation.
The agency is updating the biweekly pay cap waiver policies and procedures. We
are alerting the EPA to these matters for consideration as it drafts these updates.
Due to the potential impact of these matters on the agency's overall biweekly
waiver process, the OIG has expanded the scope of this ongoing audit to include
other regional and headquarters offices.
Agency Response
Listing of OIG reports.
We issued a discussion document on June 22, 2017, for the agency's review. The
OIG considered suggestions provided by Region 10 and OARM and modified the
report accordingly.
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UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D.C. 20460
THE INSPECTOR GENERAL
August 9, 2017
MEMORANDUM
SUBJECT: Management Alert: Concerns Over Compliance, Accountability and Consistency
Identified With EPA's Biweekly Pay Cap Waiver Process
KmnrtNn 17-P-fnSS
Region 10
Donna J. Vizian, Acting Assistant Administrator
Office of Administration and Resources Management
David Bloom, Acting Chief Financial Officer
Office of the Chief Financial Officer
This is our report on the subject audit of a hotline complaint conducted by the Office of Inspector
General (OIG) of the U.S. Environmental Protection Agency (EPA). The project number for this audit
was OA-FY17-0135. The purpose of this report is to alert the agency to certain issues identified. Audit
work is continuing, and the OIG has expanded the scope of this ongoing audit to include other regional
and headquarters offices.
This report contains no recommendations and you are not required to provide a written response. Should
you choose to provide a final response, we will post your response on the OIG's public website, along
with our memorandum commenting on your response. Your response should be provided as an Adobe
PDF file that complies with the accessibility requirements of Section 508 of the Rehabilitation Act of
1973, as amended. The final response should not contain data that you do not want to be released to the
public; if your response contains such data, you should identify the data for redaction or removal along
with corresponding justification.
FROM
Arthur A. Elkins Jr.
TO
Michelle L. Pirzadah, Acting Regional Administrator
We will post this report to our website at www.epa.gov/oig.
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Management Alert: Concerns Over Compliance,
Accountability and Consistency Identified With
EPA's Biweekly Pay Cap Waiver Process
17-P-0355
Table of C
Purpose 1
Background 1
Regulatory and Policy Requirements 1
EPA Policy and Procedures 2
Responsible Offices 2
Scope and Methodology 2
Results of Audit 3
Conclusion 4
EPA Response and OIG Comments 5
Appendices
A OARM Response to Discussion Document 6
B Distribution 11
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Purpose
As a result of a hotline complaint, the Office of Inspector General (OIG) of the
U.S. Environmental Protection Agency (EPA) is conducting an audit of EPA
Region 10's biweekly pay cap waiver process. The objective of the audit is to
determine whether Region 10's process meets federal requirements and complies
with established agency policies and procedures.
This report alerts the agency on issues identified to date. These issues pertain to
Region 10, as well as EPA headquarters offices involved in the waiver process.
Our audit work is continuing, and due to the potential impact of these matters we
have expanded the scope to include other regional and headquarters offices.
Background
The EPA OIG received a hotline complaint alleging mismanagement by EPA
Region 10 of its biweekly pay cap waiver process. The complaint alleged that
there appears to be an absence of management control for approving biweekly pay
cap waivers that is contrary to agency policy. Examples cited included: approvals
for non-emergencies, a lack of review by the human resources office, missing
supporting documentation, and inadequate justifications.
Regulatory and Policy Requirements
Title 5 U.S.C. § 5547, Limitation on Premium Pay, establishes a biweekly pay cap
for General Schedule (GS) employees. The biweekly basic pay cap may be
waived for GS employees who are paid premium pay while conducting work
designated as emergency or mission-critical.
Title 5 U.S.C. § 5547(a) states that employees may be paid premium pay, but
limits basic pay plus premium pay for any pay period to the greater of the
maximum rate of pay for a GS-15 employee or the rate payable for Level V of the
Executive Schedule. Title 5 U.S.C. § 5547(b)(1) states the limit for basic pay plus
premium pay:
... shall not apply to an employee who is paid premium pay by
reason of work in connection with an emergency (including a
wildfire emergency) that involves a direct threat to life or property,
including work performed in the aftermath of such an emergency.
Further, 5 U.S.C. § 5547(b)(3) states that:
... the head of an agency may determine that subsection (a) shall
not apply to an employee who is paid premium pay to perform
work that is critical to the mission of the agency.
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EPA Policy and Procedures
The EP A's Pay Administration Manual provides policy and procedures on pay
administration for employees in GS positions. Chapter 15, Section 6, states that the
biweekly pay cap may be lifted for those emergencies deemed to be a natural or
non-natural disaster involving direct threats to life or property. The EPA has
delegated the authority to declare disaster emergencies to various management
officials in the regions and at headquarters. For an emergency confined to one
region, the Regional Administrator will decide whether the emergency is a disaster
meriting the lifting of the biweekly cap. The Regional Administrator may
redelegate the authority to declare an emergency to the Assistant Regional
Administrator or Deputy Regional Administrator. The deciding official will notify
the local Human Resources Officer (HRO) on a Natural Disaster Emergency
Designation form. The form provides for:
• The type of natural disaster, locations and beginning date.
• Signature of the approving official.
• The HRO approval.
• The notification of the conclusion of the natural disaster emergency by the
approval official.
• The effective date of termination and signature of the HRO.
Unlike the relevant Title 5 statutory provision, the EPA policy does not address
procedures to waive the biweekly pay cap for work "critical to the mission of the
agency."
Responsible Offices
In accordance with EPA policy, Regional Administrators approve the waivers for
emergencies confined to one region. Region 10's Office of Management
Programs, Human Resources and Facilities Unit is the local human resource
office responsible for reviewing and processing the approved waivers. The Office
of Administration and Resources Management's (O ARM's) Office of Human
Resources is responsible for providing overall technical guidance and direction
for the EPA's policy on overtime in emergencies. The Office of Human
Resources is also responsible for establishing policy and procedures. The Office
of the Chief Financial Officer (OCFO) is responsible for the payroll processing of
the waivers.
Scope and Methodology
We are conducting this audit 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
17-P-0355
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conclusions based on our audit objective. We believe that the evidence obtained
to date provides a reasonable basis for the findings and conclusions presented in
this report.
To determine whether Region 10's process meets federal requirements and
complies with established agency policies and procedures, we performed the
following:
• Interviewed officials and personnel in OARM's Office of Human
Resources (including its Shared Service Center in Las Vegas, Nevada)
and OCFO on the pay cap waiver policy and procedures.
• Obtained biweekly pay cap waiver requests for fiscal years (FYs) 2015,
2016 and 2017 through December 31, 2016.
• Reviewed waiver requests to determine whether each request:
o Was approved by the Region 10 Regional Administrator or
designee.
o Was reviewed/approved by Region 10's HRO.
o Meets the requirement for approval (we looked for written
justification that an emergency exists and the nature and extent of
the threat to life and property, or why the response was considered
mission-critical).
• Obtained Region 10's internal review report on biweekly exceedances.
• Obtained payroll data that identified Region 10 employees exceeding the
biweekly pay cap for FYs 2015, 2016 and 2017 through January 7, 2017.
• Reconciled the pay cap waiver requests with the payroll data to determine
whether all instances of exceedance were documented.
Results of Audit
Our audit disclosed concerns over compliance, accountability and consistency
with EPA Region 10's and headquarters' overall biweekly pay cap waiver
process.
For Region 10, we identified 79 instances where employees exceeded the
biweekly pay cap during FYs 2015, 2016 and 2017 (through January 7, 2017).
Most of the 79 exceedances lacked a supporting waiver request; Region 10
provided 15 waiver requests that covered only 21 of the 79 instances. The OIG's
review of the 15 waiver requests showed that requests cited both emergencies and
work that was critical to the mission of the agency as justification. The OIG
review also showed that requests were approved by the Region 10 Regional
Administrator as required, but only one request also showed approval by the
Region 10 HRO. In addition, 11 of 15 requests lacked adequate information to
determine whether there was an emergency with a threat to life and property, or
whether that the work was critical to the mission of the agency. This occurred
because the region did not have an internal policy or process in place to address
review by the regional HRO, the need for sufficient justification, or the retention
17-P-0355
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of supporting documents. As a result, the potential exists that Region 10
employees could be overpaid or be paid for work that does not meet the intent of
premium pay requirements in 5 U.S.C. § 5547.
In addition, we disclosed inconsistencies and a lack of accountability over the
processing of Region 10's biweekly pay cap waivers within OARM and OCFO.
Based on interviews with officials and personnel in these offices, we learned that
there is no clear line of responsibility to maintain documentation for waiver
requests or to track waiver requests and approvals between the region, OARM
and OCFO. Neither OARM nor OCFO could provide a list of waivers processed
for the period requested or supporting documentation. Both offices denied
responsibility for tracking the waivers and maintaining the supporting
documentation.
Also, the Shared Service Centers are not consistent in their review and processing
of waiver requests. One service center stated it reviews the waiver requests to
ensure requests are valid and meet policy requirements before forwarding to
OCFO for payroll processing. Another service center stated it does not review the
waiver request before forwarding to OCFO—it only checks for the Regional
Administrator's approval.
The OIG discussed the issue of inconsistent review practices by the Shared
Service Centers and the responsibility for maintaining supporting documentation
with OARM. OARM confirmed the inconsistent review practices of the Shared
Service Centers and suggested we contact individual Regional Administrators'
offices to obtain a listing of waivers and the supporting documents. It is still
undetermined as to who is responsible for official records retention.
We learned from Region 10 that OARM was in the process of updating the
biweekly pay cap waiver policies and procedures at a national level. However, we
do not know whether the updated policies and procedures will address the issues
presented in this report.
Conclusion
The OIG has identified numerous instances of noncompliance with Region 10's
biweekly pay cap waiver process, as well as inconsistencies and the lack of
accountability in the processing of waiver requests by OARM and OCFO. We are
alerting the EPA to these matters for consideration as the agency drafts updated
policies and procedures. Due to the potential impact of these matters on the
agency's overall biweekly waiver process, the OIG plans to expand the ongoing
audit to include other regions as well as OARM and OCFO. No recommendations
are being made at this time, but our audit work is ongoing and recommendations
may be made in a subsequent report on the EPA's overall biweekly waiver
process.
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EPA Response and OIG Comments
The OIG provided a discussion document to the agency for comment on June 22,
2017. We discussed our audit findings with Region 10, OARM and OCFO on
June 29, 2017. Region 10 provided the OIG with comments on the discussion
document via email on July 7, 2017. OARM responded via a memorandum dated
July 21, 2017. OCFO provided no response.
Region 10 commented that it would be helpful if we, up front, defined
"emergencies" as natural and non-natural disasters, and then used those terms
consistently throughout the report. The region also commented that it does not
deny responsibility for maintaining its own records. We made revisions to address
the region's consistency concern, but we believe our wording referencing
"emergencies" is consistent with the manual and documentation provided by the
agency. We also made revisions to clarify the offices that deny responsibility for
maintaining records.
Region 10 and OARM commented that the 79 instances where employees
exceeded the biweekly pay cap may include instances that would not require a
waiver. As part of our ongoing audit, we intend to work with Region 10 to
identify which of the 79 instances do not require a waiver. We also intend to work
with OARM and OCFO to determine whether the agency can identify total waiver
requests and authorizations through agency systems.
OARM stated that the Office of Human Resources does not have the responsibility
"for reviewing and processing the approved waivers"; rather, it is responsible for
"providing overall technical guidance and direction for the EPA's policy on
overtime for emergencies." OARM also said that the responsibility for maintaining
documentation rests with the regional HROs, and the SSCs role is to serve as a
pass-through to OCFO. We made revisions to the "Responsible Offices" section to
address OARM's concerns. However, based on our discussions with the agency
and as noted in the report, the SSCs are not consistent in their review and
processing of waiver requests passed through to OCFO.
Both Region 10 and OARM said that the region and EPA headquarters are working
to update the biweekly pay cap waiver policies and procedures. The OIG will
discuss these revisions as part of the ongoing audit, and understands that the
updated policies and procedures may address the issues identified in this report
(e.g., the role of the SSCs).
OARM's memorandum response is included in Appendix A. Region 10's email
response is not included.
17-P-0355
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Appendix A
OARM Response to Discussion Document
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D.C. 20460
JUL 2 I 2017
OFFICE OF
ADMINISTRATION
AND RESOURCES
MANAGEMENT
MEMORANDUM
SUBJECT: Management Response to Office of Inspector General Management Alert: Concerns Over
Compliance, Accountability and Consistency Identified with EPA's Biweekly Pay Cap
Waiver Process ("Project OA-FY17-0135")
Thank you for the opportunity to review and comment on the Office of the Inspector General's
report titled Management Alert: Concerns Over Compliance, Accountability and Consistency
Identified With EPA Biweekly Pay Cap Waiver Process, Project No. OA-FY17-Q135. We are
pleased to provide our attached comments that supplement those already provided by EPA's
Region 10 Office on July 7, 2017. The focus of our comments is to ensure the accuracy of the
OIG's discussion document as well as provide updated information on the EPA's Pay Cap Waiver
Process.
If you have any questions, please contact Linda Gray, director, Office of Human Resources, at
(202) 564-4606 or Grav.Linda@epa.gov.
Attachment
cc: John Showman
Howard Osborne
Quentin Jones
Dan Opalski
Nancy Lindsay
Joyce Kelly
Robert Hill
Jeanne Conklin
17-P-0355 6
FROM:
'onna J. Vizian, Acting Assistant Administrator
TO:
Arthur A. Elkins, Jr. Inspector General
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Linda Gray
Wesley Carpenter
Lynnann Hitchens
Marian Cooper
Matthew Bell
Janice Jablonski
Lauren Lemley
Bobbie Trent
Benita Deane
Angela Bennett
Darren Schorer
Debbi Hart
Cheri Hembrey
17-P-0355
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ATTACHMENT
OIG PROJECT NO. OA-FY17-0135
Page
Number
Section & Text
OARM Comments
2
Responsible Offices - The Office of
Administration and Resources
Management's (OARM's) Office of
Human Resources, through its
regional human resources offices and
Shared Service Centers, is responsible
for reviewing and processing the
approved waivers.
This statement is factually incorrect on three
separate points:
1. The regional HROs report through their
assistant regional administrators to the
regional administrator for their respective
region. They do not report to OHR or to
OARM.
2. The three shared service centers report to
OARM but do not report to OHR. The RTF
SSC reports to the director of the Office of
Administration and Resources Management—
RTP, while the Cincinnati and Las Vegas
SSCs report to the director of the Office of
Administration and Resources Management-
Cincinnati.
3. The "Responsibilities" portion of this section
of the Pay Manual states that OHR is
responsible for "providing overall technical
guidance and direction for the EPA's policy
on overtime for emergencies."
Consequently, OHR does not have the
responsibility "for reviewing and processing the
approved waivers" as asserted in the report.
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3
Scope and Methodology - The text in
the sixth bullet of the document states:
"obtained payroll data that identified
Region 10 employees exceeding the
biweekly pay cap for FYs 2015,2016
and 2017 through January 7,2017."
During an OIG conference call on June 29,2017,
OARM asked the question of whether that data
included information which indicated how those
employees were coded with respect to their
coverage under the Fair Labor Standards Act.
The reply did not provide a definitive answer.
This is an important point to raise because
employees who are covered by the FLSA are
paid overtime authorized under that act and are
not subject to the biweekly pay limitation found
in Title 5 of the U.S. Code. If FLSA-covered
employees are included in this audit report, then
the scope of the problem could appear to be
greater than it is and if included as part of a
corrective action, could potentially lead to an
effort to recoup funds from employees who
legitimately earned them.
4
Results of Audit - The
document raises the following
concerns:
1. "Based on interviews with officials
and personnel in these offices, we
learned that there is no clear line of
responsibility to maintain
documentation for waiver requests or
to track waiver requests and approvals
between the region, OARM and
OCFO,"
2. "Also, the Shared Service Centers
are not consistent in their review and
processing of waiver requests."
3. "We learned from Region
10 staff that OARM was in the
process of updating the
biweekly pay cap waiver
1. The responsibility for maintaining the
documentation rests with the regional
HROs. This is documented in paragraph /
in the "Responsibilities" portion of this
section of the Pay Manual:
"HROs are responsible for providing
guidance to managers and supervisors on
overtime in emergencies; for ensuring
that requests are properly prepared; for
processing requests for waivers; for
ensuring that natural disasters overtime is
not subject to the biweekly maximum
earning limitation; and for maintaining
files of requests for waivers of the
biweekly maximum earning limitations."
2. The SSCs no longer have a substantive role in
the review or processing of waiver requests. In
the past, the list of names of employees for
whom the pay cap was lifted was entered into
2
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policies and procedures at a
national level. However, we do
not know whether the updated
policies and procedures will
address the issues presented in
this report"
the agency's personnel and payroll system
through a Request for Personnel Action (SF-52.),
which is no longer the case. Consequently, the
SSCs do not "process" any actions nor do any
other data entry to effect the lifting of the pay
cap; the SSCs serve as a pass-through to the
Office of the Chief Financial Officer who "flip a
switch" in the computer system that provides our
payroll support to lift the pay cap for the
employees listed in the document approved in
the region.
3. OUR has been working with staff in Region
10 to update the biweekly pay cap waiver
policies and procedures. OIIR has revised the
forms used to request and terminate the lifting of
the biweekly pay cap and has revised the text in
paragraph f of this chapter of the pay manual.
OHR can share and discuss the revised form and
text with the OIG if needed.
The revised procedures allow for the entire
process to remain within a region. The RA or
their designee still states that an emergency has
been declared and requests the pay cap be lifted.
The regional HRO still reviews and signs off on
the request. However, under the proposed new
approach, the ability to "flip the switch" to lift
the pay cap will shift from OCFO to the region
(most likely the regional comptroller's office)
and enable the PeoplePlus coordinator to lift and
restore the biweekly pay cap. Currently, Region
10 is working on developing local standard
operating procedures and the associated training.
3
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Appendix B
Distribution
The Administrator
Chief of Staff
Chief of Staff for Operations
Deputy Chief of Staff for Operations
Assistant Administrator for Administration and Resources Management
Chief Financial Officer
Regional Administrator, Region 10
Agency Follow-Up Coordinator
General Counsel
Associate Administrator for Congressional and Intergovernmental Relations
Associate Administrator for Public Affairs
Deputy Assistant Administrator for Administration and Resources Management
Associate Chief Financial Officer
Controller, Office of the Controller, Office of the Chief Financial Officer
Director, Office of Human Resources, Office of Administration and Resources Management
Director, Office of Resources, Operations, and Management, Office of Administration and
Resources Management
Deputy Director, Office of Resources, Operations, and Management, Office of Administration
and Resources Management
Deputy Regional Administrator, Region 10
Assistant Regional Administrator, Region 10
Director, Public Affairs and Community Engagement, Region 10
Audit Follow-Up Coordinator, Office of the Administrator
Audit Follow-Up Coordinator, Office of Administration and Resources Management
Audit Follow-Up Coordinator, Office of the Chief Financial Officer
Audit Follow-Up Coordinator, Region 10
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