.* *. U.S. Environmental Protection Agency	12-4-0720
£ AM \ Dffiro r»f Incnprtnr	August 22, 2012
^ (fcjl z Office of Inspector General
* At a Glance
Why We Did This Review
The U.S. Environmental Protection
Agency (EPA), Office of Inspector
General, conducted this
examination based upon an
anonymous hotline complaint that
expressed concerns associated
with the publication of the Bay
Journal by the Alliance for the
Chesapeake Bay, Inc. (the
recipient). The purpose of this
examination was to determine
whether the recipient's costs
reported are reasonable,
allowable, and allocable in
accordance with the terms and
condition of the cooperative
agreements and whether results
intended were achieved. EPA
awarded the recipient five
cooperative agreements between
August 2005 and July 2010 with a
total approved project cost of
$3,619,049. The purpose of the
agreements was to promote public
education, outreach, and
participation in the restoration of
the Chesapeake Bay. One of the
tasks under the cooperative
agreements was to produce and
publish the Bay Journal.
Furthering EPA's Goals and
Cross-Cutting Strategies
•	Protecting America's waters
•	Enforcing environmental laws
For further information, contact
our Office of Congressional and
Public Affairs at (202) 566-2391.
The full report is at:
20120822-12-4-0720. pdf
Examination of Costs Claimed Under EPA
Cooperative Agreements CB-97324701 Through
CB-97324705 Awarded to Alliance for the
Chesapeake Bay, Inc.
What We Found
The recipient achieved the intended result of producing the Bay Journal, but
did not comply with the Code of Federal Regulations (CFR)—specifically,
40 CFR Part 30 and 2 CFR Part 230—regarding procurement and financial
management requirements. The recipient did not prepare and document a
cost or price analysis, nor evaluate the performance of its Bay Journal
contractor. Also, its federal financial reports are not supported by its
accounting records. We questioned project costs totaling $1,357,035.
The recipient's written policies and procedures do not include necessary
guidance to ensure compliance with 40 CFR Part 30. When recipients do
not complete the required cost or price analysis, we have no assurance that
costs are fair and reasonable. Due to noncompliance issues and
procurement policy and procedure weaknesses, the recipient may not have
the capability to manage current and future grant awards.
Recommendations and Agency/Recipient Response
We recommend that the Regional Administrator, Region 3, disallow the total
questioned project costs of $1,357,035 and recover $1,189,864 of federal
funds paid under the cooperative agreements. We also recommend that the
Regional Administrator require the recipient to improve its procurement
internal controls and ensure that future federal financial reports are
supported by accounting system data. Lastly, we recommend that certain
special conditions be included for all active and future EPA awards to the
recipient until the region determines that the recipient has met all applicable
federal financial and procurement requirements.
Region 3 proposed an alternative resolution to review the costs of the
contracts. We cannot accept this resolution because the region did not
provide information on how it would demonstrate that the costs associated
with the publication of the Bay Journal were fair and reasonable. The
recipient stated that the facts do not support the recommendation to disallow
and recover the claimed costs. The recipient agreed that it achieved the
intended results of producing the Bay Journal.