U.S. ENVIRONMENTAL PROTECTION AGENCY
OFFICE OF INSPECTOR GENERAL
EPA Superfund Contract
Initiatives and Controls to
Reduce Fraud, Waste, and
Abuse
Report No. 12-P-0360
March 16, 2012

-------
Report Contributors:
Janet Kasper
Michael Petscavage
Melinda Burks
David Penman
Abbreviations
CMM
Contracts Management Manual
CO
Contracting Officer
EPA
U.S. Environmental Protection Agency
EPAAR
EPA Acquisition Regulation
FAR
Federal Acquisition Regulation
FMR
Financial Monitoring Review
FY
Fiscal year
H.R.
House of Representatives
IA
Interagency Agreements
IGCE
Independent Government Cost Estimate
MATS
Management Audit Tracking System
OAM
Office of Acquisition Management
OIG
Office of Inspector General
OMB
U.S. Office of Management and Budget
PO
Project Officer
RAC
Remedial Action Contract
RPM
Remedial Program Manager
USACE
U.S. Army Corps of Engineers
Hotline
To report fraud, waste, or abuse, contact us through one of the following methods:
e-mail:	OIG Hotiirie@epa.aov	write: EPA Inspector General Hotline
phone:	1-888-546-8740	1200 Pennsylvania Avenue NW
fax:	202-566-2599	Mailcode 2431T
online:	http://www.epa.aov/oia/hotline.htm	Washington, DC 20460

-------
.vtffcD STA?.
*. U.S. Environmental Protection Agency	12-P-0360
-	\ Office of Inspector General	|; "
22 /
¦° ° At a Glance
Why We Did This Review
The U.S. Environmental
Protection Agency (EPA)
Office of Inspector General
(OIG) conducted this
congressionally required
review to report to the House
and Senate Committees on
Appropriations the Agency's
current efforts to strengthen
Superfund contracting controls
to prevent future waste, fraud,
and abuse.
Background
Congress enacted the
Comprehensive Environmental
Response, Compensation and
Liability Act of 1980,
commonly referred to as
Superfund, to address threats to
human health and the
environment. In the cleanup of
Superfund sites, EPA uses a
variety of instruments, such as
contracts and interagency
agreements (IAs). In fiscal year
2010, EPA obligated
$413 million to contracts and
$244 million to the U.S. Army
Corps of Engineers.
For further information, contact
our Office of Congressional and
Public Affairs at (202) 566-2391.
The full report is at:
www.epa.gov/oiq/reports/2012!
20120316-12-P-0360. pdf
EPA Superfund Contract Initiatives and Controls
to Reduce Fraud, Waste, and Abuse
What We Found
We identified three EPA initiatives related to Superfund contracting controls:
•	Contracts 2010 Strategy
•	Office of Acquisition Management's Performance Measurement and
Management Program
•	Recovery Act Stewardship Plan
In addition to the above initiatives, EPA has other contract internal controls in
place. EPA describes its contracting internal controls in documents such as the
Contracts Management Manual, EPA Acquisition Handbook, EPA Acquisition
Regulation, and IA Desk Manual. EPA evaluates implementation of internal
controls through Office of Management and Budget Circular A-123 reviews.
As required by the Committees, we identified 20 OIG audit reports issued to EPA
since fiscal year 2005 with recommendations related to Superfund contracting
controls. A full listing of those recommendations and EPA's corrective actions are
provided in appendix A. Some of the corrective actions implemented by EPA as a
result of our recommendations include:
•	EPA began verifying the timeliness of contractor performance evaluations
by contracting officers and revised the EPA Acquisition Handbook.
•	EPA developed a process to ensure adjustment vouchers and monies owed
to EPA are tracked until receipt.
•	EPA revised internal guidance to require a cost-benefit analysis be
conducted prior to awarding a Cost-Pius-A ward-Fee contract.
We noted that one audit report did not have two recommendations entered in the
Agency tracking system, nor were the corrective actions to address the
recommendations entered in the system.
We also identified five ongoing OIG audits and two audit projects planned to begin
in fiscal year 2012 that impact Superfund contracting controls or EPA contracting
controls in general.

-------
^tosr^
t O '
|	*	WASHINGTON, D.C. 20460
v /
PRO*^
THE INSPECTOR GENERAL
*	-	UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
xSbz;
March 16, 2012
MEMORANDUM
SUBJECT: EPA Superfund Contract Initiatives and Controls to Reduce
Fraud, Waste, and Abuse
Report No. 12-P-0360
FROM: Arthur A. Elkins, Jr. /uyfyMf ^ ' (/ f^ \_J
Inspector General
TO:	Mathy Stanislaus
Assistant Administrator for Solid Waste and Emergency Response
Craig E. Hooks
Assistant Administrator for Administration and Resources Management
This is a final report by the Office of Inspector General (OIG) of the U.S. Environmental
Protection Agency (EPA). We conducted the assignment based on a requirement from the House
and Senate Committees on Appropriations. The committees required the OIG to report on EPA's
implementation of OIG recommendations, as well as current efforts, to strengthen Superfund
contracting controls to prevent waste, fraud, and abuse. We do not make any recommendations in
this report, and you are not required to respond to this report.
If you or your staff have any questions regarding this report, please contact Melissa Heist,
Assistant Inspector General for Audit, at (202) 566-0899 or heist.melissa@,epa. gov: or
Janet Kasper at (312) 886-3059 or kasper.ianet@epa.gov.

-------
EPA Superfund Contract Initiatives and Controls	12-P-0360
to Reduce Fraud, Waste, and Abuse
	Table of Contents	
Chapters
1	Introduction	 1
Purpose	 1
Background	 1
Scope and Methodology		2
2	Current EPA Initiatives Related to Superfund Contract Controls		4
Current Initiatives		4
Internal Controls Related to Superfund Contracting		7
3	Past Recommendations and Agency Corrective Actions		11
4	OIG Audits Currently Being Conducted and Future Plans		13
Audits Currently Underway		13
Planned OIG Audits for Fiscal Year 2012		14
Appendices
A Summary of Recommendations and Corrective Actions Implemented	 15
B Distribution	 49

-------
Chapter 1
Introduction
Purpose
The U.S. Environmental Protection Agency (EPA) Office of Inspector General
(OIG) conducted this congressionally required review to report to the House and
Senate Committees on Appropriations the Agency's current efforts to strengthen
Superfund contracting controls to prevent future waste, fraud, and abuse.
Background
On July 19, 2011, the House Committee on Appropriations submitted report
112-151, to accompany House of Representatives (H.R.) 2584. The Committee
submitted the report in explanation of the accompanying bill that made
appropriations for the Department of the Interior, EPA, and related agencies for
the fiscal year (FY) ending September 30, 2012. The bill provides regular annual
appropriations for EPA and other federal agencies.
The report commended EPA for proactively identifying methods to reduce
contract costs and urged EPA to continue to identify contract efficiencies so that
more funds could be spent on site remediation and cleanup. However, the report
also highlighted the Committee's concerns about whether EPA's controls for
Superfund contracts are sufficient given OIG findings of criminal activity and
kickbacks at the Federal Creosote site in New Jersey. In the 1990s, creosote was
discovered under a residential neighborhood in Manville, New Jersey. Creosote, a
mixture of chemicals used to preserve wood products, such as railroad ties, was
found by EPA to include chemicals that may cause cancer. As of May 2009,
construction of EPA's remedies for the site had been completed with total site costs
equaling almost $340 million. However, a joint investigation by Department of
Justice Antitrust Division's New York Field Office, the Internal Revenue Service
Criminal Investigation, and the EPA OIG uncovered criminal activity at the site.
Criminal activities included fictitious bids, kickbacks, and inflation of invoices.
The Committee's report stated that the OIG should report to the Committee within
90 days of enactment of the Consolidated Appropriations Act, 2012, concerning
EPA's implementation of OIG recommendations, including ongoing efforts to
tighten contracting controls. The Joint Statement of Managers report, as part of
H.R. 2055, directed the OIG to report to the House Committee on Appropriations,
within 90 days of enactment of the Act, on current Agency efforts to strengthen
Superfund contracting controls to prevent future waste, fraud, and abuse. The Act
was passed on December 23, 2011.
12-P-0360
1

-------
Congress enacted the Comprehensive Environmental Response, Compensation,
and Liability Act of 1980, commonly referred to as Superfund, to address threats
to human health or the environment. The Superfund program uses a variety of
contracting methods. In FY 2010, EPA had more than 100 active Superfund class
contracts in place, and obligated $413 million to contracts. As such, it is vital that
controls are in place to prevent fraud, waste, and abuse. The program also uses
interagency agreements (IAs) with other federal agencies, notably the U.S. Army
Corps of Engineers (US ACE), and cooperative agreements with state
governments, to obtain needed services. In FY 2010, EPA obligated $244 to
US ACE. For the Federal Creosote site, EPA used an IA with the US ACE to clean
up the site.
Scope and Methodology
Due to our limited scope and purpose, as well as the limited time to perform the
work, we did not conduct our work in accordance with all generally accepted
government auditing standards issued by the Comptroller General of the United
States. Specifically, we did not evaluate the effectiveness of management
controls, determine compliance with laws and regulations, or develop findings
and recommendations. Further, we did not thoroughly assess the validity and
reliability of data obtained from the Agency's Management Audit Tracking
System (MATS). Our primary source for determining the status of the Agency's
corrective actions taken as a result of prior OIG reports was MATS.
EPA uses MATS to track audit information Agency-wide. EPA Manual 2750
requires the Agency to enter data in the tracking system, such as management
decision dates and final action dates. The manual defines resolution as an
approved management decision and states that a management decision must
address each of the findings or recommendations in a report. Final action, as
defined in EPA Manual 2750, is the completion and documentation of all actions
specified in the management decision. For the Agency to consider an audit closed,
there must be a management decision that addresses the audit's recommendations,
and all corrective actions identified in the management decision must be
implemented.
To gather information regarding current Agency efforts to strengthen Superfund
contracting controls to prevent future waste, fraud, and abuse, we interviewed
EPA managers in the Office of Acquisition Management (OAM) within the
Office of Administration and Resources Management, the Office of Solid Waste
and Emergency Response, the Office of the Chief Financial Officer, and
Region 10.
To compile a listing of related recommendations and corrective actions, we
reviewed OIG-issued audit reports from FY 2007 forward to identify
recommendations that either directly or indirectly related to Superfund contract
controls. For those recommendations, we reviewed MATS to identify the status of
12-P-0360
2

-------
the Agency's corrective actions. We also included one audit from FY 2005 that
covered Remedial Action Contracts (RAC) because the recommendations in that
audit are being followed up on in a current OIG audit.
To compile the current ongoing reviews related to Superfund contracting controls,
we reviewed OIG management systems to identify objectives and reviews that
could possibly pertain to the subject. We then contacted OIG managers to verify
whether the assignments identified were related to Superfund contracting controls.
To determine future audits related to Superfund contracting controls, we reviewed
the OIG 2012 annual plan and spoke with OIG managers to ensure that all
applicable future work related to the subject was identified.
12-P-0360
3

-------
Chapter 2
Current EPA Initiatives Related to
Superfund Contract Controls
We identified three current EPA initiatives related to strengthening Superfund
contracting controls:
•	Contracts 2010 Strategy
•	OAM's Performance Measurement and Management Program
•	Recovery Act Stewardship Plan
In addition to the above initiatives, EPA has other contract internal controls in
place. EPA describes its contracting internal controls in documents such as the
Contracts Management Manual (CMM), EPA Acquisition Handbook,
EPA Acquisition Regulation (EPAAR), and IA Desk Manual. EPA evaluates
implementation of internal controls through Office of Management and Budget
(OMB) A-123 reviews.
Current Initiatives
Contracts 2010 Strategy
Reforming contracting is one of the six performance management strategies
included in the Obama administration's Accountable Government Initiative.
OMB has placed great emphasis on reforming contracting to reduce costs and
risks and get better results. EPA, like other federal agencies, is tasked with
examining and reporting its efforts in reducing non-competitive procurements,
reducing/mitigating high-risk contracting, and finding efficiencies to save costs.
EPA's Contracts 2010 Strategy, dated May 24, 2011, sets the framework for
acquisitions in support of Superfund program activities for the next 10 years.
The 2010 strategy contains seven goals, incorporating those highlighted in the
previous Contracts 2000 Strategy and adding others that reflect new program
directions and heightened government-wide concerns for efficiency and
procurement process improvements. The following seven goals of the Contracts
2010 Strategy are to guide the development and implementation of the next round
of Superfund acquisitions:
1.	Balance national consistency with local flexibility
2.	Ensure that there is appropriate competition in the contracting process
3.	Increase participation of all socio-economic concerns in the Superfund
contracting program
4.	Implement green policies and procedures
12-P-0360
4

-------
5.	Identify and implement opportunities and initiatives for process and cost
efficiencies
6.	Identify the full range of vehicles or instruments available for obtaining
services for the Superfund cleanup programs
7.	Mitigate high-risk contracting practices.
Of those seven goals, goals 2, 5, and 7 most represent Agency initiatives to
strengthen contracting controls:
•	Ensuring appropriate competition. The intended result of this goal is to
achieve an increased level of awareness concerning competition in the
contracting process. Contract placement actions should always consider
competition. Although in some instances contract competition may not be
the best use of Agency resources, sole-source contracting is a special
occurrence and must be well documented with the appropriate rationale.
•	Implementing process and cost efficiencies. The strategy states that one
approach is to explore and assess whether appropriate tools are evaluated
and implemented, particularly the use of multiple awards, fixed price
contracts, and fixed price components of contracts.
•	Mitigating high-risk contracting. High-risk contracts, as defined by the
OMB, are contracts that were awarded without competition or contracts
awarded from a solicitation that received only a single bid; cost
reimbursement contracts; or time and material type contracts. In July 2009,
OMB directed federal agencies to assess their current contract inventory of
high-risk contracts and strive to mitigate high-risk contracting practices.
The Agency has been working with OMB and its acquisition community to
reach its mandated goal of reducing the number of high-risk contracts.
When the use of high-risk contracts is deemed necessary and appropriate,
the Agency is to take steps to recognize and manage the risks.
The next step is to develop a detailed plan to identify additional analysis needed
for strategy implementation and measures to monitor progress in meeting goals of
the Contracts 2010 Strategy. EPA is currently developing an implementation
strategy.
OAM's Performance Measurement and Management Program
OAM is implementing the Performance Measurement and Management Program.
Further, in late 2011, OAM began implementing the related Balanced Scorecard,
which is a functional component of the program. The purpose of the program is to
establish a framework under which OAM may ensure that business systems
adhere to OAM's mission and vision, and strategy statements follow best business
management practices and comply with applicable statutes, regulations, and
contract terms and conditions. Under the Balanced Scorecard the Agency
12-P-0360
5

-------
establishes performance objectives and measures, assigns targets, and takes
measurements. Formal documented self-assessments and peer reviews are the
principal data generating and gathering source. Staff report on the status of
performance to management and the customer; the feedback cycle then drives
improvement actions as appropriate.
According to the draft Concept of Operations for the Performance Measurement
and Management Program, having efficient and effective business processes
associated with successfully acquiring goods and services is critical to
accomplishing agency mission and goals while simultaneously complying with
many rules, regulations, and policies. Internal controls are necessary to protect the
integrity of federal acquisition programs in a way that ensures the Agency meets
its fiduciary responsibilities to the public, conducts its business fairly, and
employs consistent and transparent practices. To assure internal and external
stakeholders—such as the EPA Administrator, Congress, OMB officials, and the
public—that these principles are robustly integrated into the EPA Acquisition
System, it is critical that the Agency has an effective Performance Measurement
and Management Program. The accomplishment of this initiative recognizes the
nexus between the Agency's existing quality assurance program; OMB Circular
A-123, Management of Internal Controls; and the implementation of best
business practices.
EPA's senior procurement executive is responsible for establishing an effective
acquisition management system that ensures that quality goods and services are
obtained at reasonable prices, in a timely fashion, and in accordance with the
statutory and regulatory requirements and the programmatic needs of the Agency.
To assist in accomplishing this responsibility, the Balanced Scorecard provides
the methodology for assessing performance of the EPA's procurement offices,
and includes a compliance review component. This component focuses on the
organization's ability to comply with system requirements, including laws,
regulations, terms and conditions of contracts, ethical standards, and good
business management practices, as appropriate.
Recovery Act Stewardship Plan
For IAs and contracts funded by the American Recovery and Reinvestment Act of
2009, the main control or strategy EPA uses to monitor and mitigate risk in the
implementation is the Recovery Act Stewardship Plan. Under the plan, EPA
assessed the risk to management and oversight of Recovery Act funds and
identified the controls the Agency needed to reduce the risk of fraud, waste, and
abuse. EPA's Recovery Act Steering Committee charged the Recovery Act
Internal Controls Workgroup with monitoring the control activities identified in
the stewardship plan. The Agency reports the results of this monitoring quarterly.
In addition, with the help of a consultant, the Office of the Chief Financial Officer
performed a statistical review of the stewardship plan to enhance all of the
monitoring efforts to prevent fraud related to Recovery Act funds.
12-P-0360
6

-------
Internal Controls Related to Superfund Contracting
In addition to the above initiatives, EPA has other contract internal controls in
place. EPA describes its contracting internal controls in documents such as the
CMM, EPA Acquisition Handbook, EPAAR, and IA Desk Manual. EPA evaluates
implementation of internal controls through OMB Circular A-123 reviews.
Contracts Management Manual
The CMM contains important contracting controls that apply to all Agency
contracts, including Superfund contracts. These internal controls help to ensure
prevention of fraud, waste, and abuse, and include the following control areas:
•	Contracting Officer Warrant Program (Section 1.2). Establishes
specific education, training, and experience standards for Agency
employees who are authorized to contract for supplies and services on
behalf of the Agency.
•	Oversight of Acquisition Functions (Section 1.2.5.8), Describes
provisions for adequate separation of acquisition functions to avoid
potential conflicts of interest; standards for management accountability to
ensure prevention of fraud, waste, and abuse; and quality assessment plan
compliance reviews.
•	Procedures for Documenting and Handling Organizational Conflicts
of Interest (Sections 9.1 and 9.2). Provides guidance on procedures for
documenting organizational conflicts of interest decisions that occur prior
to contract award, and handling organizational conflicts of interest issues
that arise after contract award.
•	Statements of Work (Section 11.1). Conveys to contracting personnel the
fundamental principles of how to prepare a statement of work, defined as
the written description of the contractual requirement for supplies or
services, and covers the importance of the statement of work and contract
types.
•	Invoice Review Process (Section 11.2). Describes responsibilities,
procedures, and instructions for the processing of contract invoices;
stipulates the policy to review contract invoices thoroughly for cost
reasonableness; and includes roles of the different parties in reviewing
contract invoices, along with checklists to be used for invoice review.
These controls ensure that costs are allowable, allocable, and reasonable.
•	Subcontracting Policies and Procedures (Chapter 44). Stipulates
required practices concerning subcontracts.
12-P-0360
7

-------
EPA Acquisition Handbook
In addition to the contracting internal controls described in the CMM, the EPA
Acquisition Handbook also describes important contracting controls that apply to
all Agency contracts, including:
•	Training and Certification (Section 1.1). Provides information and
guidance on federally mandated education, training, and experience
requirements for employees in the acquisition workforce.
•	Reviews, Concurrences, and Checklists (Section 4.1). Lists the required
reviews, concurrences, and approvals in connection with the acquisition
process.
•	Cost Advisory Functions (Section 31.1). Identifies price negotiation
procedures that apply to actions requiring a cost analysis.
•	Protests and Contract Performance (Section 33.2). Provides guidance
to improve the quality of Agency determination and findings, and required
division director approval when a protest is filed.
•	Contract Management (Section 42.2). Identifies reporting requirements
to ensure that proper contract administration is being performed.
•	Tracking Contractor Billings (Section 42.3). Ensures that Contracting
Officers (COs) take appropriate steps to track contractor billings under
cost reimbursement and fixed-rate contracts.
EPAAR
The EPAAR, which supplements the Federal Acquisition Regulation (FAR),
includes guidance and policy ranging from competition requirements to contract
type. Subpart 1503.5, Contractor Responsibility To Avoid Improper Business
Practices, details the management controls that must be in place and that the
contractor must abide by.
IA Desk Manual
The IA Desk Manual is one of the documents that contains the basic controls in
place for Superfund IAs with the US ACE. The manual includes IA processing
instructions, which incorporate EPA Project Officer (PO) and Remedial Project
Manager (RPM) duties. The EPA PO provides overall management and direction
over the IA. The PO provides advice and guidance to the prospective users of the
IA, authorizes assignments under the IA, and maintains management control
systems in order to know the financial and performance status of the activities
under the I A. The assignments under the IA are initiated using a work
12-P-0360
8

-------
authorization form. The RPM, On-Scene Coordinator, or other Superfund staff
member is responsible for overseeing the project's activities and expenditures.
The oversight is completed through regular briefings with the US ACE, review of
US ACE monthly reports and payment requests, and the resolving of any payment
disputes.
The US ACE Special Terms and Conditions section of the IA Desk Manual states
that the US ACE agrees to meet the site-specific financial management and
recordkeeping responsibilities in EPA's Superfund Financial Management and
Recordkeeping Guidance for Federal Agencies. The Special Terms and
Conditions section covers various control activities applicable to all IAs with the
USACE, including:
•	cost documentation requirements
•	reporting requirements
•	cost recovery
•	cost collection upon cancellation
•	record retention requirements
•	audits
•	final inspection and certification
•	financial close-out
•	procurement
•	equipment disposition
•	minority business utilization
•	project specific conditions
•	resolution of disagreements
•	quality assurance
The IA Desk Manual states that IA post award monitoring is to be conducted at
least once every 12 months. POs are responsible for programmatic reviews, and
IA specialists are responsible for administrative reviews. The review questions
cover timely submittal of reports, compliance with terms and conditions,
drawdowns, review of billing, appropriateness of time and funding for completion
of the project, and unliquidated obligations.
OMB Circular A-123 Reviews
For IAs, the main processes used to ensure effective implementation of internal
controls are the OMB Circular A-123 reviews and self-assessment reviews. The
latest A-123 audit reviewed a random IA sample, and the areas reviewed included
ensuring that the completed IA checklist was in the file, proper documentation
was in the file, the PO was certified, and programmatic and administrative
baseline reviews were completed as necessary. The results indicated that
exceptions were insignificant and corrective action was minimal.
12-P-0360

-------
The Shared Service Center responsible for IAs conducts self-assessments by
reviewing a statistically valid representative sample of IAs processed to verify
sustained compliance with applicable regulations, policies, and procedures. The
goals of the assessments are that over time there is a reduction in the number of
findings, increased compliance and consistency, and increased standardization of
business practices. The latest IA self-assessment was conducted in conjunction
with the A-123 audit. The purpose of the self-assessment was to review a select
number of IAs to assess the efficiency of certain aspects of the IA administrative
procedural process. The self-assessments covered four areas: (1) statutory
authority; (2) terms and conditions; (3) file content; and (4) close-out. The self-
assessment results included several positive observations, as well as findings
resulting in recommendations for follow-up.
As with IAs, OAM also uses the A-123 reviews to ensure effective
implementation of internal controls for contracts. The Agency's latest assurance
letter covering contracts management stated that the Agency's acquisition
functions are being performed in an effective and efficient manner. An entity
level acquisition assessment recommended that EPA: (1) create formal methods to
assess how well training programs are meeting the needs of the acquisition
workforce, (2) establish a formal process for the collection and analysis of human
capital data for the consideration of human capital decisions in relation to the
acquisition workforce, and (3) reassess the performance evaluation system to
align individual activities with organizational goals. Those findings are being
addressed by OAM workgroups and are included in OAM's program review
strategy.
12-P-0360
10

-------
Chapter 3
Past Recommendations and
Agency Corrective Actions
We identified 20 OIG audit reports issued to EPA with recommendations related
to Superfund contract or IA controls. Of these reports, 19 were issued between
FY 2007 and the present; the remaining report, issued in FY 2005, was included
because it is the basis for another relevant audit currently underway.
Comprehensive summaries of the 20 audit reports issued to EPA, including the
recommendations and corrective actions, are in appendix A.
For 15 of the 20 audits, MATS indicated that all corrective actions intended to
address each report's recommendations were implemented. For the remaining five
audits:
•	Two of the recommendations and the related corrective actions were not
entered in MATS for audit report 2005-P-00001 (appendix A,
pages 17-19). This audit report is the subject of another audit currently
underway and we anticipate issuing those findings in FY 2013.
•	Audit report 1 l-P-0362 is still active and the corrective actions for that
report are expected to be completed in November 2012 (appendix A,
page 45).
•	The remaining three audit reports were recently issued, in FY 2012, and
the corrective actions are to be implemented after a management decision
is approved. Those audit reports are 12-4-0295, 12-P-0311, and 12-P-0320
(appendix A, pages 46-48).
Many of the audit report recommendations required actions to strengthen key
internal controls, such as EPA's CMM and Acquisition Handbook, as well as
IA documentation. Some of the corrective actions that EPA implemented as a
result of our recommendations were:
•	EPA established mechanisms to distribute the financial monitoring
review (FMR) reports to COs and POs impacted by the reviews.
•	EPA evaluated the resources used to manage contracts for remedial
cleanup of Superfund sites. The report contained recommendations for
the Agency to consider during the Contracts 2010 implementation phase.
•	EPA issued guidance requiring stronger cost-effectiveness justifications
in IA decision memorandums submitted by program offices.
12-P-0360
11

-------
EPA began verifying the timeliness of contractor performance
evaluations by COs and revised the EPA Acquisition Handbook to
incorporate contractor past performance evaluation reviews as an
oversight activity.
EPA developed a process to ensure adjustment vouchers and monies
owed to EPA are tracked until receipt.
EPA revised internal guidance, such as the CMM, to require a cost-
benefit analysis be conducted prior to awarding a Cost-Plus-Award-Fee
contract and to require work assignment managers, POs, COs, and
Performance Evaluation Board members to explicitly document the
basis for award-fee decisions.
12

-------
Chapter 4
OIG Audits Currently Being Conducted
and Future Plans
The FY 2012 OIG annual plan identifies mandated and selected assignment topics
continuing from FY 2011 and assignments scheduled to commence during
FY 2012. Currently, there are five ongoing audits and two planned audits for
FY 2012 that are related to Superfund contracting controls.
Audits Currently Underway
We identified five ongoing audits that are related to Superfund contracting
controls or impact contracting controls in general. Table 1 notes the audits and the
objectives for each.
Table 1: Ongoing OIG Audits
Audit Title
Objectives
Superfund Remedial
Action Contracts
•	Has EPA implemented the recommendations from the December 2004
OIG audit Response Action Contracts: Structure and Administration
Need improvement, and has it resulted in an increase in the use of
fixed price contracting?
•	Has fixed price contracting achieved the anticipated cost savings or
other benefits associated with fixed price contracting vehicles?
EPA Efforts in Response
to the President's Savings
Initiative
Determine whether:
•	EPA's efforts to identify and realize savings have been effective.
•	EPA savings reported to the Office of Administration and Resources
Management were accurate and complete.
Controls over Time and
Materials Contracts
Determine whether:
•	EPA process/procedures require verification that the contractor
personnel have the qualifications/credentials specified in the contract.
•	Assess whether the implementation of that process is effective.
•	Determine if EPA received the level of services that it paid for.
Review of EPA's Regional
Contract Management
(Time and Materials)
(EPA Regional Contract
EPS90804)
Determine whether:
•	The EPA contract review process requires verification that the
contractor personnel have the qualifications/credentials specified in the
contract.
•	EPA received the level of services that it paid for.
American Recovery and
Reinvestment Act Site
Visit of Diversion Ditch
Repair Project at the Gilt
Edge Mine Superfund Site
Determine whether:
•	The contractor and its subcontractors complied with selected
requirements under the American Recovery and Reinvestment Act of
2009
•	The contractor's procurement of its subcontractor complied with federal
requirements.
Source: OIG analysis
12-P-0360	13

-------
Planned OIG Audits for Fiscal Year 2012
We identified two planned audit projects that are related to Superfund contracting
controls or impact contracting controls in general. Table 2 notes the audit projects
and the objectives for each.
Table 2: Planned OIG Audits
Audit Title
Objectives
Unliquidated Obligations for Grants and
Interagency Agreements
•	Did the EPA office complete its review of unliquidated
obligations as required in FY 2011?
•	Was there adequate documentation to support the
decision to retain obligated amounts?
Audits of Superfund Contractors
The objectives of the audits will include determining
whether contractors complied with selected federal
requirements.
Source: OIG analysis
12-P-0360
14

-------
Appendix A
Summary of Recommendations and
Corrective Actions Implemented
Our primary source for determining the status of the Agency's corrective actions taken as a result
of prior OIG reports was MATS. As noted in chapter 1, EPA Manual 2750 requires the Agency
to enter information on the status of corrective actions into MATS. EPA staff are responsible for
the information in MATS. We did not thoroughly assess the validity and reliability of the data
obtained from MATS. Below is a listing of all the applicable prior reports; summaries of each
report follow. In the summaries, the "Final Action Date" is the date that all corrective actions
were implemented. In some cases the recommendations have been modified from the original
report so that abbreviations are consistent throughout this report.
Report Title
Report No.
Date Issued
Summary
Page No.
Response Action Contracts: Structure and
Administration Need Improvement
2005-P-00001
December 6, 2004
17
Interagency Agreements to Use Other Agencies'
Contracts Need Additional Oversight
2007-P-00011
March 27, 2007
20
EPA Can Improve Its Managing of Superfund
Interagency Agreements with U.S. Army Corps of
Engineers
2007-P-00021
April 30, 2007
22
EPA Should Further Limit Use of Cost-Plus-
Award-Fee Contracts
08-P-0093
February 26, 2008
24
Over-Billed Labor Charges on START Contract
No. EP-S3-05-02, Tetra Tech EM, Incorporated,
Boothwyn, Pennsylvania
08-4-0154
May 19, 2008
26
EPA Can Improve the Awarding of
Noncompetitive Contracts
08-P-0186
June 30, 2008
27
EPA Should Strengthen Internal Controls over
Interagency Agreement Unliquidated Obligations
09-P-0086
January 26, 2009
29
Over-Billed Base Year Labor Charges on START
Contract No. EP-S3-05-02, Tetra Tech EM,
Incorporated Boothwyn, Pennsylvania
09-4-0135
April 3, 2009
32
EPA Should Stop Providing Estimates of Total
Labor Hours to Contractors
09-P-0229
September 9, 2009
33
Contractor Invoice Internal Controls Need
Improvement
09-P-0242
September 23, 2009
34
EPA Needs to Improve Cost Controls for
Equipment Used during Emergencies
10-P-0047
December 16, 2009
36
EPA Can Improve Its Preparation and Use of
Independent Government Cost Estimates for
Superfund Contracts
10-P-0065
February 16, 2010
38
EPA Does Not Always Receive Adjustment
Vouchers from Contractors
10-P-0075
March 8, 2010
40
12-P-0360
15

-------
Report Title
Report No.
Date Issued
Summary
Page No.
EPA Should Improve Its Contractor Performance
Evaluation Process for Contractors Receiving
Recovery Act Funds
10-R-0113
April 26, 2010
42
EPA's Terms and Conditions as Well as Process
to Award Recovery Act Interagency Agreements
Need Improvement
11-R-0016
November 16, 2010
43
EPA Can Improve the Use of Financial Monitoring
Reviews for Recovery Act Superfund Contracts
11-R-0081
January 31, 2011
44
EPA Needs to Reexamine How It Defines
Payment Its Recapture Audit Program
11 -P-0362
July 19, 2011
45
Agreed-Upon Procedures Applied to Equipment
Rate Proposals Submitted Under EPA Contract
EP-S9-11-01 by SFS Chemical Safety, Inc.,
Emeryville, California
12-4-0295
February 27, 2012
46
EPA Can Improve Its Improper Payments
Reporting
12-P-0311
March 1, 2012
47
Policies Needed for Proper Use and Management
of Cost-Reimbursement Contracts Based on
Duncan Hunter Act
12-P-0320
March 6, 2012
48
12-P-0360
16

-------
Report Title:	Response Action Contracts: Structure and Administration Need
Improvement
Report Number: 2005-P-00001
Date Issued:	December 6, 2004
Final Action Date: June 20, 2007
Link:	http://www.epa.gov/oig/reports/2005/20041206-2005-P-00001.pdf
Recommendations
We recommended that EPA:
2-1. Develop and implement a plan with milestones for RAC II which:
a)	increases use of Indefinite Delivery/Indefinite Quantity, task order, and site specific
contracts
b)	increases the use of separate contracting for design, construction, and other remedial
services
2-2. Conduct a lessons learned analysis of the new Indefinite Delivery/Indefinite Quantity
contracts as soon as sufficient data is available and develop a plan to share and utilize
the results of the analysis.
2-3. Stop funding RACs in excess of identified needs.
2-4.	Review and revise the recertification policy so as to remove it as an impediment to
utilization of better contract types. The policy should reflect a balance between the need
to return funds to Headquarters for redistribution to where the most pressing needs are
identified, and the degree of flexibility Headquarters is willing to grant to the regions to
move funds between sites as they now do with work assignments.
3-1.	Issue clarifying guidance on "Superfund Policy for Assigning Remedial Work to
US ACE" requiring that:
a)	Past performance of US ACE be considered in source selection
b)	The rationale for all source selection decisions be documented
3-2.	Develop and implement a plan to evaluate US ACE performance and share this
information nationwide.
4-1.	Provide National Institute of Health Contractor Performance System training to
applicable regional and headquarters staff.
12-P-0360
17

-------
4-2.	Develop a method for holding COs accountable for documenting evaluations of
contractor performance in the National Institute of Health Contractor Performance
System timely and consistently.
5-1.	Complete the proposed cost benefit analysis to determine whether the Remedial Action
Contract Management Information System should be retained or other more cost
effective methods should be used to collect RAC financial data.
5-2. If EPA decides to continue using the Remedial Action Contract Management
Information System, develop and implement a strategy to improve regional utilization
of the system (or its replacement system if so decided), and require that financial
information be collected for all RACs.
Corrective Actions
2-1. EPA did not enter this recommendation or address the corrective action for it in MATS.
The OIG is currently following up on this recommendation in an ongoing audit. We
anticipate completing the audit in FY 2013.
2-2. EPA stated that it plans to include the lessons learned as a standing agenda topic on
monthly conference calls with POs and COs and again at their annual Superfund Senior
Regional Management and Acquisition Council conference. There was no date entered
in the corrective action field in MATS.
2-3. EPA agreed to evaluate each region's funding and, if necessary, meet with the regions
to discuss the findings of their evaluation. Corrective action was completed on April 30,
2005.
2-4.	EPA agreed to review and clarify the funds recertification policy to describe how this
policy applies to Indefinite Delivery/Indefinite Quantity type contracts. Corrective
action was completed on June 20, 2007.
3-1.	EPA agreed to review how each region documents its decision as part of the Superfund
Contracts Regional Review Program. EPA agreed to share the results of these reviews
and, as a result of the findings, revise or reissue the guidance to address any
recommended adjustments to documentation. Corrective action was completed on
November 14, 2006.
3-2.	EPA stated an electronic form and a nationwide database were being developed that
would facilitate the assessment of US ACE project management and the performance of
US ACE contractor work for all actively managed projects by US ACE. Corrective
action was completed on December 1, 2005.
4-1.	EPA stated it will continue to provide training on the National Institute of Health
Contractor Performance System at various contract forums. Corrective action was
completed on July 13, 2005.
12-P-0360
18

-------
4-2.	EPA did not enter this recommendation or address the corrective action for it in MATS.
The OIG is currently following up on this recommendation as part of an ongoing audit.
We anticipate completing the audit in FY 2013.1
5-1.	EPA agreed to complete the proposed cost benefit analysis to determine whether the
Remedial Action Contract Management Information System should be retained or if
other methods should be used to collect RAC financial data. Corrective action was
completed on May 17, 2005.
5-2. EPA stated that if the decision at the July Superfund Senior Regional Management and
Acquisition Council conference is to continue to utilize the Remedial Action Contract
Management Information System, a strategy for its implementation will be developed.
Corrective action was completed on January 26, 2006.
1 A similar recommendation was made in report no. 10-R-0113 and MATS indicates that the corrective action is
completed.
12-P-0360
19

-------
Report Title:
Report Number:
Date Issued:
Final Action Date:
Link:
Interagency Agreements to Use Other Agencies' Contracts Need
Additional Oversight
2007-P-00011
March 27, 2007
May 10, 2010
http://www.epa.gov/oig/reports/2007/20070327-2007-P-0Q011.pdf
Recommendations
We recommended that EPA:
1.	Provide guidance to POs for developing independent government cost estimates (IGCEs)
or other appropriate cost information, as well as cost reasonableness assessments. These
assessments should include an analysis of the fees paid to servicing agencies.
2.	Ensure the Grants Administration Division requires that the IA decision memorandum
better explains why an IA is more cost effective, and include an evaluation of cost
reasonableness assessments in the Grant Administration Division's oversight reviews of
IA management.
3.	Provide guidance to POs for identifying alternatives to the contracting vehicle selected.
OAM's CMM addresses market research and should be consulted for guidance.
4.	Strengthen the existing training to include how to develop IGCEs or other appropriate
cost information, conducting cost reasonableness assessments, and identifying
alternatives.
5. Work with program officials to ensure that PO performance standards reflect their
responsibilities for managing interagency contracts.
6.	Review EPA interagency contracts with Federally Funded Research and Development
Centers to ensure they were appropriately awarded and develop guidance for program
offices when considering an interagency contract with these centers.
7.	Emphasize to program offices the importance of maintaining a complete file, and
providing a copy to the successor PO as required by the recently published EPA Order
regarding I As.
Corrective Actions
1.	EPA stated it provided POs with initial guidance and training on how to develop IGCEs
and cost reasonableness assessments for I As that require cost-related determinations
(e.g., Economy Act IAs). Corrective action was completed on June 1, 2007.
2.	EPA stated that, after consultation with the Agency's Grants Management Council, it will
issue guidance requiring stronger cost effectiveness justifications in IA decision
12-P-0360
20

-------
memorandums submitted by program offices. EPA also stated it is enhancing the decision
memo to require that the programs provide stronger justifications and documentation.
Additionally, EPA stated it would conduct a comprehensive program review of IAs in
FY 2008 and share the results with OIG. Corrective action was completed on May 10,
2010.
3.	EPA agreed to issue guidance requiring program offices to document in their decision
memorandum that they have consulted with the appropriate EPA contracting office and
that there is no viable existing Agency contract vehicle that can be used for the work.
Corrective action was taken on January 1, 2008.
4.	EPA made interim changes to its PO training program. Corrective action was completed
on September 9, 2008.
5.	EPA stated it would work with senior resource officials to ensure that IA responsibilities
are referenced, as appropriate, in PO performance agreements as part of the 2008
Performance Assessment Rating System process. Corrective action was completed on
January 1, 2008.
6.	EPA agreed to conduct the necessary review, and should the review determine that
additional guidance beyond that contained in the FAR is required, it would update its IA
guidance accordingly. Corrective action was completed on September 20, 2007.
7.	EPA stated it continues to emphasize the importance of this requirement in its
PO training on EPA Order 1610 and considers this corrective action to be ongoing.
Corrective action was completed on March 31, 2007.
12-P-0360
21

-------
Report Title:
Report Number:
Date Issued:
Final Action Date:
Link:
EPA Can Improve Its Managing of Superfund Interagency Agreements
with U.S. Army Corps of Engineers
2007-P-00021
April 30, 2007
April 3, 2008
http://www.epa.gov/oig/reports/2007/20070430-2007-P-00Q21.pdf
Recommendations
We recommended that EPA:
2-1. Require that regional offices develop an EPA independent cost estimate for US ACE's
oversight of I As.
2-2. Require that regional offices conduct a cost analysis of alternatives when determining
whether to award an IA and evaluate the analysis against an EPA-developed cost
estimate.
2-3.	Develop a process for holding regional offices and RPMs accountable for complying
with the Office of Solid Waste and Emergency Response's 2003 policy for assigning
remedial work, and the Office of Administration and Resources Management's 2002
guidance to document in decision memorandums justifications for IAs based on an
analysis of alternatives and EPA-developed cost estimates.
3-1.	Require US ACE to improve the format of its monthly reports so that costs and activities
correlate and can be clearly understood. RPMs must be able to determine who in
US ACE worked on the I A, for how long, the costs charged EPA, and what work was
accomplished and remains to be completed.
3-2. Use the Intra-governmental Payment and Collection system to reimburse USACE's
in-house costs for work accomplished under IAs.
3-3. Develop a specific plan for using the $2.5 million in Management and Support fees held
by US ACE or require the US ACE to refund these fees to EPA, and continue to develop
plans on an annual basis to address future fees.
3-4. Require future IAs awarded to the US ACE to include terms and conditions that will
enable RPMs to monitor USACE's cost, quality, and timeliness.
3-5. Develop a policy on how and when the feedback reports will be used as an oversight
tool to monitor and improve the cost, quality, and timeliness of USACE's performance.
12-P-0360
22

-------
Corrective Actions
2-1. EPA agreed to revise and reissue its May 2003 policy on assigning work to US ACE.
EPA stated it would require regions to prepare an estimate of anticipated US ACE full-
time equivalent hours/cost, travel, and other direct costs prior to entering into an IA
with US ACE. Corrective action was completed on April 3, 2008.
2-2. EPA agreed to update the May 2003 policy on assigning work to US ACE to require
regions to document their decisions regarding use of US ACE versus other mechanisms.
EPA also stated that it will require an estimate of anticipated US ACE full-time
equivalent hours/cost, travel, and other direct costs be developed before entering into an
IA with US ACE. Corrective action was completed on April 3, 2008.
2-3.	EPA agreed to reissue its May 2003 policy on assigning work to US ACE and to include
the following requirements: (1) regions should document all alternatives to the IA they
considered, why the IA mechanism with the US ACE was selected, and why estimated
US ACE staff hours and costs for the proposed work are considered to be reasonable;
(2) regions will normally consider several selection factors when making these
decisions; (3) regions will document regional management involvement in these
decisions; and (4) headquarters will develop a process for holding regional offices and
RPMs accountable for complying with the new policy and for monitoring regional
adherence to the reissued policy. Corrective action was completed on April 3, 2008.
3-1.	EPA stated that a joint EPA/US ACE workgroup was formed that will further assess
issues associated with monthly reports and invoices, areas for improvement, and
recommended follow-up actions. Corrective action was completed on April 3, 2008.
3-2. EPA agreed to further assess and consider whether to use the Intra-governmental
Payment and Collection system to reimburse US ACE for payment of staff work
accomplished under I As. Corrective action was completed on April 3, 2008.
3-3. EPA stated it has an established plan in place for use of the $2.5 million in Management
and Support fees held by US ACE and will update this plan to address expanded
technical support activities to be funded with these fees. EPA plans to draw down the
remaining Management and Support fees, funding work that would normally be paid for
from Superfund's annual budget. Corrective action was completed on October 31, 2007.
3-4. EPA stated it would work to review current I As for terms and conditions relating to
EPA monitoring of USACE costs, quality, and timeliness; and consider whether to
recommend development of generic Superfund terms and conditions. Corrective action
was completed on April 3, 2008.
3-5. EPA agreed to develop a plan for how and when the feedback reports will be used as an
oversight tool to monitor and improve the cost, quality, and timeliness of USACE
performance. Corrective action was completed on April 3, 2008.
12-P-0360
23

-------
Report Title:
Report Number:
Date Issued:
Final Action Date:
Link:
EPA Should Further Limit Use of Cost-Plus-Award-Fee Contracts
08-P-0093
February 26, 2008
May 5, 2009
http://www.epa. gov/oig/reports/2008/20080226-08-P-0093.pdf
Recommendations
We recommended that EPA:
2-1. Revise the CMM to require that:
•	a cost-benefit analysis be conducted prior to awarding a Cost-Plus-Award-Fee
contract
•	all Cost-Plus-Award-Fee contracts be approved by the CO's Service Center
Manager
2-2.	Revise CMM to require work assignment managers, POs, COs, and Performance
Evaluation Board members to explicitly document the basis for decisions made.
3-1.	Negotiate with contractors to modify contracts currently providing base fees in excess
of the 3-percent limit cited by EPAAR 1526.404-273(b) so that the fees no longer
exceed the 3-percent limit.
3-2.	Communicate the 3 percent base fee limit included in EPAAR to all COs and POs using
Cost-Plus-Award-Fee contracts and verify compliance during Headquarters reviews.
4-1.	Analyze alternatives and determine a way to simplify the base fee calculation for Cost-
Plus-Award-Fee contracts.
4-2. Require the COs for all current Cost-Plus-Award-Fee contracts to review the self-
evaluation requirement and either eliminate the requirement or provide written
justification for not eliminating the requirement.
4-3. Recover the $4,801 in overpaid award fees paid to a contractor, or offset this amount
against future payments.
Corrective Actions
2-1. EPA agreed to revise the CMM to require that each contract file include documentation
to show why the particular contract type was selected. When selecting a Cost-Plus-
Award-Fee contract the CO must apply adequate analytical measures, such as cost
benefit analysis. Corrective action was completed on April 27, 2009.
12-P-0360
24

-------
2-2.	EPA agreed to revise the CMM chapters related to the use of Cost-Plus-Award-Fee
contracts to strengthen the coordination in decision-making and documenting the basis
for decisions made. Corrective action was completed on April 27, 2009.
3-1.	EPA negotiated with contractors to modify contracts providing base fees in excess of
the 3 percent limit. Corrective action was completed on May 5, 2009.
3-2.	EPA issued a Flash Notice which requested that all Agency contracting offices verify
through their Quality Assessment Plan process that they are complying with the
3 percent base fee limit for their Cost-Plus-Award-Fee contracts. EPA also stated it
would send out reminder verification/compliance request notices on an annual basis.
Corrective action was completed on February 6, 2008.
4-1.	EPA agreed to establish a work group to analyze various alternatives and determine if
there is a way to simplify Cost-Plus-Award-Fee base fee calculations. Corrective action
was completed on August 19, 2008.
4-2. EPA asked its acquisition community, via a Flash Notice, to determine if self
evaluations are useful or needed for their particular Cost-Plus-Award-Fee contracts.
EPA also stated that COs would document their contract files with their findings and
recommendations. Corrective action was completed on March 14, 2008.
4-3. EPA recovered $4,801 from the contractor in overpaid award fees. Corrective action
was completed on March 18, 2008.
12-P-0360
25

-------
Report Title:
Report Number:
Date Issued:
Final Action Date:
Link:
Over-Billed Labor Charges on START Contract No. EP-S3-05-02,
Tetra Tech EM, Incorporated, Boothwyn, Pennsylvania
08-4-0154
May 19, 2008
January 9, 2009
Due to confidential business information, this report was not made public
Recommendations
We recommended that EPA:
1.
Disallow
$203,588 of Option Year 1 Core Emergency Response Team Labor.
2.
Disallow
$9,990 of Option Year 2 Core Emergency Response Team Labor.
3.
Disallow
$122,948 of Option Year 1 Fixed-Rate Labor.
4.
Disallow
$103,832 of Option Year 1 Subcontract Costs.
Corrective Actions
A certification memorandum was signed by the CO disallowing costs. Corrective action was
completed on January 9, 2009.
12-P-0360
26

-------
Report Title:	EPA Can Improve the Awarding of Noncompetitive Contracts
Report Number:	08-P-0186
Date Issued:	June 30, 2008
Final Action Date:	April 15, 2009
Link:	http://www.epa.gov/oig/reports/2008/20080630-08-P-Q186.pdf
Recommendations
We recommended that EPA:
2-1. Document in the file for each contract that was not approved at the appropriate level the
circumstances why the Justification for Other than Full and Open Competition was not
approved at the appropriate level and the corrective actions taken. Require the
Competition Advocate to review the documentation for those procurements where the
Justification for Other than Full and Open Competition required such approval.
2-2. Ensure that internal controls designed to identify Justification for Other than Full and
Open Competition for sole source procurements over $550,000 requiring the
Competition Advocate's approval are developed and properly implemented.
2-3. Revise the Approval Matrix in the Acquisition Handbook to require that contracting
staff one level above the CO review and approve all Justification for Other than Full
and Open Competitions to ensure they include required elements.
2-4. Ensure that Quality Assessment Plans include a review of sole source contracts.
Specifically, the Quality Assessment Plans should ensure that the Justification for Other
than Full and Open Competition was approved at the appropriate level, that the
Justification for Other than Full and Open Competition includes all required elements,
and that synopses of proposed sole source contracts are published when necessary and
contain all required language.
2-5. Publish an OAM Hot Tips newsletter that reminds contracting staff of the approval
thresholds for sole source procurements, the importance of using the required checklists
and ensuring all applicable fields are completed, and the synopses requirements as set
forth in FAR Part 5.
3-1. Reinforce the requirement that the contract files for sole source procurements include
evidence of market research when necessary.
3-2. Include in Quality Assessment Plans a review of the market research conducted and
determine the appropriateness of awarding sole source procurements.
12-P-0360
27

-------
Corrective Actions
2-1. EPA documented in the contract files the circumstances why the Justification for Other
than Full and Open Competition was not approved at the appropriate level. EPA also
agreed to have the Agency's Competition Advocate review the documentation.
Corrective action was completed on June 30, 2008.
2-2. EPA stated that new controls would include a level above the CO to review pre-award
documentation to determine if the required signatures have been obtained. Additionally,
EPA stated that the Agency's Competition Advocate would develop post-award
automated reports to identify contract actions requiring the Agency Competition
Advocate's signature. Corrective action was completed on December 18, 2008.
2-3. EPA agreed to update the Acquisition Handbook to reflect the level above the CO
review. Corrective action was completed on December 18, 2008.
2-4. EPA agreed to reinforce to the COs through a Flash Notice that Quality Assessment
Plans are to include oversight elements related to sole source contracts. Corrective
action was completed on January 31, 2009.
2-5.	EPA agreed to publish in its Hot Tips newsletter a reminder to COs of the approval
thresholds for sole source procurements, the importance of using required checklists,
and the synopses requirements set forth in FAR Part 5. Corrective action was completed
on July 31, 2008.
3-1.	EPA agreed to reinforce, through its Hot Tips newsletter, the requirement that sole
source procurements include evidence of market research when necessary, and to
include a review of the market research conducted as part of its Quality Assessment
Plan. Corrective action was completed on June 25, 2008.
3-2. EPA agreed to reinforce the recommendation via Flash Notice and include a review of
market research efforts in Quality Assessment Plans. Corrective action was completed
on January 31, 2009.
12-P-0360
28

-------
Report Number:
Date Issued:
Final Action Date:
Link:
Report Title:
EPA Should Strengthen Internal Controls over Interagency Agreement
Unliquidated Obligations
09-P-0086
January 26, 2009
September 30, 2010
http://www.epa.gov/oig/reports/2009/20090126-09-P-0Q86.pdf
Recommendations
We recommended that EPA:
2-1. Direct the Grants and Interagency Agreements Management Division and the Grants
Management Office to:
(a)	Work with the POs to prepare decrease amendments to deobligate the remaining
$4.2 million in IA unliquidated obligations identified during our audit and initiate
close-out action.
(b)	Ensure the I As with $2.3 million deobligated during the audit are closed out.
2-2. Direct the Office of Grants and Debarment to ensure EPA Order 1610 is consistently
followed, which includes:
(a)	Grants Management Offices notifying the PO that the IA is expiring before the
project period ends.
(b)	POs initiating close-out of the project once a project is complete and all applicable
costs have been billed or paid.
(c)	Grants Management Offices initiating close-out of the IA if the PO has not done so
after the end of the IA project period.
(d)	Grants Management Offices sending close-out notices to the other agencies, the
PO, and the Cincinnati Finance Center for I As where the project period end date is
greater than 270 days old.
2-3. Direct the Office of Grants and Debarment to work with other agencies on developing
standard billing practices.
2-4. Direct the Office of Grants and Debarment to work with the Grants Management Office
and POs to ensure compliance with the existing deobligation and close-out procedures
under EPA Order 1610. When other agencies do not respond within 90 days to the
decrease amendments, have Grants and Interagency Agreements Management
Division/Grants Management Offices send the decrease amendment to the Cincinnati
Finance Center and instruct it to deobligate the remaining funds and administratively
and financially close out the I As.
12-P-0360
29

-------
2-5. Follow through with program offices to ensure they develop performance measures that
are incorporated into PO performance standards which hold the PO accountable for
their performance in monitoring and timely closing out I As.
2-6. Ensure the IA data in the Grants Information and Control System and Integrated Grants
Management System are reconciled.
2-7. Develop procedures that ensure compliance with Office of the Chief Financial Officer
Policy Announcement 96-04 and require all POs responsible for managing and closing
out IAs to participate in the unliquidated obligation review and determine the validity
and necessity of all inactive IAs for current and expired project periods.
2-8. Reformat the unliquidated obligation report in order of IA number and require that the
Grants and Interagency Agreements Management Division and Grants Management
Offices forward the report to the PO of record and his/her supervisor, so a single review
of the entire unliquidated obligation amount can be performed.
Corrective Actions
2-1. EPA stated it deobligated $3.5 million of the $4.2 million of IA unliquidated obligations
identified. Additionally, EPA closed out 10 of the 14 agreements, as well as all of the
IAs with the $2.3 million that were deobligated. EPA stated it would continue to work
with the responsible project offices and other agencies to deobligate the remaining
balances and to close out those agreements as soon as possible. Corrective action was
completed on August 12, 2010.
2-2. EPA instituted a new system that will notify POs when an IA is due to expire in
60 days. EPA also stated the Agency would adopt measures to help ensure compliance
with EPA Order 1610 through the implementation of the new Interagency Shared
Service Center. EPA stated that the Interagency Shared Service Center would provide
centralized cradle-to-grave IA administration. Corrective action was completed on
March 20, 2009.
2-3. EPA agreed to develop IA Policy for billing practices. Corrective action was completed
on June 30, 2009.
2-4. EPA agreed to ensure compliance with EPA Order 1610 as part of the Interagency
Shared Service Center comprehensive assessments and performance review process.
Corrective action was completed on May 30, 2009.
2-5. EPA agreed to develop PO performance standards that include measures for holding
POs accountable for timely monitoring and closing out IAs. Corrective action was
completed on September 15, 2009.
2-6. EPA stated it completed a reconciliation of IA close-out data between the Grants
Information and Control System and the Integrated Grants Management System. EPA
12-P-0360
30

-------
also agreed to complete a comparison of additional data elements between the Grants
Information and Control System and the Integrated Grants Management System records
to identify further mismatches in the data. Corrective action was completed on June 30,
2009.
2-7. EPA agreed to issue a memorandum regarding guidance for conducting A-123 internal
reviews of unliquidated obligations. EPA also agreed to incorporate Policy
Announcement 96-04, requiring all program offices to conduct annual unliquidated
obligation reviews into the Resource Management Directive System. Corrective action
was completed on August 31, 2010.
2-8. The Office of the Chief Financial Officer agreed to provide the unliquidated obligations
report and assist the Office of Grants and Debarment, as needed, to ensure it has the
most useful sort. Corrective action was completed on May 5, 2009.
12-P-0360
31

-------
Report Title:
Report Number:
Date Issued:
Final Action Date:
Link:
Over-Billed Base Year Labor Charges on START Contract No.
EP-S3-05-02, Tetra Tech EM, Incorporated Boothwyn, Pennsylvania
09-4-0135
April 3, 2009
December 2, 2010
Due to confidential business information, this report was not made public
Recommendations
We recommended that EPA:
1.	Disallow $166,980 of Base Year Core Emergency Response Team Labor.
2.	Disallow $65,491 of Base Year Fixed-Rate Labor.
3.	Disallow $20,618 of Base Year Subcontract Costs.
Corrective Actions
Region 3 negotiated with Tetra Tech concerning the over-billings and obtained a credit of
$163,327 to be applied to a future invoice. Corrective action was completed on December 2,
2010.
12-P-0360
32

-------
Report Title:	EPA Should Stop Providing Estimates of Total Labor Hours to
Contractors
Report Number: 09-P-0229
Date Issued:	September 9, 2009
Final Action Date: September 30, 2010
Link:	http://www.epa.gov/oig/reports/2009/20090909-09-P-Q229.pdf
Recommendations
We recommended that EPA:
1.	Revise EPAAR to eliminate the requirement that EPA include total estimated labor hours
in work assignments or identify specific circumstances in which the requirement should
apply.
2.	Communicate to contract management and program staff who prepare and use IGCEs
when estimates of total labor hours, or any other cost-related estimates, should not be
provided to contractors prior to receiving the contractor's proposal.
Corrective Actions
1.	EPA stated it will revise the EPAAR and published the new guidance for immediate
implementation and use by contract management and program officials. Corrective action
was completed on May 25, 2010.
2.	EPA published the new guidance for immediate implementation in a News Flash Notice
and briefed the change to COs and program managers at the Superfund Senior Regional
Management and Acquisition Council conference. Corrective action was completed on
January 13, 2010.
12-P-0360
33

-------
Report Title:
Report Number:
Date Issued:
Final Action Date:
Link:
Contractor Invoice Internal Controls Need Improvement
09-P-0242
September 23, 2009
September 2, 2010
http://www.epa. gov/oig/reports/2009/20090923-09-P-0242.pdf
Recommendations
We recommended that EPA:
2-1. Modify the CMM to require use of the checklist for invoice reviews the Contracting
Officer Representatives perform, and to ensure Contracting Officer Representatives
receive invoices and supporting documentation to assist their reviews.
2-2. Where the progress report and invoice did not cover the same time period, require the
contractors identified during this review to revise their progress reports to match the
time period of the invoice.
2-3. Re-evaluate the assignment of the responsibility for math and rate verifications on
contractor invoices and update the CMM accordingly.
2-4.	Require that the COs, as part of the annual invoice review, make certain that the POs
and Contracting Officer Representatives are:
a.	Implementing changes to the CMM made in response to the audit report.
b.	Requiring contractors to submit invoices and progress reports with matching periods
of performance.
3-1.	Analyze FMRs to identify findings that are recurring on multiple contracts.
3-2. Develop a corrective action for addressing the common findings identified in FMRs.
Corrective Actions
2-1. EPA agreed to modify the CMM to better define documentation needs. EPA indicated
that the update would include supporting documentation needed from the contractor to
assist the Contracting Officer Representatives in invoice reviews and the Contracting
Officer Representatives documentation needed to prove that a sufficient invoice review
was performed. Corrective action was completed on March 2, 2010.
2-2. EPA stated that contractors would be notified via written letter that progress reports
must match the time periods of the invoice submitted. EPA also stated that in cases
where these requirements are not contained in the contract, those contracts would be
modified. Corrective action was completed on December 18, 2009.
12-P-0360
34

-------
2-3. EPA stated the CMM is in compliance with statute and modification to the CMM is not
appropriate. EPA agreed to prepare a memorandum regarding math and rate verification
on contractor invoices. Corrective action was completed on September 2, 2010.
2-4.	EPA stated that the reviews would be carried out in each CO's annual review of
invoices as required by their division's or region's Quality Assessment Plan. EPA also
stated that the Quality Assessment Plan would be modified accordingly in EPA's
Acquisition Handbook. Corrective action was completed on April 15, 2010.
3-1.	EPA agreed to carry out an analysis to identify findings that are recurring on multiple
contracts. Corrective action was completed on November 30, 2009.
3-2. EPA stated that Financial Analysis and Oversight Service Center would disseminate all
FMR reports to all EPA COs managing active contracts with the contractor. EPA
further stated that the Financial Analysis and Oversight Service Center would present at
procurement conferences and contractor forums to remind both government and
contractor personnel of their responsibilities and issues requiring attention. Corrective
action was completed on December 21, 2009.
12-P-0360
35

-------
Report Title:	EPA Needs to Improve Cost Controls for Equipment Used during
Emergencies
Report Number: 10-P-0047
Date Issued:	December 16, 2009
Final Action Date: March 31,2010
Link:	http://www.epa.gov/oig/reports/2010/20091216-10-P-0Q47.pdf
Recommendations
We recommended that EPA:
2-1. Review all equipment charges for responding to Hurricanes Gustav and Ike and identify
any items where the usage fees exceeded the average purchase price. For these
equipment items, the CO should negotiate maintenance rates for the equipment and then
require the contractor to repay any charges in excess of negotiated rates.
2-2. Amend the Emergency and Rapid Response Services contract to require the contractor
to provide average purchase price information within a specific timeframe.
2-3. Develop a system or process to identify and prevent overcharges for contractor-owned
equipment for Superfund Technical Assessment and Response Team and emergency
logistics contracts. If the Removal Cost Management System is not used, provide
policies and procedures for how to track equipment costs.
2-4.	Modify the Removal Cost Management System so that it tracks equipment charges by
contract rather than just task order.
3-1.	Expand the Emergency Contracting Procedures to describe when EPA should convene
a control review board, what offices should participate in board meetings, and how long
the board should remain active.
4-1.	Notify the OIG when planned milestones for corrective actions are going to be delayed
more than 6 months.
Corrective Actions
2-1. EPA agreed to review all equipment charges and use the Removal Cost Management
System to compare it against contractor records. Corrective action was completed on
January 13, 2010.
2-2. EPA Region 6 required contractors to provide average purchase price information in the
Removal Cost Management System within 60 working days after the initial award and
on each anniversary date of the contract. Corrective action was completed on
October 20, 2009.
12-P-0360
36

-------
2-3. EPA developed the Removal Cost Management System for use by the Superfund
Technical Assessment and Response Team contractors across the country to track
equipment usage and costs. Corrective action was completed on December 2, 2010.
2-4.	EPA stated the Removal Cost Management System has a data mining feature that
enables users to query the system and capture individual equipment cost. Training was
provided on how to query the system at the Superfund PO/CO Conference. Corrective
action was completed on July 13, 2010.
3-1.	EPA's Acquisition Handbook, Chapter 18, Emergency Contracting Procedures, was
expanded to address the requirements to convene a Control Review Board, who will
participate, and how long the board will remain active. Corrective action was completed
on November 2, 2011.
4-1.	EPA agreed to update and utilize the audit tracking system, MATS, to ensure
compliance with EPA Manual 2750. Corrective action was completed on May 1, 2010.
12-P-0360
37

-------
Report Title:
Report Number:
Date Issued:
Final Action Date:
Link:
EPA Can Improve Its Preparation and Use of Independent Government
Cost Estimates for Superfund Contracts
10-P-0065
February 16, 2010
July 7, 2011
http://www.epa.gov/oig/reports/2010/20100216-10-P-0Q65.pdf
Recommendations
We recommended that EPA:
2-1. Require OAM to update its IGCE guide to address:
•	Technical direction documents that exceed the simplified acquisition threshold
•	Emergency acquisitions
•	The U.S. Government Accountability Office Cost Estimating and Assessment Guide
2-2. After the OAM IGCE guide is updated, require EPA regions and program operating
divisions to conduct a review to verify compliance with the updated guide.
2-3. Eliminate the practice of accepting contractor estimates that differ from IGCEs without
examining the reason for the difference.
2-4. Require the Superfund program to update, distribute, and maintain its supplemental
tools and guidance used for IGCE preparation (e.g., the Office of Superfund
Remediation and Technology Innovation's cost estimating toolbox).
2-5. Instruct OAM and the Superfund program office to provide training to Superfund
program staff on IGCE tools and databases, as well as OAM and Superfund IGCE
guidance.
Corrective Actions
2-1. EPA agreed to update the guide and it will contain a broad overview for preparing a
sufficient IGCE and specific guidance for preparing an IGCE for an emergency
acquisition or a technical direction document. Additionally, the guide will contain
information on cost estimating techniques. Corrective action was completed on June 15,
2010.
2-2. EPA agreed that the updated guidance will recommend that EPA regions and program
operating divisions should conduct a review and develop and/or update existing
guidance in accordance with OAM's updated guide. Corrective action was completed
on June 30, 2010.
12-P-0360
38

-------
2-3. EPA agreed to update the guidance and provide training to effectively address accepting
contractor estimates that differ from IGCEs without examining the reason for the
difference. Corrective action was completed on July 15, 2010.
2-4. EPA agreed to update, distribute, and maintain its supplemental tools and guidance used
for IGCE preparation. Corrective action was completed on April 29, 2011.
2-5. EPA agreed to provide training to Superfund program staff on IGCE tools and
databases, as well as IGCE guidance. Corrective action was completed on July 15,
2010.
P-0360
39

-------
Report Title:	EPA Does Not Always Receive Adjustment Vouchers from Contractors
Report Number:	10-P-0075
Date Issued:	March 8, 2010
Final Action Date:	April 1, 2010
Link:	http://www.epa.gov/oig/reports/2010/20100308-10-P-0Q75.pdf
Recommendations
We recommended that EPA:
2-1. Track receipt of adjustment vouchers and monies owed EPA for final negotiated
indirect cost rates in accordance with OMB Circular A-50.
2-2. Identify all final indirect cost rate agreements where adjustment vouchers have not been
submitted and track them to ensure receipt.
2-3. Require Financial Administrative COs to identify all contracts impacted and list those
contracts in the final indirect cost rate agreements.
2-4. Require Financial Administrative COs to provide the final indirect cost rate agreement
directly to the COs for contracts impacted by the agreement.
2-5. Increase COs' and POs' awareness of their responsibilities for processing and managing
indirect cost rate agreements and adjustment vouchers through discussions and
presentations at meetings and conferences on contract management, as well as through
articles in OAM's quarterly newsletter on current policy initiatives.
Corrective Actions
2-1. EPA agreed to establish a process to ensure that adjustment vouchers and monies owed
to EPA are tracked. Corrective action was completed on February 1, 2010.
2-2. EPA agreed that COs should review all final indirect cost rate agreements and
determine which vouchers have not been submitted and track them to ensure receipt.
EPA also agreed to include an article in Hot Tips to raise awareness for enhanced CO
oversight. Corrective action was completed on March 31, 2010.
2-3. EPA agreed that the Financial Administrative COs will list the prime contracts in the
indirect cost rate agreements and establish indirect rates which will apply to all of the
prime contracts and subcontracts which the vendor holds with EPA. Corrective action
was completed on March 31, 2010.
2-4. EPA agreed that Financial Administrative COs will be required to distribute negotiated
indirect cost rate agreements to all affected Service Center managers and Regional CO
Supervisors. Corrective action was completed on March 31, 2010.
12-P-0360
40

-------
2-5. EPA discussed responsibilities for processing and managing indirect cost rate
agreements and adjustment vouchers at the Spring 2010 Contractor Forum and the
annual PO/CO and Acquisition conference. EPA also agreed to include information
with respect to this topic in the Hot Tips article. Corrective action was completed on
March 31, 2010.
P-0360

-------
Report Title:	EPA Should Improve Its Contractor Performance Evaluation Process for
Contractors Receiving Recovery Act Funds
Report Number: 10-R-0113
Date Issued:	April 26, 2010
Final Action Date: June 10, 2010
Link:	http://www.epa.gov/oig/reports/2010/20100426-10-R-0113.pdf
Recommendations
We recommended that EPA:
2-1. In accordance with OMB's directive, institute a process that would provide
management with information to monitor the timeliness and quality of contractor
performance evaluations.
2-2.	Revise its Quality Assurance Plan requirements to include the timeliness and oversight
of contractor performance evaluations.
3-1.	Maintain FMRs, Defense Contract Audit Agency, and OIG reports in an electronic
system that COs can access.
3-2. Require COs to access the centrally available OAM database for all applicable reports
and consider results in annual contractor performance evaluations.
Corrective Actions
2-1. EPA agreed to begin using the Department of Defense's Contractor Performance
Assessment Reporting System, in lieu of the National Institute of Health's Contractor
Performance System. Corrective action was completed on May 1, 2010.
2-2.	EPA agreed to revise the Acquisition Handbook, Chapter 4.2, Quality Assessment
Plans, to include contractor Past Performance Evaluation Reviews as an oversight
activity. Corrective action was completed on April 1, 2010.
3-1.	EPA agreed to consolidate the reports on a shared server for access. Corrective action
was completed on June 1, 2010.
3-2. EPA agreed to post a Hot Tips article on the Intranet encouraging all COs to use
information available from all reports, and to consider the results in the annual
contractor performance evaluations. Corrective action was completed on June 1, 2010.
12-P-0360
42

-------
Report Title:
Report Number:
Date Issued:
Final Action Date:
Link:
EPA's Terms and Conditions as Well as Process to Award Recovery Act
Interagency Agreements Need Improvement
ll-R-0016
November 16, 2010
November 3, 2011
http://www.epa.gov/oig/reports/2011/20101116-1 l-R-0016.pdf
Recommendations
We recommended that EPA:
2-1. Revise standard terms and conditions for future I As with US ACE to include EPA's roles
and responsibilities and amend Recovery Act I As with the US ACE as they are modified.
2-2. Amend the terms and conditions in Recovery Act I As with Indian Health Services to
include EPA's roles and responsibilities in the areas of design and planning,
construction monitoring, and final project inspection.
2-3.	Revise standard terms and conditions for future I As with Indian Health Services to
include EPA's roles and responsibilities in the areas of design and planning,
construction monitoring, and final project inspection.
3-1.	Prepare a program evaluation of levels of effort and the cost of the processes associated
with procurement, management, and oversight of the construction contract for projects
delivered by US ACE, EPA, or remedial action contractors to support decision making
in selecting the method of obtaining construction delivery services.
3-2. Use this program evaluation to provide transparency and aid in developing a contracting
strategy that will allow the EPA regional offices to make informed decisions when
determining the best value for delivering Superfund construction projects.
Corrective Actions
2-1. EPA revised the standard terms and conditions for IAs with US ACE to include EPA's
roles and responsibilities. Corrective action was completed on November 19, 2011.
2-2. According to the Agency's response to the audit report and the OIG's comments, EPA
& updated the terms and conditions for modified Recovery Act IAs. Corrective action was
2-3.	completed on October 28, 2010.
3-1.	EPA agreed to conduct a program evaluation and have the regions participate in the
evaluation. Corrective action was completed on June 24, 2011.
3-2. After completing the program evaluation (see 3-1 above), EPA stated it would use the
findings to develop a contracting strategy by October 31, 2011. Corrective action was
completed on September 30, 2011.
12-P-0360
43

-------
Report Title:	EPA Can Improve the Use of Financial Monitoring Reviews for
Recovery Act Superfund Contracts
Report Number: 1 l-R-0081
Date Issued:	January 31,2011
Final Action Date: October 22, 2010
Link:	http://www.epa.gov/oig/reports/2011/20110131-1 l-R-0081 pdf
Recommendation
We recommended that EPA:
3-1. Revise policies and procedures to ensure that FMR reports are distributed timely to all
POs, work assignments managers, and task order managers assigned to the contract
impacted by the FMR as well as those working on other active contracts with the same
contractor.
Corrective Actions
3-1. EPA updated its internal Financial Analysis and Oversight Standard Operating
Procedures to require FMR reports to be distributed to cognizant COs and POs. The
COs and POs are to further disseminate the report(s) to all parties associated with the
contract, including delivery order POs, task order POs, and work assignment managers.
Corrective action was completed on October 22, 2010.
12-P-0360
44

-------
Report Title:	EPA Needs to Reexamine How It Defines Its Payment Recapture
Audit Program
Report Number: 1 l-P-0362
Date Issued:	July 19, 2011
Final Action Date: Ongoing
Link:	http://www.epa.gov/oig/reports/2011/20110719-1 l-P-0362.pdf
Recommendation
We recommended that EPA:
1. Report the results of all activities, including audits the OIG and other audit organizations
conduct, when reporting on its payment recapture audit program in 2011.
Corrective Actions
1. EPA agreed to report in the Agency Financial Report Defense Contract Audit Agency
audit efforts that result in amounts over and under billed by the contractor; all questioned
costs determined to be improper payments that are identified during all post-award grant
reviews, including state and local governments, tribes, and universities; and questioned
costs determined to be improper payments that are identified through OIG audits and
state Single Audit reports. Corrective action is ongoing and expected to be completed on
November 15, 2012.
12-P-0360
45

-------
Report Title:
Report Number:
Date Issued:
Final Action Date:
Link:
Agreed-Upon Procedures Applied to Equipment Rate Proposals
Submitted Under EPA Contract EP-S9-11-01 by SFS Chemical Safety,
Inc., Emeryville, California
12-4-0295
February 27, 2012
N/A
Due to confidential business information, this report was not made public
Recommendations
We recommended that EPA:
1.	Not utilize the equipment rates proposed by the contractor for billings or for negotiating
option period prices.
2.	Disallow and recover unallowable equipment costs of $30,123 claimed under the base
period of the contract.
3.	Modify the contract to reduce the option period 1 firm fixed price by the excess
equipment costs of $42,911.
Corrective Actions
The recommendations were provided to the CO and the CO's decision is pending.
12-P-0360
46

-------
Report Title:	EPA Can Improve Its Improper Payments Reporting
Report Number:	12-P-0311
Date Issued:	March 1, 2012
Final Action Date:	N/A
Link:	http://epa.gov/oig/reports/2012/2012030 l-12-P-0311.pdf
Recommendations
We recommended that EPA:
1.	Issue guidance requiring that the results of all grant improper payment determinations
and recaptures be documented in the compliance database and reported in the FY 2012
Agency Financial Report.
2.	Continue to track in MATS the recommendation in OIG Report No. 1 l-P-0362—to
include in the Agency Financial Report all improper payments identified through EPA
reviews and OIG financial and single audits—until the corrective actions are completed.
3.	Report discounts not taken as improper payments under the Improper Payments
Elimination and Recovery Act, starting with the FY 2012 Agency Financial Report,
unless clarification from OMB states otherwise.
4.	Issue guidance to program offices to ensure the quality of reported improper payment and
recaptured payment information.
Corrective Actions
1.	EPA prepared draft guidance and is in the process of completing additional refinements
to the draft guidance for appropriate Agency review and final issuance. Corrective action
is ongoing and expected to be completed on April 30, 2012.
2.	EPA re-opened corrective actions 1.2 and 1.3 from OIG Report No. 1 l-P-0362.
Recommendations will remain open until the corrective actions are completed. Corrective
action is ongoing and expected to be completed on November 15, 2012.
3.	EPA respectfully disagreed with this recommendation and stated that the OIG's
interpretation of improper payments for discounts is overly broad. The recommendation
is unresolved with resolution efforts in progress.
4.	EPA stated it will issue FY 2012 annual guidance to the Office of Administration and
Resources Management, the Office of Water, and the Research Triangle Park-Finance
Center. Corrective action was not verified and, therefore, it is considered pending.
12-P-0360
47

-------
Report Title:
Report Number:
Date Issued:
Final Action Date:
Link:
Policies Needed for Proper Use and Management of Cost-Reimbursement
Contracts Based on Duncan Hunter Act
12-P-0320
March 6, 2012
N/A
http://www.epa.gov/oig/reports/2012/20120306-12-P-032Q.pdf
Recommendations
We recommended that EPA:
1.	Develop a policy for COs that provides guidance on preparing written acquisition plans
that comply with the FAR revisions resulting from the interim rule (FAR Case
2008-030).
2.	Update the procurement initiation notice as contained in the CMM to include, as an
attachment, a copy of the Contracting Officer Representative appointment memorandum.
3.	Direct COs to verify that nomination forms and appointment memorandums are included
in contracting files for all current contracts.
4.	Develop and distribute instructions on coding of Indefinite Delivery/Indefinite Quantity
contracts. EPA should ensure that the four contracts identified in this finding are coded
consistent with the instructions.
Corrective Actions
1.	EPA agreed with the recommendation and stated that it would issue an Interim Policy
Notice updating the references to the CMM for acquisition planning. EPA would also
update the Peer Review Checklist to reflect changes made to the FAR. Corrective action
is ongoing and expected to be completed on March 31, 2012.
2.	EPA stated it will publish an Interim Policy Notice requiring program and technical staff
to nominate prospective Contracting Officer Representatives in EPA's Acquisition
System's requisition documents. Corrective action is ongoing and expected to be
completed on September 30, 2012.
3.	EPA stated it will require the nomination form of the Contracting Officer Representative
to be included in the official contract file in accordance with FAR 4.803(a)(33).
Corrective action is ongoing and expected to be completed on September 30, 2012.
4.	EPA stated it will publish a flash policy notice advising staff that Indefinite Delivery/
Indefinite Quantity contracts should be coded in the Federal Procurement Data System in
accordance with the Federal Procurement Data System's User's Manual dated April
2011. Corrective action is ongoing and expected to be completed on March 31, 2012.
12-P-0360
48

-------
Appendix B
Distribution
Office of the Administrator
Assistant Administrator for Solid Waste and Emergency Response
Assistant Administrator for 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
Audit Follow-Up Coordinator, Office of Solid Waste and Emergency Response
Audit Follow-Up Coordinator, Office of Administration and Resources Management
12-P-0360
49

-------