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Inspector General Division(s)
Conducting the Audit
Eastern Audit Division
Boston, Massachusetts
Program Office(s) Involved
Office of Research and Development,
National Health & Environmental
Effects Research Lab,
Atlantic Ecology Division
Photograph:
Shannon Nichols, EAD
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MEMORANDUM
SUBJECT:
FROM:
TO:
Audit of Extramural and Property Management at the
Atlantic Ecology Division
Audit Report No. 2000-P-00015
Paul D. McKechnie
Divisional Inspector General
Eastern Audit Division
Norine E. Noonan, Ph.D.
Assistant Administrator,
Office of Research and Development
Attached is our audit report, Audit of Extramural and Property Management at
the Atlantic Ecology Division. This report contains findings and recommendations that
are important to the Atlantic Ecology Division within the Office of Research and
Development.
This audit report represents the opinions of the Office of the Inspector General
(OIG). Final determinations on recommendations in this audit report will be made by
EPA managers in accordance with established EPA audit resolution procedures.
Accordingly, the findings contained in this audit report do not necessarily represent the
final EPA position.
ACTION REQUIRED
In accordance with EPA Order 2750, you as the action official are required to
provide this office a written response to the audit report within 90 days. Your response
should address all recommendations, and include milestone dates for corrective
actions planned, but not completed.
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We have no objection to the release of this report to the public.
Should you or your staff have any questions about this report, please contact me
or have your staff contact Linda Fuller, Team Leader at (617) 918-1470.
Attachment
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Audit of Extramural and
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EXECUTIVE SUMMARY
INTRODUCTION On June 16, 1993, the OIG issued its audit report,
Management of Extramural Resources at the
Environmental Research Laboratory, Narragansett,
Rhode Island. The Environmental Research
Laboratory is now the Atlantic Ecology Division
(AED). The OIG's 1993 audit was part of a
nationwide review of contract management practices
at ORD laboratories. Significant findings were
reported which included the: 1) appearance of
incumbent favoritism in the procurement of contracts;
2) misuse of EPA research contracts, cooperative
agreements, and interagency agreements; 3)
inadequate contract management controls; and 4)
other various administrative deficiencies. Due to the
significance of the findings, the OIG conducted a
review to determine if improvements were made in
AED's management of contracts, cooperative
agreements, and interagency agreements. Desiring
to improve operations, AED personnel requested that
we also review property management.
OBJECTIVES The objectives of our review were to determine if
AED:
1. provided adequate oversight of
Contractors to assure that work was
completed in accordance with contract
provisions, the statement of work, and
other applicable regulations;
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2. properly used contracts, interagency
agreements, and cooperative
agreements as intended to help
accomplish the Agency's research
mission; and
3. adequately accounted for and
safeguarded its property.
RESULTS IN BRIEF Since our 1993 audit, AED made limited progress in
implementing the recommendations in our prior report
to improve the management of contracts, cooperative
agreements and interagency agreements. If AED had
better used their Extramural Management Specialist's
(EMS') Event Cycle Reports, which identified internal
control weaknesses, this report would not be
necessary. However, the Acting Director was
responsive to our recommendations and already
started implementing various corrective actions at the
time of our audit. AED recently hired personnel with
stronger backgrounds in program administration and
contract management who should help resolve some
ofthe continuing problems. The following summaries
provide further details of our findings.
Senior Management Needs to Improve
Administrative Controls
AED Senior Management did not adequately oversee
administrative practices in contract and property
management. Both the AED's Acting Director and
Associate Director for Administrative Program
Operations (ADPO) need to assure that policies and
procedures are established and implemented so that
contract and property management effectively
supported the facility's science and research mission.
The Acting Director's focus had been on
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science/research. The ADPO is principally
responsible for administrative functions, however,
AED was without a permanent ADPO from February
1996 until April 1998. Even though AED's EMS
reported on contract and property management
weaknesses in 1996, these issues were not
addressed. As a result, contract and property
resources were not used effectively. The Operations
& Maintenance (O&M) Contractor did not provide all
the services required or expected under the contract.
Valuable property was left vulnerable to misuse or
theft.
Limited Improvement in Contract Management
While AED's management of its ADP contract was
adequate, management of its O&M contract
continued to be seriously deficient. As a result, the
O&M Contractor, not AED, controlled the work. The
Contractor did not provide all services according to
the contract. Until recently, the O&M Project Officers
lacked either the skills or experience to effectively
manage the contract.
Improvements Needed in Property Management
Improvements need to be made in AED's property
management. We found that 1) custodial officer
designations were out-dated; 2) annual inventories
were not performed; and 3) the status of loaned
equipment was unknown. The Property Officer and
the EMS brought these weaknesses to the attention
of Senior Management who did not take corrective
action. Improving property management was not a
priority. As a result, $6,212,611 of accountable
property was not safeguarded.
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RECOMMENDATIONS
Improvements Made in Oversight of Cooperative
Agreements but Not Interagency Agreements
AED made improvements in its oversight of
cooperative agreements but not interagency
agreements (lAGs). Funding for cooperative
agreements reviewed was for appropriate AED
activities (pre-doctoral and post-doctoral research).
The Project Officer and Local Site Representative
diligently monitored grant activities and maintained
adequate documentation to assure that the terms of
the agreements were met. As a result, these
cooperative agreements helped fulfill AED's research
mission to support science. Specifically, these
agreements supported training and development of
young environmental scientists who conducted
environmental and ecological research.
The Project Officer for the IAG, however, did not
assure that status reports or support for costs were
received and reviewed. The IAG Project Officer
admitted that he was remiss in carrying out his
responsibilities. As a result, we could not confirm if
progress was made in AED's oversight of lAGs.
We recommend that the AED Director:
1. Instruct the ADPO to establish contract and
property management procedures which will
ensure that staff, contract, and property
resources are used effectively and that
property is safeguarded. Also, the ADPO
should ensure that the procedures are
followed and delivering results.
2. Take appropriate action if staff does not
perform in accordance with established
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procedures and performance agreements.
3. Develop a formal system to resolve
weaknesses identified in Event Cycle Reports.
A corrective action plan should be developed
with specific staff identified to carry out
actions. Milestones should be set and
progress along with success should be
measured.
4. Seek out expert assistance from Headquarters,
Research Triangle Park, etc.
At the end of each Chapter, specific
recommendations have been included to improve 1)
contract monitoring, 2) property management, and 3)
IAG monitoring.
AGENCY COMMENTS A teleconference was held with the Office of
AND OIG EVALUATION Research and Development (ORD) and the OIG staff
on March 1, 2000 to discuss the draft audit report's
findings. On March 16, 2000, the Assistant
Administrator (AA) responded to our draft report. The
AA stated that, in general, ORD concurred with the
report's findings and recommendations. We
incorporated some of ORD's comments into our
findings and also included a section summarizing
ORD's comments and our evaluations at the end of
each finding. ORD's response is attached in its
entirety as Appendix 4.
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TABLE OF CONTENTS
Page
EXECUTIVE SUMMARY i
ABBREVIATIONS ix
CHAPTER 1 - INTRODUCTION 1
Purpose 1
Background 1
Scope and Methodology 3
Prior Audit Coverage 5
CHAPTER 2 - SENIOR MANAGEMENT NEEDS TO IMPROVE
ADMINISTRATIVE CONTROLS 7
CHAPTER 3-LIMITED IMPROVEMENT IN CONTRACT MANAGEMENT 23
CHAPTER 4 - IMPROVEMENTS NEEDED IN
PROPERTY MANAGEMENT 43
CHAPTER 5 - IMPROVEMENTS MADE IN OVERSIGHT OF
COOPERATIVE AGREEMENTS BUT NOT
INTERAGENCY AGREEMENTS 63
APPENDIX 1 - SCHEDULE OF SAFETY FINDINGS 73
APPENDIX 2 - SCHEDULE OF CUSTODIAL ACCOUNTS 75
APPENDIX 3 - SCHEDULE OF 1999 INVENTORY 77
APPENDIX 4 - ORD'S RESPONSE TO OIG DRAFT REPORT 79
APPENDIX 5-DISTRIBUTION 97
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ABBREVIATIONS
AA
Assistant Administrator
ADPO
Associate Director for Project Operations
AED
Atlantic Ecology Division
CMD
Contract Management Division
CO
Contracting Officer (or Office)
EAD
Eastern Audit Division
EMS
Extramural Management Specialist
EPA
Environmental Protection Agency
FAIR
Facilities Administration and Information Resources
FMFIA
Federal Managers' Financial Integrity Act
IAG
Interagency Agreement
IDP
Individual Development Plan
IFMS
Integrated Financial Management System
NHEERL
National Health & Environmental Effects Research Laboratory
NOAA
National Oceanic and Atmospheric Administration
NRC
National Research Council
OIG
Office of the Inspector General
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O&M
Operations & Maintenance
ORD
Office of Research and Development
PO
Project Officer
PPAS
Personal Property Accountability System
RLA
Revocable License Agreement
RTP
Research Triangle Park
SOW
Statement of Work
URI
University of Rhode Island
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CHAPTER 1
INTRODUCTION
PURPOSE The OIG conducts follow-up audits of prior significant
reports to determine ifauditees have successfully
implemented recommendations. On June 16, 1993,
the OIG issued its audit report, Management of
Extramural Resources at the Environmental Research
Laboratory [now the Atlantic Ecology Division (AED)],
Narragansett, Rhode Island, Significant findings
were reported in contractor selection, contract
management, and various administrative practices.
We conducted a limited follow up review of contract,
cooperative agreement, and interagency agreement
management practices at AED. We also reviewed
property management upon the request of AED staff
who desired to improve operations.
BACKGROUND The Office of Research and Development (ORD)
provides the scientific foundation to support EPA's
mission with research and development, technical
support, integration of scientific information and
anticipatory research. Since our last audit, ORD
reorganized in 1995 which changed the Narragansett
laboratory's organization and mission. It became the
Atlantic Ecology Division, one of nine divisions within
ORD's National Health & Environmental Effects
Research Laboratory (NHEERL) which performs high
quality effect-based research to improve the Agency's
ability to make decisions about health and ecological
risk. AED's new mission was to study the effects of
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/KLatitU Ecology Division
contaminants and other stressors on the coastal
waters and watersheds of the Atlantic seaboard.
Under the supervision of the NHEERL Associate
Director for Ecology, AED's Director is supported by
an Associate Director for Program Operations and an
Associate Director for Research The Associate
Director for Research has been the Acting Director
for six years AED is composed of three branches 1)
Ecosystems Analysis and Simulation Branch, 2)
Ecological Response Branch, and 3) Indicator
Development Branch An Extramural Management
Specialist (EMS) reports to the AED Director The
EMS provides guidance on extramural management
and carries out other administrative duties AED
employs 02 Federal employees at Narragansett,
Rhode Island as well astwo employees at its
Annapolis, Maryland site
As of Federal Fiscal Year 1999, the following
extramural resources were administered at the
Narragansett site (These figures do not include
resources administered at the Annapolis site )
Contracts * Dollar Value
Operations & Mantenance $3,911,901
ADP 1*803*530
Guards 853,536
JanitoriaJ 480,572
GlBSsroom 196,800
Librae .1MJM
TOTAL $7
NOAA $ 325, goc
National Marine Fisheries 56,77C
Department erf HeeJth &
Human Ser^ces 9.61 S
TOTAL i"1 ;:/-
Coo oeratrvfr Aareem ents DollarVsme
University of Rhode Island $1,000,000
National Senior Citizens
Education & Research Center 700,00C
National Academy of Science 1 65,00C
National Academy of Science 50.00C
TOTAL r.TR cn;j
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SCOPE AND We performed this audit in accordance with
METHODOLOGY Government Auditing Standards (1994 Revision)
issued by the Comptroller General of the United
States as they apply to performance audits. Our
review included tests of the program records and
other auditing procedures we considered necessary.
We conducted audit work at EPA's National Health
and Environmental Effects Research Laboratory
(NHEERL), AED located in Narragansett, Rhode
Island.
We reviewed AED files containing work orders and
invoices for the Operations and Maintenance (O&M)
and Facilities Administration and Information
Resources (FAIR) contracts. We determined from
work orders, invoices and interviews whether
improvements were made in contract management
since the 1993 OIG report. We interviewed key
personnel at AED, including the Acting Director,
ADPO, Project Officers, Alternate Project Officers,
and EMS. At AED, we interviewed the Contracting
Officer from EPA's Research Triangle Park, North
Carolina.
For the O&M contract, we reviewed 100 percent of
the Fiscal Year 1997 work orders to determine the
designated priority of the tasks. We reviewed every
10th work order to determine if the final work by the
Contractor was accepted by AED. For Fiscal Year
1999, we reviewed all the work orders though May
10, 1999 to determine the amount of time it took to
complete the task and if there was an acceptance
signature from the Project Officer. Finally, we
reviewed Fiscal Year 1999 invoices through June 6,
1999 to determine if Contractor costs claimed were
allowable.
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For the FAIR contract, we judgmentally sampled 25 of
95 (26 percent) work orders issued between January
and May 1999 to determine if work was completed
timely. Additionally, we reviewed a judgmental
sample of invoices from Fiscal Years 1998 and 1999
to determine if all costs claimed were properly
supported.
We reviewed Fiscal Years 1998 and 1999
(September through May) procurement requests to
determine if services and supplies included in the
O&M contract were purchased from other sources.
The Project Officer assisted us in our review.
We selected two of four cooperative agreements and
one of three interagency agreements for review.
Agreements with the highest dollar values were
selected. We interviewed Project Officers and the
Local Site Representative. We reviewed progress
reports, invoices and other pertinent information to
determine if extramural funds were used for their
intended purposes.
A training report from ORD Management Information
System was scanned for employees who had taken
many college courses. We reviewed the form SF-
182, Training Request Form, for Fiscal Years 1997
through 1999 for those employees with many college
courses to determine training objectives. We
interviewed the Acting Director, ADPO, and
Personnel Assistant regarding policies and
procedures for attending training classes at
universities.
We used the Integrated Financial Management
System (IFMS) to determine when property
information was entered into the system. Specifically,
we reviewed all the capital equipment. We also
reviewed large dollar purchase orders for Fiscal
Years 1998 and 1999 to determine when the
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equipment was entered into IFMS. We compared the
1997 Personal property Accountability System
(PPAS) and 1999 IFMS inventory printouts.
With the AED Property Officer, we conducted an
unannounced inventory using July 8, 1999 IFMS
inventory reports.
We used the 1996 U.S. EPA Safety, Health, &
Environmental Review and discussed those findings
with AED's Safety Officer.
As part of our evaluation, we reviewed AED's Fiscal
Years 1996, 1997, and 1998 Federal Managers'
Financial Integrity Act (FMFIA) Assurance Letters. In
Fiscal Years 1996 and 1997, there were no material
weaknesses related to our review. The Fiscal Year
1998 letter identified the retirement of the Facilities
Manager as a vulnerability to monitoring contractor
performance. The Fiscal Year 1998 letter also
reported that AED considered past OIG findings
resolved. Based on our findings and the findings
reported in 1996 by AED's EMS, these FMFIA reports
did not adequately identify AED's internal control
weaknesses. For further details, see Chapters 2
through 5.
Our fieldwork was performed from May 17, 1999 to
August 20, 1999.
PRIOR AUDIT On June 16, 1993, the Eastern Audit Division issued
COVERAGE Management of Extramural Resources at the
Environmental Research Laboratory, Narragansett,
Rhode Island (Audit Report No. E1JBF2-01-0275-
3100236). We reported findings of favoritism in
contract procurement; inadequate contract, IAG, and
cooperative agreement management; as well as other
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poor administrative practices. This audit was part of
a nationwide review of contract management at ORD
laboratories.
NHEERL conducted management reviews of AED,
issuing reports dated March 1995 and September 29,
1998. The reviews assessed AED's use of its
resources and compliance with applicable laws,
regulations, and Agency policy. The reviews also
assessed management controls and procedures to
determine whether established controls and
procedures were functioning effectively. In general,
NHEERL reported that AED made improvements in
extramural management. However, NHEERL also
provided recommendations to AED to improve certain
aspects of its contract management. No findings or
recommendations were reported on property
management.
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CHAPTER 2
SENIOR MANAGEMENT NEEDS TO
IMPROVE ADMINISTRATIVE CONTROLS
AED Senior Management did not adequately oversee
administrative practices in contract and property
management. Both the AED's Acting Director and
Associate Director for Administrative Program
Operations (ADPO) did not assure that policies and
procedures were established and implemented so
that contract and property management effectively
supported the facility's science and research mission.
The Acting Director's focus had been on
science/research. The ADPO is principally
responsible for administrative functions, however,
AED was without a permanent ADPO from February
1996 until April 1998. Even though AED's Extramural
Management Specialist (EMS) reported on contract
and property management weaknesses in 1996,
these weaknesses were not corrected. As a result,
contract and property resources were not used
effectively. The O&M Contractor did not provide all
the services required or expected under the contract.
Valuable property was left vulnerable to misuse or
theft.
According to ORD [Office of Research and
Development] Policies and Procedures Manual
Chapter 4, Section I:
It is ORD policy that all extramural instruments
are managed in such a manner as to promote
the highest level of scientific and engineering
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excellence while adhering to all applicable
Federal and Agency regulations, policies,
procedures and guidance.
The Acting Director's Position Description provides
as part of major duties and responsibilities:
Assesses needs, defines goals, develops
program plans, and establishes organizational
structure of the Division; delegates authority
and responsibility; establishes overall
operating policies, priorities, and procedures;
develops long- and short-range plans and
projects; allocates dollar and manpower
resources within broad budgetary limitations;
establishes optimum intramural vs. extramural
(contract and grant effort) balance; directs,
coordinates and reviews all Division conducted
or directed activities; and reviews and
evaluates progress and performance of those
activities and takes independent corrective
actions, as necessary. Incumbent selects,
assigns and provides leadership, direction and
guidance to a multi-disciplined staff to achieve
assigned program objectives.
The ADPO Position Description states that the
incumbent provides:
... service-oriented research and administrative
support which facilitates high quality science in
pursuit of the research mission of the Division.
Additionally, the ADPO is responsible for contract,
grant and interagency agreement management;
scientific equipment management; procurement,
supply and property management among several
other services.
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The ADPO is a key position in assuring that AED has
good administrative management. This position was
not filled on a permanent basis from 1996 to 1998.
The ORD Assistant Administrator stated, "The
vacancy of this critical administrative supervisory
position exacerbated the timeliness and effectiveness
of AED's ability to remedy problems in both
extramural and property management." ORD
provided the following background information:
AED was without a permanent ADPO from
February 1996 until April 1998. This staffing
limitation is critical to understanding the delays
in dealing with all of the issues raised in this
report. On February 18, 1996 the ADPO
transferred to the AED detachment in
Annapolis, MD. An Acting ADPO was put into
place; however, he had limited management
experience and was required to maintain the
workload for his position of record along with
serving as the Acting ADPO. AED began the
recruitment process to fill the ADPO position
on a permanent basis on April 28, 1997. The
Merit Promotion closed on July 28, 1997 and
the [Office of Personnel Management] OPM
Vacancy closed on August 15, 1997. Because
this position is critical to improving
management and operations at AED, the
interview process was extensive and time
consuming. The position was not filled until
April 19, 1998.
Progress Since OIG Report In our June 16, 1993 audit report, Management of
Extramural Resources at the Environmental Research
Laboratory, Narragansett, Rhode Island, we reported
that contract management controls were inadequate;
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research contracts, cooperative agreements, and
interagency agreements were misused and other
administrative practices were deficient. As a result of
our review, ORD management issued various
guidance and policy statements to its staff.
On November 16, 1993, the Acting Assistant
Administrator for Research and Development wrote to
all ORD employees:
It has been and is the responsibility of the
Federal employees who manage these funds
to assure that they are expended in
accordance with the relevant Federal laws and
regulations and Agency policies and
procedures. Consequently when EPA
scientists become involved with expending
extramural funds they must assume the related
management responsibility. And just as good
science requires well documented data, good
management of Federal funds also requires
documentation and adherence to establish
management procedures and controls.
Our follow-up evaluated progress made in the area of
contract, cooperative agreement, and interagency
agreement management. Property management was
added to our review upon request of AED staff who
desired to improve operations in this area.
Contract Management Since our 1993 audit, AED continued to have
problems in managing its O&M contract. AED took
the corrective actions that were necessary to close
out the audit findings. Training and guidance
material on proper contracting procedures were
provided to Project Officers. Additionally, the EMS
position was
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created to serve as an advisor to the Acting Director
on all extramural management issues, policies and
procedures as they related to the organization's
operations. However, these actions did not resolve
the issue of poor contract management. AED
management did not ensure that corrective actions
taken were successful.
The Acting Director said he had been assured by his
managers that corrective actions were in place. Also,
he stated that science was the principal purpose of
the lab. It was his opinion that the lab had been well
serviced and maintained by the O&M Contractor with
the PO's oversight. The lab had "not lost any major
research milestones due to any facility systems
failures." He believed problems with contract
management continued because:
1) the Acting ADPO was not fully qualified;
2) the PO did not possess good contract
management skills; and
3) the contract was poorly written.
For approximately two years (from 1996 until April
1998), the ADPO position was temporarily filled by an
AED employee with a scientific background.
According to the Acting Director, this ADPO lacked
the management skills necessary to deal with difficult
situations, such as a PO who lacked good contract
management skills. There was no one else at AED
with the proper background who could replace the
PO.
The O&M contract's Statement of Work was written
by the ADPO (an individual hired on a permanent
basis prior to the acting ADPO) and the PO. EPA's
Contract Specialist from RTP described the contract's
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Statement of Work as "vague" and "ambiguous". The
Contracting Officer believed that this poorly written
contract prevented EPA from holding the Contractor
accountable for various activities (See Chapter 3).
The Acting Director believed EPA's Contract
Management Division did not provide adequate
assistance.
AED Senior Management needs to seek out
assistance from the appropriate EPA office which can
provide the specialized administrative expertise that
AED lacks. If AED believes such offices are not
fulfilling their responsibilities, again, it is up to Senior
Management to work out issues with their
counterparts or, if appropriate, to elevate issues to
higher management.
AED Senior Management believed they now have an
O&M Project Officer with a strong contract
background.
Cooperative Agreement and Progress was made in management of cooperative
Interagency Agreement agreements but not interagency agreements. The
Management Project Officers responsible for cooperative
agreements monitored their projects, thus assuring
that the projects achieved their intended purpose.
Also, AED implemented audit recommendations to
abolish funding of ineligible activities such as training
for advanced degrees and day-care for non-federal
employee children. However, the IAG Project Officer
did not obtain and review project status reports or
support for project costs. He believed the progress
and costs were reasonable based upon his
knowledge of the project but we could not confirm
without documentation. (See Chapter 5)
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Corrective Actions Taken The Acting Director was responsive to our findings
and started implementing corrective actions at the
time of our review. Also, prior to our review, AED
hired a new ADPO and contract Project Officer with
strong backgrounds in their respective areas. We
believe the current AED staff in general is motivated
to carry out their responsibilities. However, Senior
Management needs to be more attentive to staff
concerns in administrative areas. While science may
be Senior Management's focus, they are also
responsible for assuring that Agency resources are
effectively utilized as well as protected from waste,
fraud, and mismanagement; and that all Federal laws
and regulations are followed (May 13, 1998 EPA
Order 1000.24 CHG1).
Event Cycle Reports
Not Addressed
As part of AED's FMFIA process, the EMS
prepared Event Cycle reports which identified
weaknesses in an accountable area and provided
recommendations for improvement. Event Cycle
reports were issued for contract management on
June 13, 1996 and property management on April 22,
1996. These reports were well documented and
presented. However, weaknesses identified in 1996
continued in 1999. AED Senior Management needs
to develop a formal resolution process to take full
advantage of this asset.
Contract Management
In the contract management report, the EMS
concluded:
Overall, the Director should feel the need to
update this area of accountability. The items
noted above are repeated from the last Office
of Inspector General report. No corrective
action appears to have been taken.
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The EMS also wrote, "There were instances of the
appearance of fraud, waste or abuse." The EMS'
report was based upon a review of the O&M contract.
Several recommendations were made to improve the
performance of the Project Officer. This Project
Officer was also responsible for the O&M contract
during the prior OIG audit.
The EMS gave a presentation of her findings to the
Acting Director and ADPO on June 26, 1996. The
Project Officer responded in writing to the EMS's
findings and recommendations on August 6, 1996.
The EMS was not satisfied with the PO's written
response. Another meeting was held on October 14,
1996. The EMS said there was no formal written
agreement among the parties on appropriate
resolution.
The Acting Director said the ADPO and he met on a
weekly basis with the PO to assist him. However, the
Acting Director also stated that the individual did not
possess good contract management skills, but was
doing his best.
This individual eventually retired in August 1998.
Subsequently, two people who had limited contract
management experience were assigned the PO
duties until a permanent PO was assigned in July
1999.
There was no satisfactory resolution to the EMS
report. Poor contractor oversight continued from
1996 to 1999 (See Chapter 3).
Property Management The Acting Director said he did not realize that there
were serious problems with property management.
He based his opinion on the EMS April 22, 1996
Event Cycle report. In our opinion, the EMS' report
conclusion did not adequately convey the
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seriousness of her findings and may have contributed
to the Acting Director's view. The EMS concluded:
There are multiple instances where specific
Property is not fully in compliance with
regulations and the system lacks sufficient
safeguards in place to ensure compliance with
regulations. ... The majority of the items noted
above are minor in nature.
We disagree with her conclusion that the issues were
minor in nature based upon what she wrote in the
body of her report. The EMS wrote that while there
were no obvious instances of fraud, waste or abuse,
"the potential for such instances is definitely there."
She also wrote, "Written policies and procedures are
not in place for effective property control."
However, regardless of the tone of the conclusion,
the report contained recommendations which needed
to be addressed. As of our review in 1999, these
recommendations were still outstanding. Findings
which had been reported in 1996 continued into1999
(See Chapter 4).
NHEERL Management In its September 29,1998 Management Review of
Review AED, NHEERL expressed concern with the amount of
documentation the EMS generated in her reviews.
NHEERL wrote:
The review team found an abundance of
evidence in the files documenting the EMS'
audit efforts. It is evident that in all cases, the
EMS thoroughly researches each situation and
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prepares written documentation describing the
results of her research. This documentation
cites federal regulation, policy, rulings, etc.
Unfortunately, this review team found the level
of documentation to be somewhat
overwhelming.
NHEERL then recommended that the EMS ensure
that a less paper intensive means of advising AED
staff with extramural issues is provided. It further
stated that the EMS should work toward the goal of
evolving into more of an advisory and/or counseling
role. AED responded that EMS did work in the
capacity of an advisor/counselor and preferred to
keep documentation for reference. NHEERL then
stated:
While the EMS may choose to keep this
extensive background documentation in her
files, we recommend that a more concise
record of counsel and/or advice be provided to
extramural managers.
We are concerned that NHEERL's comments may
impair one of AED's effective means of overseeing
extramural management. In our opinion, the EMS did
a good job of identifying area weaknesses and
providing recommendations. AED now needs to
establish a formal system to assure that the
recommendations are carried out. We would not be
writing this report if the 1996 EMS recommendations
had been resolved.
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CONCLUSION Since the 1993 OIG audit report, AED made progress
in cooperative agreement management but limited
progress in contract management. While the issue of
property management had not been reported in the
OIG report, it was an outstanding issue back to the
1996 EMS report. AED management believed that
recently hired staff would help to improve operations.
However, even the most qualified staff need
management support. In our 1993 report, we
concluded that:
... a major contributing cause that permeates
all of the issues at Narragansett is the attitude
exhibited by senior management officials that
compliance with rules and regulations
interferes with science and research. This
attitude must change if Narragansett is to
improve its management of contract activities.
We believe this attitude still exists to the detriment of
administrative operations. Administrative functions
are not given the attention required to assure that
resources are being effectively used. Good
administration supports the scientific mission of the
lab. AED has staff committed to their duties, but they
also need senior management's support.
RECOMMENDATIONS We recommend that the AED Director:
1. Instruct the ADPO to establish contract and
property management procedures which will
ensure that staff, contract, and property
resources are used effectively and that
property is safeguarded. Also, the ADPO
should ensure that the procedures are
followed and delivering results.
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2. Take appropriate action if staff does not
perform in accordance with established
procedures and performance agreements.
3. Develop a formal system to resolve
weaknesses identified in Event Cycle Reports.
A corrective action plan should be developed
with specific staff identified to carry out
actions. Milestones should be set and
progress along with success should be
measured.
4. Seek out expert assistance from Headquarters,
Research Triangle Park, etc.
ORD RESPONSE ORD's Assistant Administrator (AA) responded:
ORD considers OIG audits very seriously. We
look upon them as an opportunity to identify
areas of improvement. While "sound science"
is our goal as an organization, we strongly
believe that it must be achieved with quality
management of our resources. For that
reason, we were concerned by the statements
in the draft report attributed to the AED Acting
Director. I assure you that these management
issues are given the highest priority in all ORD
organizations, including NHEERL.
Regarding contracting, the AA wrote:
The contract management vulnerabilities
described in this report were initially raised by
the AED Extramural Management Specialist
(EMS), in June 1996. Also, AED contractual
problems were carefully outlined in a 1997
NHEERL Management Review. We are
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currently implementing corrective action in this
area.
Finally, we believe that AED has made
considerable improvement in overall
extramural management. Largely, the
weaknesses discussed in the 1993 OIG audit
have not reoccurred. We are concerned that
the current draft report makes general
conclusions about AED's contract
management progress based on AED's
problems with a single contract (O&M), which
had already been identified by both the EMS
and an NHEERL Management Review.
Moreover, at the time of the OIG audit,
significant corrective actions had been made
or were in progress. For example, a new
Project Officer was hired and a new contract
was in the solicitation process. Further, as we
discussed in our teleconference, we strongly
believe that the Contract Management Division
shares our responsibility for the effective
contract management.
Regarding property management, the AA reported
that since the time of the audit, AED made significant
progress in strengthening this area.
For both areas, the AA wrote:
ORD believes it is important that the final audit
report reflect the staffing difficulties that AED
was experiencing throughout its contractual
and property problems. The report should
show that AED was without a permanent
Associate Director for program operations from
February 1996 to April 1998. The vacancy of
this critical administrative supervisory position
exacerbated the timeliness and effectiveness
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of AED's ability to remedy problems in both
extramural and property management.
Additionally, further clarification was provided on
NHEERL's Management Review comments regarding
the EMS reviews:
The NHEERL Management Review report did
not question the EMS's reviews of extramural
management. That is one of the important
duties of the EMS. What was of concern in the
review was the effectiveness of the extensive
documentation that the EMS put in the PO's
files as a result of the review. The NHEERL
Management Review recommended that a
more concise and effective means of
communication (e.g., advising, counseling) be
utilized by the EMS to help the AED PO's in
solving their extramural management
problems.
ORD also provided a Correction Action Plan (See
Appendix 4) responding to each of the finding's
recommendations.
OIG EVALUATION We are pleased that ORD gives the highest priority to
management issues. We encourage ORD to
continue to emphasize this view to AED. It was our
opinion based not only upon the Acting Director's
comments, but also his actions, that administrative
issues did not receive adequate attention. For
example, the EMS' report recommendations were not
fully implemented. Also, the Property Manager's
concerns were not timely acted upon.
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The OIG initially reported that AED's contract
management controls were inadequate in 1993. The
EMS reported in 1996 that there appeared to be no
corrective action taken since the 1993 OIG audit and
that contract management was an accountable area
which needed to be updated. NHEERL management
reviews continued to report on contract management
deficiencies until 1998. While we reported that AED
made some improvements in contract management,
its management of the O&M contract continued to be
deficient since 1993. In our opinion, this was too long
a period of time for continued weaknesses to exist,
particularly when NHEERL's/AED's staff pointed out
these weaknesses.
While the ADPO position was vacant for over two
years, the position was filled with a permanent
manager during the time of the OIG audit to 1996.
ORD did not explain why it took more than a year to
start the recruitment process for this position.
However, while having someone in this position is
important, AED also needs to assure that good
contract and property management procedures are in
place which can also help to keep operations running
effectively.
The audit report already included the information that
the ADPO position was vacant for two years.
However, per request of ORD, we included in the
finding a paragraph prepared by ORD regarding this
issue.
The scope of our audit did not include a review of
Contract Management Division (CMD) activities.
However, if AED believes CMD is not fulfilling its
responsibilities, then AED Senior Management
should deal with this problem at the appropriate
management level.
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We concur with ORD's actions to improve property
management.
Regarding the effectiveness of the EMS'
documentation of her reviews, we continue to support
the EMS' position. We believe documentation is
important to clearly support recommendations which
may be proposed.
We generally concur with ORD's Corrective Actions
for this Chapter. However, based upon ORD's
response, we need to clarify Recommendation 1.
This recommendation was not specifically referring to
providing contractors with government property.
Rather, we believe, AED needs to have strong
procedures in contract management and property
management which will provide for consistent and
effective operations in these two areas. Points 2 and
3 of AED's response generally address
Recommendation 1 except for not specifically noting
that contract procedures will be reviewed and
updated as appropriate.
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CHAPTER 3
LIMITED IMPROVEMENT IN CONTRACT MANAGEMENT
AED's progress in improving contract management
was limited. While management of the ADP contract
was adequate, management of the Operations &
Maintenance (O&M) contract continued to be
seriously deficient. The Project Officer did not ensure
that the Contractor provided all contracted services
and in some cases, separately procured work already
included in the O&M contract. Until recently, the
O&M Project Officers lacked either the skills or
experience necessary to effectively manage the
contract. Senior Management did not ensure that
these Project Officers had access to the appropriate
technical expertise needed to properly evaluate a
Contractor's performance.
"The Project Officer is the primary representative of
the Contracting Officer for a contract," according to
EPA's Contracts Management Manual, Chapter 7,
Paragraph 3c. Among other duties, the Project
Officer is responsible for monitoring compliance with
the contract and recommending modifications of the
contract to the Contracting Officer as needed.
Prior Audit Findings Our June 16, 1993 audit report, Management of
Extramural Resources at the Environmental Research
Laboratory, Narragansett, Rhode Island reported that
contract management controls were inadequate.
Project Officers at Narragansett did not properly
manage the work and activities performed by the
Contractors. The Project Officers: (1) allowed
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contract employees to perform inherently government
functions; (2) did not control Contractor costs; and (3)
did not monitor Contractor work.
EMS Report Findings In her June 13, 1996 Event Cycle Report on Contract
Management, the EMS reported: "Overall, the
accountable area has many issues to be resolved.
There were instances of the appearance of fraud,
waste, or abuse." She concluded: "The items noted
above are repeated from the last Office of Inspector
General report. No corrective action appears to have
been taken." The EMS report specifically covered
management of the O&M contract. Deficiencies
reported included: inadequate management of work
orders; EPA approved unallowable expenses;
personal services performed by the Contractor; and
outside Contractors tasked with work assignments by
the O&M Contractor rather than by the AED Project
Officer.
O&M Contract The O&M Contractor was to provide facilities
operation and maintenance support for the entire
laboratory (i.e., dry and wet laboratories, office
space, field equipment, general support services).
The contract's period of performance was October 1,
1994 until September 30, 1999 with a total cost of
$3,911,901.
Our follow-up review disclosed that three years after
the EMS report and six years after the OIG report
were issued, the O&M contract continued to be poorly
managed. A poorly written Statement of Work (SOW)
along with weak oversight by the Project Officer
enabled the O&M Contractor to disregard contract
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provisions without reprisal. For example, the
Contractor did not adequately update SideArm, a
computer system for tracking maintenance or perform
all contracted tasks. In response to our 1993 findings,
ORD provided Project Officer training to their staff
and emphasized that Federal regulations were to be
followed. However, when the EMS report indicated
that such actions had not been sufficient to address
our concerns, AED Senior Management did not take
further corrective action. The Acting Director said the
Project Officer did not have contract management
skills and there was no one else qualified to take his
place.
The Acting Director believed EPA's Contract
Management Division (CMD) also shared
responsibility for the quality of the SOW. He stated
that CMD did not provide adequate assistance to
AED. The EMS contacted CMD several times over
the course of the O&M contract and sent the Event
Cycle Report on contracting to CMD.
The scope of our audit did not include a review of
CMD so we cannot comment on their operations.
However, if the Acting Director was dissatisfied with
CMD's assistance, he should work with his
counterparts to improve CMD's and AED's
relationship.
"Vague" & "Ambiguous"
Statement of Work
According to the Acting Director, the SOW for the
O&M contract was written by the retired Project
Officer and the former ADPO. The Contracting
Officer described the SOW as "vague" and
"ambiguous". As a result, the Contracting Officer
believed that EPA could not seek redress from the
O&M Contractor for not fully complying with the
contract terms. For example, the Contractor had not
updated architectural drawings because the contract
was not clear regarding the Contractor's
responsibility to do so.
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The Contractor did not update "SideArm", a
mechanized system to account for preventive
maintenance tasks and equipment. This deficiency
was identified in the NHEERL Management Review
98-03 dated September 29, 1998. The report stated
in part;
Under the scope of the O&M contract
successful installation and implementation of
the SIDEARM software (MMS) is required.
Under the O&M SOW, EPA provides this MMS
software product for the Contractor to load,
and both the Contractor and EPA utilize this
computer application system. However, we
discovered that the data is not fully loaded,
and the MMS requirement is not implemented.
The resulting effect is the Contractor is not
performing according to the scope of the
contract and therefore has breached the terms
of the contract.
Additionally, the EPA PO has failed to take
advantage of a progressive performance
management tool that, although not by itself,
would assist in addressing some of the critical
contract issues that have been identified in this
management review. EPA has paid for the
installation of a piece of software, that is not
being utilized.
The NHEERL review recommended that the Acting
Director ensure that the EPA Project Officer use the
software and require the Contractor to use software,
as required in terms of the contract. The AED
Director concurred with this recommendation.
However, the Contractor could not be held
responsible for breach of contract according to the
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Contracting Officer. She stated that the contract was
vague regarding the use of SideArm and the Project
Officer did not direct the Contractor to use the
system. In fact, AED was unaware that the
Contractor was inputting data into SideArm until May
1999, nearly five years after the contract was
executed. However, EPA did not have a method to
verify the accuracy of the data entered according to
the Contracting Officer.
For the remaining period of the contract, AED and the
Contracting Office were working with the Contractor
to identify/verify and update information in SideArm.
The Contracting Officer said the succeeding contract
to be executed would have a detailed description of
the Contractor's responsibilities regarding use of any
computerized system to be used.
AED Senior Management and EPA's Contracting
Officer decided not to make significant modifications
to the existing contract. Rather, they concentrated on
strengthening the upcoming contract.
Project Officer Performance Not only was the contract SOW deficient, but also the
retired Project Officer's monitoring of the O&M
contract. The Contractor, not the Project Officer
controlled the work orders. The Project Officer did
not ensure that the Contractor performed all the
preventive maintenance required in the contract.
Also, the Project Officer procured services which the
O&M Contractor could have provided under the
existing contract. Some of the poor contract
management practices continued with the interim
Project Officers.
Once a work order was issued, the Project Officer
abdicated complete control to the Contractor. This
was a weakness not only with the retired Project
Officer's administration but with the interim Project
Officers as well. AED had no procedures to ensure
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that the O&M Contractor completed the work timely or
satisfactorily. Incomplete or untimely work created
potential safety hazards in some cases. For
example, wires remained uncovered and emergency
showers were not inspected.
EPA's Contracts Management Manual Chapter 7,
Attachment A describes the duties to be performed by
Project Officers. Such duties include monitoring,
inspection, and acceptance. Paragraph 16 of the
aforementioned reference states that Project Officers:
Monitor compliance with the contract. Inspect,
accept and/or track deliverables. Identify,
document and report potential or actual
problems (including potential conflicts of
interest, constructive changes) to the CO.
Provide technical direction (if permitted in
accordance with the terms of the contract).
Control of Work Orders The O&M Contractor completed and maintained work
order information until the beginning of our audit in
May 1999. The Project Officer stated the Contractor,
not AED, entered data from work orders into the
status program including the start and completion
dates. The Contractor also filled-out the portion of
the work order form dealing with estimated and actual
hours to complete the work as well as estimated and
actual material costs. The Contractor physically
possessed all work order documents. In our opinion,
such a system was not conducive to good project
management.
Because AED scientists wanted to know the status of
their work orders, the ADP Contractor was tasked
with developing a system to track work orders. AED
officials approved this system in March 1998. The
EMS stated that the Project Officer or another EPA
employee was supposed to enter work order
information into the system but instead the O&M
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Contractor was actually entering the information.
AED did have access to the Contractor's information
but there was no evidence of oversight by AED staff
to verify the accuracy of the information entered.
Additionally, procedures were not in place to ensure
the Project Officer or the requestor signed the
completed work order certifying that the Contractor's
work performed was timely and acceptable. As a
result, there was no documented evidence that work
orders were timely completed to the requesters'
satisfaction per the work order request.
The interim Project Officer stated he didn't know if the
Contractor completed work orders within prescribed
times as EPA did not have control of the work orders.
He did know, that based on his recent review of work
orders, that the Contractor takes longer than
necessary to do routine work such as painting doors.
He stated, "for example I believe the computer room
renovations that [the Contractor] did should have
taken two weeks not six months. Sometimes [the
Contractor] does work assignments different than the
work order requested, and therefore, different than
the EPA employees needed." Currently there is a
lack of EPA management oversight and
documentation to show the work was satisfactorily
completed.
On August 20, 1999 the interim Project Officer stated
that now he visually spot checks work orders to make
sure the work is being done. He also stated the
Contractor controls and enters data into the
computerized work order system. However, no AED
official signs off on the work order certifying that the
work was satisfactorily completed because AED does
not have a procedure to determine that the work was
in fact done. The Project Officer said controls over
work orders will be improved under the new contract
which will be effective October 1, 1999.
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Our review of 55 work orders (10 percent) issued
during FY 97, showed that approximately 93
percent of the work orders were not signed by any
AED employee as accepting the work. Requiring the
Project Officer or the requester to sign the work order
certifying that the work performed was acceptable
and timely completed would eliminate this problem.
The Project Officer also stated, "Sometimes [the
Contractor] did assignments based on a verbal
request of an EPA employee without waiting for a
work order which might be written after the fact." He
stated, "there is an appearance that the Contractor is
running the place."
One of the interim Project Officers stated that he
brought his concerns regarding the management of
work orders and other issues to the attention of the
ADPO on or about January 1999. He said the ADPO
told him nothing new was to be done regarding the
O&M contract because a new Project Officer was to
be hired and a new O&M contract was to be awarded
in October 1999.
The ADPO, who arrived at AED in April 1998,
explained that he first became aware of problems in
contract management when he received the NHEERL
draft management review in August 1998. The
retired Project Officer never informed him of any
contract management problems, therefore, as far as
he knew there weren't any problems. He stated that
he was a manager, not a subject matter expert.
Therefore, he relied on his Project Officers to keep
him informed of any and all contract problems. He
believed the retired Project Officer tried to do the best
job he could, but he was limited in his skills to
effectively manage the contract.
The AED Acting Director said most people in the
laboratory were scientists and he didn't have anyone
qualified who could take over the Project Officer
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position. He stated that the principal purpose of the
laboratory was science but acknowledged that there
was no excuse for poor contract management. He
didn't believe the nature of the problems with the
O&M contract affected laboratory operations and he
was assured by his managers that corrective actions
resulting from previous audits were taken.
A discussion with the AED Safety Officer showed how
the work order system functioned and how untimely
work orders could affect safety at the lab. He said he
did not see work orders once they were submitted.
The only way he could tell if the work was done, was
to walk around the facility and check on it when he
could. Sometimes he did not know for several weeks
or months that a job was still pending. He said some
of the work orders submitted were marked as
"completed" when the work had not been done. He
said the O&M Contractor's Project Manager had been
entering information into the computerized work order
system rather than the AED Project Officer. He said
the intent of the system was to allow the AED Project
Officer to review the Contractor's work and keep the
AED staff informed of the status of the work orders.
He said the program did not work as intended.
The Safety Officer provided the following examples
as specific instances when laboratory safety was
compromised due to untimely work by the Contractor.
1. Work Order #97-232, dated 2/25/97: The
Contractor was instructed to make electrical
repairs in the wet lab. There were uncovered
wires and switch boxes in various places, a
safety hazard. Even though the work order
was marked as completed in the database, the
work was never done.
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2. Work Order # 99-115, dated January 13,
1999: Contractor was instructed to check for
electrical shorts in the oven. Again, the work
order was marked as completed even though
there is still a stray voltage problem with this
equipment.
The Safety Officer also identified 15 findings the
Contractor was responsible for in the July 1996 U.S.
EPA Safety, Health, and Environmental Review. Five
of the 15 findings were classified as "Priority B" which
was defined as deficiencies that could lead to
regulatory enforcement action or to unacceptable
safety, health and environmental risk. (See Appendix
1 for details.)
Preventive Maintenance The Contractor did not perform all preventive
maintenance required by the O&M contract. While
AED was fortunate that no serious accidents
occurred, the staff and facility were left vulnerable. It
was the Project Officer's responsibility to ensure that
the Contractor met all the terms of the contract.
In response to a memorandum initiated by the AED
Project Officer, the Contracting Officer sent a letter
dated September 14, 1999 to the O&M Contractor
describing contractual and performance issues
requiring corrective action. We believe these
deficiencies resulted from the lack of adequate
oversight by the Project Officer. The Contracting
Officer wrote that the following critical items, systems,
and tasks either are not being maintained/tested as
specified in the contract or do not have records to
indicate maintenance/testing have been performed.
1. Electrical Systems
2. Water, Drain & Distribution Systems
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3. Other Laboratory Support and Distribution
Systems
4. Fire Protection System
5. Field equipment
6. No unscheduled "work order" maintenance and
repair had been recorded for any item.
7. Laboratory Lift Trucks
The Contracting Officer's letter further stated;
In general, the records demonstrate that
services are not being performed as specified
(e.g. the contract requires daily, monthly,
quarterly, semi-annual, and annual services on
"HVAC and Boiler" but records indicate that,
depending on the item, only semi-annual or
annual services were performed).
The AED Safety Officer said that not all the
emergency showers had been inspected yearly by
the Contractor as required. Again, while no accidents
occurred, such actions put the safety of the AED staff
at risk. Poor contract monitoring not only resulted in
health and safety concerns, but also wasted
resources.
Procurement Requests The former O&M Project Officers purchased $6,587
of services already included in the O&M contract
during Fiscal Years 1998 and 1999. For the same
time period, 13 purchase order requests were
processed for supplies which should have been
charged on the Contractor invoices. Another 15
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items/services procured were questionable but a final
determination could not be made because a clear
cost breakdown was not available. Not only did AED
unnecessarily expend limited lab funds for services
already included in the contract, but additional
administrative resources were unnecessarily used in
processing these procurement requests. The current
Project Officer did not know why these purchase
orders were requested.
The following schedule shows services purchased
separately which were already included in the O&M
contract.
PO
No.
Request
Date
Service Description
Cost*
Contract
Ref.
8N-
0100-
NNSA
09/25/97
Provide service for
Freezer
$ 568
B.5.1.4.
8N-
0149-
NNSA
10/14/97
Provide service to
evaluate trouble with
speed control for the
return and supply fan
on Air Handler
$ 475
B.5.1.1
B.5.3.1.
8N-
0188-
NNSA
11/12/97
Emergency Service
for Underground
Storage Tank
Monitoring Systems
$ 262
B.l.
8N-
0189-
NNSA
11/20/97
Replace defective fire
alarm zone module
$ 500
D.6.2.
8N-
0232-
NNSA
12/23/97
Provide emergency
services to main sea
water filtering system
$ 420
D.4.8.
8N-
0233-
NNSA
12/18/97
Install weather
stripping on Lobby
doors
$ 285
D.10.
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Audit of Extramural and
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PO
No.
Request
Date
Service Description
Cost*
Contract
Ref.
8N-
0273-
NNSA
01/29/98
Re-set pre-action
valve in the
Hazardous Storage
Bldg.
$ 500
D.6.3.
8N-
0342-
NNSA
03/20/98
Replace broken glass
in the Lobby
$ 368
D.10.
8N-
0348-
NNSA
03/25/98
Lift Truck Repairs
$ 763
B.10.
8N-
0395-
NNSA
05/08/98
Provide repairs to
fiberglass pipe
supplying seawater to
the Laboratory
$1,063
D.5.2.
8N-
0488-
NNSA
06/11/98
Recondition 4
stainless steel
propellers
$ 375
D.12.3.
8N-
0639-
NNSA
09/04/98
Close up boiler #1, set
fires, perform
efficiency test
$ 504
D.1.6.
8N-
0641-
NNSA
09/04/98
Close up boiler #2, set
fires, and perform
efficiency test
$ 504
D.1.6.
Total *
$6,587
* Amounts rounded
In addition to the services described above, a blanket
purchase order was authorized for snow removal.
The agreement terms, in part, listed clearing all
walkways for $20 per hour. According to the contract,
paragraph D.10, the Contractor shall maintain the
general physical plant. The Contractor shall provide
general facilities maintenance as follows: provide
snow removal for sidewalks and pedestrian ramps.
According to Section F.1 of the contract:
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The contractor shall provide the necessary
supplies, material, and spare parts for the
operation, maintenance, and repair of the
Laboratory facility and systems. The
Contractor shall maintain quantity levels
appropriate with their approved maintenance
schedule. Advance approval from the Project
Officer is required for any single purchase
order of $200 or greater. The Contractor shall
not purchase any supplies, material, or parts
with a unit cost of $1,000 or greater.
The Contractor was to provide a variety of supplies,
materials, and parts for use in carpentry, plumbing,
and electrical work as well as maintenance of field
equipment and vehicles.
Section B.2 (d) of the contract, "Consideration and
Payment for Line Items", provides that costs for
supplies and services were to be "vouchered" every
two weeks for the actual cost, including mailing and
shipping costs, incurred during the preceding two
weeks with no added cost or fee.
Contrary to the above contract provisions, AED's
former Project Officers submitted purchase order
requests for supplies which should have been
included on the Contractor invoices. These items
included:
P.O.
Date
Supplies Purchased
Cost
8N-0181-
NNSA
8N-0190-
NNSA
8N-0207-
NNSA
09/18/97 | Electric Strike Folger
11/18/97 1 Fan Shaft (Perm Ventilator)
11/24/97 | Flourescent fixtures &
I electronic ballasts
458
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P.O.
8N-0219-
NNSA
8N-0367-
NNCX
8N-0396-
NNSA
8N-0519-
NNSA
8N-0548-
NNSA
8N-0571-
NNSA
8N-0601-
NNSA
9N-0139-
NALX
9N-0241-
NNSA
Date
Supplies Purchased
12/16/97 jj Aluminum Fan Wheel,
j Shaft (fan wheel)
Bandsaw Blade
05/08/98 C.S. Shaft
07/07/98 1 Air Conditioner
07/27/98 1 Parts needed for freezer
08/12/98 1 Door closers, hinges, and
shims
09/16/98 1 30 gallon barrels
12/15/98 Fuel conditioner, grease,
fog spray, fog oil, spark
plugs, plug installer,
gearcase leak check, safety
chains, lugnuts, keel roller,
roller pin
03/19/99 Drain plugs, battery, 3"
blower mower, electrical
panel
9N-0300- | 04/26/99 [ Filter holder model,
NNSA I ^ pressure regulator/ball
valve/pressure gauge &
fittings assembly & manual
Cost * I
840
47
270
784
151
1.386
830
463
Total
$ 620
$7,167 *
* Amounts Rounded
In our opinion, the former Project Officers' submission
of such purchase orders showed their lack of
familiarity with the contract. Discussions with the
current Project Officer indicated that he was better
acquainted with the terms of the contract. He also
questioned the appropriateness of these requests.
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ADP Contract
Work Order Management
The Acting Director recommended that the EMS
review procurement requests to assure that contract
provisions were met. We concur with his
recommendation.
The ADP contract was adequately managed but
improvements could be made in tracking work orders
and working with the alternate Project Officer for this
contract. The ADP Project Officer properly
documented and reviewed the invoices but could use
EPA's checklist to aid in his review.
The Project Officer effectively managed the work
orders except for ensuring Contractor timeliness in
completing work. We judgmentally selected and
reviewed 25 of 95 work orders issued during the
period January through May 1999 to determine if
work orders were effectively managed. We
determined that the Project Officer, not the
Contractor, maintained control over the work orders.
The Project Officer estimated the hours to complete
the work and certified that the work performed was
within the scope of the contract and done to the
satisfaction of the requestor.
Each completed work order was signed by the
requester stating that the Contractor satisfactorily
completed the work requested. The ADP Project
Officer developed this work order format. We
strongly recommend that the O&M Project Officer
adopt this format.
However, work was not always done on a timely
basis. Twelve of the twenty-five work orders
reviewed were not completed timely. Four of the 12
untimely work orders were designated as emergency
actions. Emergency requests were late from four to
28 days. The Project Officer stated that he does not
have an effective system to track the timely
completion of work orders. He agreed to establish a
38
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computerized tracking system to ensure that work is
completed timely.
The alternate Project Officer for the ADP contract
said that the Project Officer did not allow him to
perform his duties as alternate. Even on vacation,
the ADP Project Officer instructed staff to have all
contract business sent to his residence. The Acting
Director said the Project Officer did not have
confidence in the Alternate's ability to understand the
nature of work. At the time, AED lacked appropriate
personnel. The Acting Director said he would be
assigning another person with the appropriate
background as Alternate.
Adequate invoice Contractor invoices for the period October 31,
Review 1997 through February 3, 1999 were properly
documented and reviewed by the ADP Project Officer
prior to being submitted for payment. All costs were
verified with the Contractor's monthly progress report.
However, the Project Officer was not attaching a copy
of the required checklist which was intended as an
aid to the Project Officer in reviewing the invoices for
reasonableness, allowability, and allocability of
claimed Contractor costs. The EPA Invoice Review
Guide, dated November 1, 1995 states, "Copies of
the checklist should be attached to each invoice
before it is filed in the PO's files."
The ADP Project Officer stated that in the future he
would attach copies of the checklist to each invoice
before it is filed in his files.
No Alternate
Project Officer
CONCLUSION AED's retired Project Officer allowed the O&M
Contractor to control its work without adequate EPA
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oversight. Succeeding interim Project Officers could
not fully correct past poor contract management
practices. As a result, the Contracting Officer
believed that the O&M Contractor could not be held
responsible for its poor performance because EPA
wrote a poor SOW and provided inadequate
oversight. This was especially distressing since weak
contract management practices had been identified
by both the OIG in 1993 and AED's EMS in 1996.
While the current Project Officer, who has a strong
contracts background, should improve operations,
AED also needs to establish procedures to ensure
that EPA and not the Contractor controls the work.
AED also needs to improve communication with the
Contracting Office and take advantage of the
Contracting Officer's expertise when necessary.
RECOMMENDATIONS We recommend that the Acting Director instruct the
O&M Project Officer to:
1. Complete estimated hours and costs on work
order forms and maintain work orders.
2. Develop a tracking system to document that
the Contractor performs all preventive
maintenance and submits deliverables in
accordance with the terms of the contract.
3. Define time frames such as "routine",
"emergency", etc. given to the Contractor.
4. Develop a tracking system to assure that work
was completed and completed on a timely
basis by Contractor.
5. Use the work order form developed by the
ADP Project Officer for all contracts so that
requesters or other appropriate officials can
40
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Atlantic Ecology Division
sign-off as approving completed Contractor
work.
We also recommend that the Acting Director instruct:
6. The ADPO to meet weekly with the Project
Officers to review the status of work orders
and take corrective action as necessary.
ORD RESPONSE In response to the Contract Officer's statement that
the O&M SOW was "vague" and "ambiguous", ORD
wrote:
The complexity and ambiguities of the SOW of
this contract were also noted in the 1997
NHEERL Management Review. It was the
opinion of the two former Contracting Officers
on that team that the contract was so complex
and ambiguous that it would be difficult for
anyone to manage. This is why we strongly
feel that it is of the utmost importance for the
Contracting Officer to work with the Project
Officer and EMS to ensure the award of a
clearly written, sound contract. We believe
that contract management is a team effort and
that CMD has shared responsibility in ensuring
that EPA can hold contractors responsible for
the work that they are getting paid to do.
During our exit conference, NHEERL's Management
Deputy Director stated that developing an SOW was
a joint responsibility between CMD and AED.
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ORD also provided a Correction Action Plan (See
Appendix 4) responding to each of the finding's
recommendations.
OIG EVALUATION In our opinion, inadequate Project Officer oversight
was a significant factor in the poor management of
the O&M contract. Even though systems had been
developed to assist the Project Officer in monitoring
the contract, the Project Officer never used these
systems. The Project Officer did not track Contractor
performance of preventive maintenance or ensure
that work was completed. A "complex" SOW would
not have prevented the Project Officer from
performing such basic monitoring responsibilities.
CMD activities were not included in the scope of our
audit. Our review was directed at AED activities and
responsibilities. However, ORD does make a good
point in noting that CMD shares responsibility. If AED
did not receive appropriate assistance from CMD,
then Senior Management should resolve this issue.
We do note that at the time of our audit CMD and
AED staff were working together to ensure that the
new O&M contract SOW would be stronger and
clearer in stating Contractor responsibilities.
We concur with ORD's Corrective Actions for this
Chapter.
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CHAPTER 4
IMPROVEMENTS NEEDED IN PROPERTY MANAGEMENT
Improvements need to be made in AED's property
management. We found that: 1) custodial officer
designations were out-dated; 2) annual inventories
were not performed; and 3) the status of loaned
equipment was unknown. The Property Officer and
the Extramural Management Specialist (EMS)
brought these weaknesses to the attention of Senior
Management who did not take corrective action.
Improving property management was not a priority.
As a result, $6,212,611 of accountable property was
not safeguarded.
The AED Property Officer is an extremely
conscientious individual who brought several property
management concerns to the attention of the OIG in
order to get these matters corrected. We agree that
these matters are significant requiring Senior
Management's attention.
In her April 22, 1996 Event Cycle report on property
management, the EMS identified similar findings with
recommendations. However, three years later, we
found that these weaknesses were not addressed by
Senior Management.
According to EPA's February 12, 1990 Personal
Property Management Policy Manual, Property
Managers and Custodial Officers are responsible for
ensuring the efficient and effective implementation
and maintenance of EPA's personal property
management program. At AED, the ADPO is
responsible for the oversight of all administrative
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functions including property management. The
Property Officer reports to the ADPO. Custodial
Officers are appointed by Senior Management.
EPA's Personal Property Policy Manual Chapter 1,
Para 5.8, states in part:
Office and Division Directors, Branch Chiefs,
or equivalents are directly responsible for the
establishment and continuous enforcement of
administrative directives and measures for all
items of government property under their
control. This includes property items carried in
the Agency Personal Property Accountability
System (PPAS) [information now entered into
IFMS], as well as items not carried in the
PPAS. Management of property must ensure
these items are properly acquired, used,
maintained and safeguarded.
Supervisory responsibility at all levels requires
the establishment and continuous enforcement
of all administrative measures necessary to
ensure adequate preservation and use of all
Government property under their jurisdiction.
This includes assigning Custodial Officers and
ensuring positions are filled at all times, as
well as, ensuring that the Custodial Officer's
position description is amended to reflect
Custodial Officer duties.
Custodial Officer Custodial Officers are key in safeguarding personal
Designations property. EPA's February 12, 1990 Personal
Property Management Policy Manual provides:
Acting under the general direction of an
organizational supervisor and under the
44
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Audit of Extramural and
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Atlantic Ecology Division
technical direction of the Property Accountable
Officer or Program Accountable Officer, the
Custodial Officer is responsible for the proper
care, maintenance, utilization, accountability,
and security of personal property assigned to
the Custodial Area, and will be responsible for
the property until formally relieved of his/her
duties by the proper authority. Specific duties
include:
Informing his/her immediate supervisor
of changes affecting the status of
personal property in the Custodial Area
to include: loss, theft, damage,
modification, and classification of
excess and unreparable (sic) property.
Reporting to the Property Accountable
Officer and preparing documentation for
all property transactions in his/her
Custodial Area to include: transfer,
disposal, adjustment transactions
(overage or shortage), and declaration
of excess; and obtaining prior approval
from the Property Accountable Officer
for plans to convert, alter, modify, or
dismantle personal property.
Conducting physical inventories of the
personal property within the Custodial
Area as required and directed by the
Property Accountable Officer and/or the
Program Accountable Officer.
Reconciling the inventories and
certifying the results. Initiating the
paperwork to resolve overages and
shortages.
Establishing and maintaining prescribed
control records.
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Without a full complement of properly designated
Custodial Officers, all these activities were not carried
out for all Custodial Areas at AED.
Property accounts lacked official or current Custodial
Officer designations. Sixteen of 32 Custodial Officers
had not signed acceptance of their accounts. Four
former employees were still identified as Custodial
Officers up to a year and a half after they left AED
(See Appendix 2). As a result, property valued at
approximately $6,212,611 was not adequately
safeguarded (See Appendix 3). Senior management
had not established and implemented adequate
controls and procedures to ensure that existing
Custodial Officers understood their responsibilities or
designated replacement Custodial Officers on a
timely basis.
We interviewed 10 of the 16 Custodial Officers who
had not signed for their property accounts to
determine why they had not accepted responsibility
for their accounts. Of the ten Custodial Officers
interviewed: five said they hadn't been asked to sign
for their accounts or they did not know why they had
to sign for their property account; three said they
hadn't signed because the property account inventory
had not been reconciled; one said she hadn't
received training so she assumed she was not
responsible for the property; and one Custodial
Officer said he had not gotten around to signing.
These responses indicated that Senior Management
had not instilled a strong and clear sense of
responsibility among Custodial Officers regarding
their duties.
For the Custodial Officer who had not gotten around
to signing for his account, we found another
procedural deviation. Contrary to AED's practice, this
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Custodial Officer, rather than the Property Officer,
maintained his own account file. However, during our
audit, the Custodial Officer could not find his file.
This Custodial Officer was responsible for $1,337,887
of computer equipment according to the July 8, 1999
IFMS, "Custodial Account Report Sorted by Decal
Number". Without the file, we could not determine if
and when an inventory had been taken. Also, this
Custodial Officer could not carry out his
responsibilities such as conducting inventories,
reporting property transactions, or property status
changes.
The Property Officer recognized two years ago that
AED Custodial Officers needed training. In his
February 5, 1997 memorandum to the Acting ADPO,
he wrote, "The need exists for training in the areas of
property and records management." He requested
that AED fund travel expense for expert assistance
from EPA Headquarters' Property Management
Office. However, the AED Acting Director said funds
were not available to pay for such a trip. This
problem was not addressed and continued.
In a June 24, 1999 memorandum to the OIG, the
Property Officer stated, "I believe that the Custodial
Officers are confused about their duties despite the
written instructions I have provided". He said this
was made clear to him when one Custodial Officer
would not sign for his property account. The Property
Officer further stated, "I believe this plan [seeking
training assistance from Headquarters] must be
revisited and the Custodial Officers be trained in the
responsibilities [of Custodial Officers] as well as the
Senior Management Team. Their career path is up
through the technical side and they do not
understand that they must support not hinder or
discourage proper and legal internal control property
procedure. I believe that their lack of knowledge with
respect to property issues can be found to weave not
47
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only through in-house property, as well as field
sampling gear but also extramural property."
The Property Officer then wrote to the ADPO in a
June 28, 1999 memorandum that AED needed a
provision for dealing with Custodial Officers who
either do not sign off on their property after an
inventory or do not make themselves available in a
timely manner to do a proper inventory of material
they are responsible for. He further stated,
"situations of this nature should be corrected
immediately."
AED also lacked controls to ensure that property
accounts were inventoried, reconciled and transferred
when Custodial Officers left AED employment. Four
former employees, who had departed AED during the
past 18 months, were still listed as active property
Custodial Officers. As a result, AED had no
assurance that these property accounts were
safeguarded. Senior Management did not designate
permanent replacements prior to the Custodial
Officers leaving. This problem was previously
reported by the EMS in her April 22, 1996 Event
Cycle report on property management. The EMS
report stated that a quick run through of the property
records yielded over $200,000 worth of equipment
assigned to 15 people who no longer worked at AED.
In his June 28, 1999 memorandum, the Property
Officer stated, "Currently when someone retires or
when an individual employee is transferred the
responsibility of the property under their control is not
inventoried or signed off on, and assigned to a new
custodian at the time the person leaves." Further,
"There is only a verbal assignment that until a
permanent person is hired the temporary person 'will
take care of it"'. The Project Officer did not believe
he had the authority to appoint a new custodian. EPA
Headquarters' Property Officer confirmed that
48
Report No. 2000-P-00015
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Audit of Extramural and
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authority to designate a Custodial Officer rested with
Senior Management. We determined that property in
the amount of $771,382, was still assigned to four
custodians who left AED as long ago as December
1997.
Annual Inventories Not Annual inventories of accountable, government
Performed property were not performed as required by EPA
policy. Additionally, 14 of the 32 property accounts
had no evidence that an inventory had been
performed. The Property Officer believed that
inventories were to be conducted every two years,
not annually. Also, the absence of properly
designated Custodial Officers resulted in
undocumented inventories. Without annual
inventories, $6,212,611 of AED property was not
adequately accounted for. Our unannounced
inventories of a sample of accounts disclosed that the
IFMS inventory system included items which could
not be found as well as obsolete equipment. Also,
some equipment had not been entered into IFMS.
The Property Officer advised us of instances of
idle/unneeded and missing/stolen property which was
still reported in the IFMS inventory system.
EPA's Personal Property Policy Manual Chapter 2,
Paragraph 6.2.6.1, Accountable Property states:
The Program Accountable Officer, Regional
Administrators, Laboratory Directors, or the
Directors, Office of Administration and
Resources Management, RTP and Cincinnati
shall certify annually as part of the
organization's Internal Control review that all
Custodial Officers within the organization have
been appointed and received training and that
annual accountable property inventories have
been conducted and submitted to the Property
Accountable Officer.
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The latest inventory of accountable property
performed by Custodial Officers was dated
February/March 1997. The Property Officer
inventoried capital equipment in March 1999 after
being advised to do so by Headquarters. Capital
equipment was previously inventoried in 1997. The
Property Officer believed biennial rather than annual
inventories were required. After discussions with
Headquarters Property Management personnel, the
AED Property Officer now understands that all
accountable property must be inventoried on an
annual basis. It should also be noted that neither the
ADPO nor the Acting Director knew that all
accountable property was to be inventoried annually.
Along with the Property Officer, we conducted an
unannounced inventory of four accounts to determine
the accuracy of the property account records. We
used the then current July 8, 1999 IFMS' "Custodial
Account Report Sorted by Decal Number". Based
upon the results of our review, these reports did not
reflect the actual state of the inventory. Some items
could not be found while other items had not been
entered into the system or were in the wrong account.
In some cases, obsolete equipment was still carried
on the inventory. See the schedule on the next page
for details of our review.
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Atlantic Ecology Division
Account Number
# Items
Hems Not Found
244
271
257
TOTAL
7
10
9
24
$ 7,95c
74,217
?1 77R
SO
* Number
# Items
no thp Prnnprtv 1 i*t
244
271
257
TOTAL
5
7
2
' r.
$ 8,49c
60,090
Unknowr
* Account
* Number
4 Items
Items Found without
: EPA Deeds:
244
271
257
TOTAL
14
2
5
$ 15.B0C
30,900
* A
• Account
laie/unusea/UDsoiete
* Number
* # Items
Items
292
1
36455
257
2
2950
TOTAL
AhmjviI Ib'fnsl imIhiJ nn llin
NumliMf / lU'ffiK Wfhfiij PfupMfly Arnnifil
271
10
$ 54,40 f
292
1
Unkncwr
257
1
Unknowr
TOTAL
12
lli'rnsihui 5 Shi iijIiI Mm
I'm m'ii'rrHiJ In ihn (MM
A>:>:>njrii Nurnhur t llt'rrn* Cnrilriii inr
257
S54,Ho
Account Number
* # Items
IfFrrrift fintfnr R«r»air
271
1 $7,200
292
i m^FiRn
TOTAL
2 £?'
We also identified 16 items that had not bean entered
into PPAS or IFMS on a timely basis AED converted
from the PPAS to IFMS in May 1997 The 1 6 items
had acquisition dates from 1987 to 1998 However,
these items were not on the 1997 PPAS inventory list
Four of the sixteen items were input to IFMS in 1998
and twelve items were input in 1999 The Property
Officer said he was unaware that the lab had these
items until an inventory was taken See the schedule
on the next page for details
51
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» ?
Aj t jur'jfrfjn
trwr'aidum
U •
¦ 4* " '
4 into
lint*
909386
maine
02/22/90
09/01/99
$ 5,671 0C
909307
maine
02/20/90
09/01/99
5,671 0(
909380
maine
02/20/90
09/01/99
5,671 0(
909309
DeJs Process
01/07/94
09/02/99
13,285 0C
Eauioment
909301
3alonce
08/18/97
07/07/99
1,138 0C
909383
Current Meter
11/11/97
07/16/99
23,208 0C
909349
3arcade
12/20/97
02/08/99
1,482 0C
Scanner
909351
mege
10/25/97
09/08/99
20,295 0C
^noJy2 er
909290
SQHP
02/05/97
04/23/90
6,476. DC
Outboard
909294
70HP Outboard
03/20/96
04/23/90
3,452 0C
309238
3oa Traler
07/06/98
02/12/99
6,265 0C
903312
3oal Enaine
06/13/80
03/23/30
6,476 0(
909301
Canoe
10/16/87
05/14/98
500 0C
909381
Salance
00/10/97
07/07/99
1,138 0C
909313
Tide Gaae
05/01/98
04/02/99
3,700 0(
909314
Tide Gsae
05/01/98
04/02/99
T7nnni
"TOTAL
• •
Annual Inventories are important to track the status of
valuable government property Custodial Officers
should be able to locate the equipment under their
care and note any changes or modifications to
equipment
In addition to annual inventories, an annual
evaluation of accountable property should be done to
determine if any equipment is idle or unneeded
Such a review may be done in conjunction with the
annual inventory According to 41 CFR, Chapter 101,
Section 25 109-1
(a) The provisions of this Sec 101-25 109-1 apply
to all Federal laboratories regardless of size
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Atlantic Ecology Division
(b) Inspection tours of Federal laboratories shall
be conducted on a scheduled basis, annually,
if feasible, but no less than every 2 years, for
the purpose of identifying idle and unneeded
laboratory and research equipment.
Equipment identified by the inspection team as
idle or unneeded shall be reassigned as
needed within the laboratory, placed in an
equipment pool, or declared excess and made
available to other agencies in accordance with
part 101-43.
The Property Officer recognized that AED needed to
develop procedures to safeguard expensive
equipment as well as to identify idle/unneeded
equipment. He brought the following examples to our
attention and the ADPO.
1. A $100,000 current meter was found under a
pile of refuse in the old wet lab and appeared
to have been abandoned.
2. A $244,776 Mass Spectrograph purchased in
1993 which had never been used to anyone's
knowledge.
3. Two current meters, each worth $8,000, were
nowhere to be found. One was believed to
have been lost in Texas.
4. A $6,789 Data Logger was missing.
5. A $1,200 engine which had been stolen in
1993 was still listed on the property records.
The Acting Director said that AED was forced to buy
a spectrograph from the GSA catalog rather than the
exact item they wanted from another source. AED
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tried to customize the spectrograph to the
laboratory's needs. In 1996, the AED staff
determined that customization would not work. The
Acting Director said it took another three years to find
a suitable location to ship the spectrograph. He
further stated that AED deals with scientific
equipment which is "state of the art" and "cutting
edge". It is difficult to get the exact type of equipment
desired to do the job. He said that it is not unusual
for equipment to remain idle for three years in a
research laboratory. A laboratory cannot always
anticipate a project's equipment needs.
In our opinion, six years was an unreasonable
amount of time to keep the spectrograph idle. Even
research laboratories must plan for their needs.
The Property Officer said AED will now perform a
"walk-through" shortly after the annual inventory to
determine if excess or idle equipment exists. We
believe this procedure will improve AED staffs
knowledge of its property and needs.
Loaned Equipment Loaned Government property of $250,373 had not
Not Effectively Managed been returned in accordance with Revocable License
Agreements (RLAs) and EPA requirements. As a
result, the status of $43,690 of equipment was
unknown. The status of the remaining loaned
equipment, in the amount of $206,683, was not
documented as being returned until 1999, up to three
and one-half years after the property was returned.
Limited Senior Management oversight and a lack of
internal controls over loaned property were the direct
causes of poor property management.
EPA Property Management Policy permits the loan of
Agency owned personal property, except motor
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vehicles, on a temporary basis, with a maximum of
five years. To effect the loan, the loan document
must be signed and dated by the party to which the
loan is made. Agency directives require loans of
personal property exceeding 45 days be made by
means of RLAs. RLAs should include: the purpose
of the loan, the loan period, and a certification that
the property involved is under the requesting officials
control; and is not excess.
We reviewed eight (100 percent) of the RLAs used to
loan Government property. At the time of our review,
documentation did not exist to show that the
equipment had been returned. For three of these
eight RLAs, the Property Officer advised us that forty
pieces of equipment worth $43,690 had not been
returned to AED as of August 18, 1999 and the status
of this equipment was unknown. He said there was
no record of the equipment ever being returned. The
following schedule shows the three RLAs involved.
RLA
PLA
Dollar
Number
Date
Period
# of Items
Value
31-006-89
03/07/09
18 Months
13
S21,83E
Not Listed
OB/16/94
3 Years
16
12,751
01-27-92
05/14/92
3 Years
11
9.10C
TOTAL
40
I43J91
In response to our review, the Project Officers
responsible for the remaining five RLAs certified they
had received the loaned equipment, in some cases,
up to three and one-half years after the equipment
was returned. In two cases, AED officials certified
that equipment had been returned but not within the
RLA loan prescribed time frame. The following
schedule shows this information in detail.
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IM
r
r i
Dollar
r^i
WtjJU
mmn\m
09/08/94
3 Years
{35,170
12/1P
August 17,1339
mmmmi
: >:
: ::::
12/11/58
August 17, 1333
94-1ZBBCA27I-M33
05/18/54
3 Years
{ 66,377
02/12/36
August 17,1333
3611
4 Months
tn/is/i
August 10,1333
Not Listed
06/13/58
18 Months
03/02/33
August 18,1333
TOTAL
mm
Additionally, loan authorization was not obtained in
each case. In three cases, EPA had not signed the
RLAs and in another three cases, neither EPA nor the
licensees signed the RLAs.
EPA's Personal Property Policy Manual Chapter 2,
paragraph 6.1.3 states in part:
A memorandum requesting approval to loan
the property must be submitted to the Property
Management Officer by the requesting official.
The request must include an endorsement of
the EPA requesting official's Division Director
(or equivalent) and shall address the
requirements for short or long-term loans listed
below.
To effect the loan, the loan document must be
signed and dated by the party to whom the
loan is made (licensee). The document shall
be returned to the issuing Property
Management Officer to transfer accountability
from the Custodial Area initiating the actions to
a newly established account assigned to this
transaction. A copy of the loan agreement
shall be forwarded to the Custodial Officer who
initiated the transaction.
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The Property Officer was aware of the need to
improve the management of Government loaned
equipment and cited the RLA with the Narragansett
Bay Project as an example of his concerns. The RLA
was signed by the licensee, Narragansett Bay Project
on March 7, 1989 for a period of 18 months
authorizing receipt of thirteen pieces of AED
computer equipment valued at $21,839. The
computer equipment was not transferred until 1992.
Since this project was under the control of EPA
Region 1, the Property Officer made several attempts
to transfer property accountability to Region 1. As of
August 1999, this transfer did not occur. The EMS
had recommended that the property be transferred to
Region 1 in her April 22, 1996 Event Cycle Report.
Again, we see problems which have been identified
but not resolved over a long period of time. The
ADPO needs to establish procedures for resolving
problems identified either through internal control
review or his staff.
CONCLUSION The Property Officer was aware that property
management needed to be improved. However, he
needed support from Senior Management to
implement many of the changes needed. Senior
Management needs to assure that the Property
Officer and Custodial Officers are adequately trained
and knowledgeable to carry out their responsibilities.
Senior Management also needs to show that it
supports the Property Officer by designating
Custodial Officers on a timely basis and assuring that
annual inventories are conducted. Senior
Management was responsive to our
recommendations and already started implementing
various corrective actions. A Property Management
expert from Headquarters was scheduled for two trips
to AED to assist the Property Officer in establishing a
property management system.
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RECOMMENDATIONS We recommend that the Acting AED Director and
ADPO:
1. Require current Custodial Officers to
immediately accept responsibility of their
property accounts by providing written
acceptance.
2. Establish the practice of designating new
Custodial Officers prior to the departure of the
current Custodial Officers. Before the current
Custodial Officer leaves, the current and new
Custodial Officers along with the Property
Officer should inventory the property account.
All discrepancies should be resolved and the
new Custodial Officer should sign for the
property account at the completion of the
inventory.
3. Require the Property Officer and Custodial
Officers to receive adequate training in
property management and up-dates as
needed.
4. Certify annually as part of the organization's
Internal Control review that all Custodial
Officers within the organization have been
appointed and received training and that
annual accountable property inventories have
been conducted and submitted to the Property
Accountable Officer.
5. Instruct the Property Officer to evaluate the
use and need of property during annual
inventories.
6. Require the Property Officer to routinely
correct IFMS based upon results of annual
inventory.
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7. Establish a system of internal controls to
document and account for all current and
future loaned Government property.
8. Perform a complete inventory of all returned
equipment (loaned through an RLA)
documenting that all property is accurately
accounted for and timely entered into IFMS.
ORD RESPONSE The AA wrote:
Since the time of this audit, AED has made
significant progress in strengthening property
management. Specifically, from August 1-6,
1999, an EPA property expert conducted
property management training at AED. During
that period, property accounts were verified
and property was reconciled. In conjunction
with that visit, AED property accounts were
adjusted to reflect the new $5,000 reportable
property threshold. Currently, we are planning
the return of the property expert to conduct
follow-on training. The total amount of
accountable property reflected in the OIG draft
report as $6,212,611 is now at $4,281,243.
This reduction is based on deleting items with
a value of less than $5,000 and on the new
Property Officer's efforts to exercise the
Stevenson Wilder Act, excessing obsolete
property.
The AED has also strengthened its security
and accountability measures. For example, on
December 28, 1999, beneficial occupancy of
the new boat house was granted. Since that
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area is no longer a construction site, all AED
vessels have been relocated to an area where
security cameras are in use. Once fire safety
issues are resolved, the boat house will be the
normal storage site for all vessels. On
January 4, 2000, all locks were re-keyed on
boats, and field operations storage areas, and
old keys and locks were turned over to the
AED Security Representative. Also,
specialized locks for trailer tongue latches are
on order. These locks will prevent
unauthorized towing of all AED trailers, or
removal of trailers from a vehicle's, fixed
towing hitch, on or off site. Additionally, AED
has made procedural changes which ensure
that the Property Officer has knowledge of
property valued at $5,000 or more, when it is
ordered.
ORD requested that we add to the text of the finding
that since 1997, the Property Officer had not raised
his concerns to Senior Management until the OIG
audit in 1999.
Additionally, ORD requested that we revise our
statement that accountable property was not
adequately "safeguarded" to "inventoried."
ORD also provided a Correction Action Plan (See
Appendix 4) responding to each of the finding's
recommendations.
OIG EVALUATION We concur with AED's actions to date and with its
Corrective Actions for this Chapter. However, we do
need clarification on Recommendation 2. ORD's
response did not specifically indicate if an inventory
and reconciliation would be done when a Custodial
Officer departs.
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We did not change the text of the finding to read that
the Property Officer had not raised his concerns to
Senior Management since his 1997 memorandum.
We believe the Property Officer acted appropriately
by advising management of his concerns.
Management did not act upon those concerns. While
work is a team effort by both management and staff,
management did not accept its share of responsibility
in this matter.
We did not change our use of the word "safeguard" to
"inventory" because maintaining an inventory was not
our only concern. As already reported in the finding,
custodial officer designations were out-dated, loaned
equipment was not monitored, and equipment
need/use was not determined. To safeguard is to
take precautionary measures to protect. In our
opinion, AED had not taken adequate precautionary
measures to protect all its property. We believe
ORD's response describing further efforts taken to
strengthen security and accountability support our
statement.
Also, EPA's Personal Property Policy Manual
explains that management of property must ensure
that items are "safeguarded."
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CHAPTER 5
IMPROVEMENTS MADE IN OVERSIGHT OF
COOPERATIVE AGREEMENTS BUT NOT
INTERAGENCY AGREEMENTS
AED had made improvements in its oversight of
cooperative agreements but not interagency
agreements (lAGs). Funding for cooperative
agreements reviewed was for appropriate AED
activities (pre-doctoral and post-doctoral research).
The Project Officer and Local Site Representative
diligently monitored grant activities and maintained
adequate documentation to assure that the terms of
the agreements were met. As a result, these
cooperative agreements helped fulfill AED's research
mission to support science. Specifically, these
agreements supported training and development of
young environmental scientists who conduct
environmental and ecological research.
The Project Officer for the IAG, however, did not
assure that status reports or support for costs were
received and reviewed. The IAG Project Officer
admitted that he was remiss in carrying out his
responsibilities. As a result, we could not confirm if
progress was made in AED's oversight of lAGs.
Prior Audit Findings In our June 16, 1993 report, Management of
Extramural Resources at the Environmental Research
Laboratory, Narragansett, Rhode Island, we reported
that cooperative agreements were improperly used to
fund a day care center; lAG's were inappropriately
used to fund foreign national travel; and EPA
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education policy was circumvented so that EPA
employees could receive advanced degrees. Except
for oversight of lAGs, improvements have been
made.
Cooperative Agreements AED used the appropriate vehicle of a cooperative
agreement to fund projects related to AED's mission.
These sampled cooperative agreements were for pre-
doctoral and post-doctoral candidates. From these
candidates, AED gained information and data from
peripheral research topics to add to in-house
research. Additionally, AED Project Officers did a
good job monitoring their projects. We sampled two
cooperative agreements from a universe of four
active cooperative agreements.
The Project Officer for the National Research Council
(NRC) cooperative agreement is located in
Washington DC. The Local Site Representative
located in Narragansett interacted with the Project
Officer but had limited responsibility such as
preparing preliminary cost estimates, opportunity
announcements, and decision memoranda. In
addition, the Local Site Representative maintained
unofficial fund tracking records. All decisions
regarding candidates, their salaries, benefits, and
travel were made by NRC.
The NRC cooperative agreement (CR826388) was for
the period of February 1, 1998 to January 31, 2001.
The total dollar value of the agreement was
$7,728,000, however, only $165,000 was allocated to
AED. There were three active associates at the
Laboratory under the NRC cooperative agreement,
however, two other candidates were being
considered as well.
The Project Officer for the University of Rhode Island
(URI) Cooperative Agreement maintained information
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required under the agreement. Progress reviews and
mentor evaluations were completed at 6 months and
12 months respectively. The Project Officer also
informally followed progress through the monthly
Science Council meeting. The Project Officer did not
receive invoices for expenditures because she was
not the Certifying Officer. URI submitted invoices to
EPA's Las Vegas office for payment. The Project
Officer explained that the process was similar to a
revolving fund. The Project Officer was not involved
in that aspect of the cooperative agreement.
However, the URI point of contact did provide the
Project Officer with financial information which
showed each student's expenditures.
The URI cooperative agreement (CT825802) was for
the period August 1, 1997 to July 31, 2000. The total
project period costs were $367,286. The Senior
Resource Official approved the award package with
the understanding that the total funding under the
cooperative agreement may exceed $1,000,000 but
will not exceed $5,000,000. The cooperative
agreement was established to provide expanded
training opportunities and collaborative support for
fellowships at the undergraduate, graduate, and post-
doctoral levels to increase the effectiveness and
number of future independent scientists who will
conduct environmental and ecological research.
As a result of the monitoring and involvement of the
Project Officer and Local Site Representative, the
cooperative agreements appeared to be achieving
their intended purpose.
Day Care Center In response to our prior audit, AED closed the day
care center on March 24, 1992. Since that time, the
day care center has remained closed. According to
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the Extramural Management Specialist (EMS), there
are not enough Federal employees with children to
justify opening a day care center.
Training AED generally complied with training regulations
except in one case. This occurred because AED's
prior Director allowed, regardless of training policy,
the employee to take courses as part of the Individual
Development Plan (IDP). As a result, the employee
took three university courses during
duty hours and the government paid for one of those
classes. Another class was paid for by the
government, though the class was taken during non-
duty hours.
According to Title 5 - Administrative Personnel: An
Agency may not authorize training for an employee to
obtain an academic degree. In the IDP, the
development objective was "continue to take courses
at the University of Rhode Island toward a Bachelor
of Science in Political Science (Public
Administration)."
The new ADPO took corrective action immediately
after discovering the problem in November 1998. He
communicated with the Labor Relations Specialist
and the employee. The Labor Relations Specialist
wrote, "You cannot grant excused absence unless a
determination has been made that the training is
primarily for the benefit of the government." As a
result, the ADPO required the employee to take either
leave without pay or annual leave for courses taken
during duty hours.
According to the EMS, employees can no longer get
reimbursed for classes paid in advance. Each course
must be approved one at a time. Employees will be
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reimbursed only for those courses which will enhance
job performance.
Interagency Agreement The Project Officer for the interagency agreement
sampled did not aggressively pursue cost
breakdowns or status reports. As a result, the Project
Officer may have approved invoices for costs not
authorized in the agreement. Not adhering to the
requirements for quarterly reports and breakdown of
costs could result in EPA paying for work which was
either not performed or not allowable under the
agreement.
One of three active interagency agreements was
sampled. The National Oceanic and Atmospheric
Administration (NOAA)-EPA IAG (DWI3937902) was
for the period July 1, 1997 to June 30, 2001. The
amount of the award was $325,000. The objectives
of the IAG were to determine the current condition of
the harbor using both standard measures of
ecological condition and new, innovative, and
potentially sensitive measures of biological response.
The IAG also provided an opportunity for EPA to
maintain a collaborative effort with NOAA. According
to the lAG's Statement of Work, the objective was to
address major components of a competitive Regional
Environmental Monitoring Assessment Program
proposal and research plan submitted by Region 2 for
monitoring the New York/New Jersey harbor.
The terms and conditions of the NOAA IAG specify
that:
1. When requesting payments a breakdown of
the cost associated when the billings request
must be provided to the Project Officer. This
information should allow the Project Officer to
determine that costs billed to EPA are
reasonable and necessary. If the information
is not provided, the EPA Project Officer will
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notify FMD [Financial Management Division] to
suspend or charge back the payment of the
invoice; and
2. NOAA will provide to the EPA Project Officer
quarterly progress reports containing project
name and IAG; summary of work performed for
that quarter; estimate of the percentage of
project completed; accounting of funds
expended; summaries of all problems;
projected work for the next reporting period.
The Acting Assistant Administrator for Research and
Development sent a November 16, 1993 letter to all
ORD employees regarding Management of
Extramural Resources. Particularly, it states:
It has been and is the responsibility of the
Federal employees who manage these funds
to assure that they are expended in
accordance with the relevant Federal laws and
regulations and Agency policies and
procedures. Consequently when EPA
scientists become involved with expending
extramural funds they must assume the related
management responsibility. And just as good
science requires well documented data, good
management of Federal funds also requires
documentation and adherence to establish
management procedures and controls.
Two invoices were received by the EPA Project
Officer, however, there was no supporting
documentation attached to the invoices. The Project
Officer certified the invoices for payment because he
determined that sufficient progress had been made
by the other agency to support the progress payment
as authorized by the IAG.
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The Cincinnati Finance Office did not have the
supporting documentation for the invoices and
assumed the Project Officer had that information.
Additionally, the National Oceanic Atmospheric
Administration (NOAA) Project Officer did not have
the backup documentation available to support the
invoices. The NOAA Project Officer explained that
the NOAA budget person worked from home a lot and
maintained the backup documentation. The NOAA
Project Officer did provide a summary e-mail of how
EPA funds were disbursed by FY 1998 end. However,
these costs were not broken down to support the
invoices. Since backup documentation was not
obtained for the two invoices totaling $78,204.29
($39,869.96 & $38,334.33), there was no guarantee
that EPA did not pay for foreign national travel or
other expenses not covered under the IAG.
Additionally, the Project Officer admitted that he was
not receiving quarterly progress reports and that he
had been negligent in not following up with NOAA.
He said that quarterly reports should not have been
stipulated in the agreement because there were long
periods of inactivity during the project. The Project
Officer added that he did a lot of monitoring through
telephone conversations.
CONCLUSION The Project Officers for cooperative agreements
improved oversight by assuring that agreement
conditions were met. Weaknesses in IAG oversight
continued because the Project Officer did not use the
agreement as a guideline for monitoring performance
and costs. The 1993 OIG report found that the IAG
was used as a mechanism to circumvent EPA
regulations to fund foreign nationals and international
travel by non-EPA employees. Since then, ORD
developed policies and procedures for international
travel and guest workers. However, without the
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supporting documentation required by the agreement,
we could not determine the reasonableness of the
IAG costs.
RECOMMENDATIONS We recommend that the Acting AED Director instruct
the IAG Project Officer to:
1. Obtain and review supporting documentation
as required by the IAG for all costs charged to
date and in the future.
2. Attach the cost breakdown of the expenses to
the invoice.
3. Review cost breakdowns for allowability and
applicability to the IAG.
4. Maintain the cost breakdown in the records.
5. Obtain quarterly status reports as specified in
the IAG. If there has been no activity a note
should be written to the file.
ORD RESPONSE ORD disagreed with the general conclusion that no
improvements in IAG oversight were made. ORD
believed it was unfair to make a broad statement
based on a sample of one IAG.
ORD also provided a Correction Action Plan (See
Appendix 4) responding to each of the finding's
recommendations.
OIG EVALUATION Although we sampled one IAG, we feel our
judgmental sample was fair. There were three active
lAGs totaling $391,389 at AED during the time of our
review. The IAG selected was for $325,000, or 83%
of IAG active funds.
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Lack of documentation for IAG costs was a repeat
finding from our 1993 report. Specifically, the 1993
report stated:
Narragansett officials were unable to provide
us with documentation to support the
expenditure of funds, and stated that NOAA
was responsible. NOAA could not provide
documentation to support the expenditure of
the funds for this IAG.
Although this is not the same IAG as reported in the
1993 audit report, it is the same Federal Agency with
whom EPA entered an agreement. Considering the
above facts, we feel our conclusion was appropriate.
We concur with ORD's Corrective Actions to this
Chapter.
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APPENDIX 1
SCHEDULE OF SAFETY FINDINGS
Prioritv *B Pindinas:
Descri Dtion:
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hatiwwaflsi::;:
Tf & m P P r a ft B; w a S; iqiaseiryeteqrr ifcysici?
^|rlilnlg;;Slp^jiC^{idftS;.;r|neiWfSt3<:Sr^ylwirjHg 1; ;:
qciiie? ;tJe:;(aamsgea: mqcesreaiqlJI^tiiiafl^iweCI;::;
•AJirifes ;arha;dailis&' shBHs-isrSilifiires;.;- -;-;
* Frio
rity B is assigned to deficiencies that could lead to regulatory enforcement action orto unacceptable
safety, health and environmental risk.
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Prioritv *C Findinas:
DescriDtion:
Findina No. per report
s
Both doors at the upper level of the lobby
area at the main entrance did not latch; one
was held open by a coordinating device.
-"The stair door to the mezzanine of the wet
Lab building did not close and latch fully.
-"The fire door to the boiler room did not
close and latch when the exhaust fan was
ooeratina .
3
Battery charging area located in Room 1 1 3A.
Batteries operate telephone systems durin g
power outages. The fire door has no closer
and the partition does not extend to the floor
slab above; it ends above the suspended
c e i I i n rj "These nnnrtitinn^ r^nmprnmise the fire
separation of the batterv charaina ooeration.
1 3
Aflammable liguids storage cabinet in Bay
1 Q3 (Lopez Cabinet) of the support services
building has an open vent connection. This
could allow flammable vapors to exit the
cabinet into the several buildina soace.
1 7
Four locations of unguarded floor openings .
Personnel and equipment could potentially
fall through these opening to lower levels
causing injury to workers who have fallen and/
or injure workers at lower levels.
1 S
"The hoods in the FSB building specifically
room 196, have not been certfied since
October 199-4. It is unknown if they are
operating as designed and properly capturing
Che vapors during work procedures.
23
Machines designed to be permanently fixe d
we re o n wh eels. Such equip m e nt could m o ve
resultina in iniurv to operators
2-4
TnnQiip q i j ard aff ixed tn a qrinder wa^ fnunri
Co be in an improper position. This could
cause mate ri a I to jerk from operators grip and
ooteritiallv cause iniurv.
27
Review team noted exceptions to proper
electrical grounding practices:
-Extension cord and vacuum cleaner had its
ground prongs removed.
-Vacuum cleaner had its ground prong
re moved.
23
"Three Junction boxes exposing electrical
iA/i re s and two e I e ctri c a I o utl ets hanging on
flexibility ends from fixed wires. Inadequate
protection from exposed wiring and improper
iring methods may result in electrical shorts,
posing a potential fire hazard and could
potentially injure workers from electrical
shock.
29
Ground-fault circuit interrupters (GFCI) outlets
we re n ot labeled. Facil ity wa s i n p ro cess of
doina so. I
Piiuiily C ia ayajgntnJ lu iMluiencies that would have a minimal impact on human safety and health and the
environment, but could result in limited regulatory enforcement action.
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APPENDIX 2
SCHEDULE OF CUSTODIAL ACCOUNTS
.Custodial
: Account#
Date Accepted
Resp.
Date Conducted
Inventory
1997 Total Dollar
Amount tS)
1999 Total Dollar
Amount tS)
226
240
245
271
273
277
280
283
286
287
293
294
BLANK
BLANK
BLANK
BLANK
BLANK
BLANK
BLANK
BLANK
BLANK
BLANK
BLANK
BLANK
BLANK
BLANK
BLANK
BLANK
BLANK
BLANK
BLANK
4-3-97
BLANK
BLANK
4-3-97
BLANK
$33,956
$440,239
$69,304
$35,425
$12,121
$38,497
$329,174
$62,001
$47,776
$32,110
$1,337,887
£567,938
$88,146
$528,970
$12,051
$24,890
$5,576
$22,265
$311,278
$46,329
$37,664
GRAND TOTAL $1.631.586
$3.218.548
The following chart identifies the four accounts of the retired/resigned Custodial Officers.
¦I III 11111111
Cududifcri
Ftettrud/
1 '333 ($)
Account
t-tesaaned
Amount
1AA
257
,• . j
Retired
$ 140.825
285
Resigned
$ 33,26E
238
Retired
"""SSSW™"
$ 29.34}
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APPENDIX 3
SCHEDULE OF 1999 INVENTORY
1
226
$32.1 1 O
2
243
$1,33 7,337
3
2 4 2
$3
4
244
$567,333
5
245
$ 3 3.1 ^6
6
252
$ 6 2.326
"7
257
$ 1 4 O. 3 2 3
Ei
271
$523.37 G
0
273
$ 1 2. O 5 1
1 ~
27^
$ 3.357
1 1
27 5
$1.1 -3 3 .3 5 3
1 2
276
$ 5 3 6.23 B
1 3
277
$ 2 4.39 O
1 4
273
$ 31 9,472
1 5
273
$56,343
1 6
2SO
$5. 57 6
1 7
231
$ 1 4.563
1 3
233
$22,265
1 3
234
$66.21 7
23
235
$33,263
21
236
$31 1.273
22
233
$23,347
23
233
$56,533
24
2 3 O
$6. 5 33
25
231
$6,533
26
232
$ 1 1 5.564
27
233
$46,323
28
29^1
$37,664
23
235
$36,277
3 ~
236
$233,723
31
337
$246,372
S6.21 2.61 1
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APPENDIX 4
ORD'S RESPONSE TO OIG DRAFT REPORT
t
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D.C. 20460
MAR 1 6 2000
OFFICE OF
RESEARCH AND DEVELOPMENT
M EMORANPUM
Audit Report # 1999-211
Thank you for the opportunity to respond to the Office of Inspector General's (OIG) draft
report on extramural and property management at the National Health and Environmental Effects
Laboratory (NHRRR1,) Atlantic Ecology Division (AED), located in Narragansett. RI. In
general, wc concur with the report's findings and recommendations. We thank you for the
opportunity to discuss our primary concerns on a March 1, 2000 teleconference. As a result of
that teleconference, wc appreciate your willingness to modify the final report title and that your
final product will portray the circumstances surrounding the identified issues.
The Office of Research and Development (ORD) considers OKi audits very seriously.
We see them as an opportunity to identify areas needing improvement. Our goal of "'sound
science" must be achieved with quality management of our resources. For that reason, we were
concerned by the statements in the draft report attributed to the AED Acting Director. I assure
you that these management issues are given the highest priority in all ORD organizations,
including NI1EERL.
Wc appreciate the time and effort that you and your staff put into this audit. This report
has brought to our attention important property management issues. We fully realize that
without proper implementation of property management safeguards, the Environmental
I Protection Agency's (EPA) property may be vulnerable.
Since the time of this audit, ARD has made significant progress in strengthening property
management. Specifically, from August 2-6. 1999. an EPA property expert conducted property
management training at AED. During that period, properly accounts were verified and property
was reconciled. In conjunction with that visit, AED property accounts were adjusted to reflect
FROM:
Norinc E. Noonan
"Assistant Administratt
Deputy Assistant Inspector General
for External Audits (2421)
Recycled/necyclaUe • Printed with Vegetable Oil B&sed Inks on 100% Recycled Paper (40% Postconsumer)
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the new $5,000 reportable property threshold. Currently, we are planning the return of the property expert
to conduct follow-on training. The total amount of accountable property
reflected in the OIG draft report as $6,212,611 is now at $4,281,243. This reduction is based on deleting
items with a value of less than $5,000 and on the new Property Officer's efforts to exercise the Stevenson
Wilder Act, excessing obsolete property.
The AED has also strengthened its security and accountability measures. For example,
on December 28, 1999, beneficial occupancy of the new boat house was granted. Since that area is no
longer a construction site, all AED vessels have been relocated to an area where security cameras are in
use. Once fire safety issues are resolved, the boat house will be the normal storage site for all vessels. On
January 4, 2000, all locks were re-keyed on boats, and field operations storage areas, and old keys and
locks were turned over to the AED Security Representative. Also, specialized locks for trailer tongue
latches are on order. These locks will prevent unauthorized towing of all AED trailers, or removal of
trailers from a vehicle's fixed towing hitch, on or off site. Additionally, AED has made procedural changes
which ensure that the Property Officer has knowledge of property valued at $5,000 or more, when it is
ordered.
The OIG report has also brought to our attention the need to improve timeliness in remedying
known contract management vulnerabilities. The contract management
vulnerabilities described in this report were initially raised by the AED Extramural Management Specialist
(EMS), in June 1996. Also, AED contractual problems were carefully outlined in a 1997 NHEERL
Management Review. We are currently implementing corrective action in this area.
However, ORD believes it is important that the final audit report reflect the staffing difficulties that
AED was experiencing throughout its contractual and property problems. The report should show that
AED was without a permanent Associate Director for Program Operations from February 1996 to April
1998. The vacancy of this critical administrative supervisory position exacerbated the timeliness and
effectiveness of AED's ability to remedy problems in both extramural and property management.
Finally, we believe that AED has made considerable improvement in overall extramural
management. Largely, the weaknesses discussed in the 1993 OIG audit have not reoccurred. We are
concerned that the current draft report makes general conclusions about AED's contract management
progress based on AED's problems with a single contract (O&M), which had already been identified by
both the EMS and an NHEERL Management Review. Moreover, at the time of the OIG audit, significant
corrective actions had been made or were in progress. For example, a new Project Officer was hired and a
new contract was in the solicitation process. Further, as we discussed in our teleconference, we strongly
believe that the Contract Management Division shares our responsibility for the effective contract
management.
We remain concerned with the OIG's conclusion that improvement in the oversight of IAGs has not
been made. This conclusion was based on the review of only one IAG. This limited exploration and
sweeping conclusion does not represent the progress that AED has made in this area.
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Attached is ORD's consolidated, page-specific comments which we offer for incorporation in the
final report. We have also included our corrective action plan. Should your staff have questions or require
further information, please have them contact Cheryl Varkalis at (202) 564-6688.
Attachments (2)
cc: Paul McKechnie
Linda Fuller
Cathy Jenson
Henry Longest
Debbie Dietrich
Peter Durant
Arnold Bloom
Cheryl Varkalis
Ann Akland
Gilman Veith
Patricia Jackson
Karen Dean
Norman Rubinstein
Glenn Moore
Carol Ann Sakiewicz
81
Attachment 1
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Consolidated ORD Comments
on
OIG Draft Audit Report #1999-211
NHEERL
Atlantic Ecology Division
1. Title page (back)-Draft Report states:
"Office of Air and Radiation"
RESPONSE: We request the following change to this portion of the draft report:
"Office of Research and Development"
2. On pages ii, and 8, the draft report states:
" however, this position was in a state of transition for a period of time."
RESPONSE: We request the following change to this portion of the draft report:
" however, AED was without a permanent ADPO from February 1996 until April 1998.
2-a. On page 9, please add the following text to the final report:
"However, AED was without a permanent ADPO from February 1996 until April 1998. This
staffing limitation is critical to understanding the delays in dealing with all of the issues raised in this
report. On February 18, 1996 the Associate Director for Program Operations (ADPO) transferred to the
AED detachment in Annapolis, MD (now located at Fort Meade, MD). An Acting ADPO was put into
place; however, he had limited management experience and was required to maintain the workload for his
position of record along with serving as the Acting ADPO. AED began the recruitment process to fill the
ADPO position on a permanent basis on April 28, 1997. The Merit Promotion closed on July 28, 1997 and
the OPM Vacancy closed on August 15, 1997. Because this position is critical to improving management
and operations at AED, the interview process was extensive and time consuming. The position was not
filled until April 19,1998."
Discussion: This clarifies the staffing situation by providing specific information on what is meant by
"transition."
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3. On pages iii, 8, 16, and perhaps other sections, the draft report states:
"In the area of contract management, progress was not made since the June 16, 1993 OIG Report."
RESPONSE: We request the following change to this portion of the draft report:
"In the area of contract management, there continued to be problems with one of the contracts that was
audited." Or change to "there was limited progress."
Discussion: This conflicts with other statements in the report that there was "limited improvement" (e.g.
title of next section, and chapter).
4. On pages iii, 11, and throughout the body of the draft report, the statement is made that Project Officers
on the O&M contract did not have an adequate "background in contract management."
RESPONSE: We request the following change to this portion of the draft report to replace the term
"contract management" with "facilities management" and/or "good contract management skills."
Discussion: All individuals tasked as Project Officer were fully trained and therefore had the required
background. The O&M PO did not have adequate background in facilities management. Therefore, it was
difficult for him to manage the facilities work which was under contract. An alternative re-wording is that
the PO did not have "good contract management skills."
5. On pages iii, and 36, the statement is made that AED Senior Management "ignored" property concerns.
RESPONSE: Request that in regard to the property management issue, all occurrences of the word
"ignored" be changed to "did not take appropriate actions to evaluate the seriousness of these issues."
Discussion: As is explained within the OIG Draft Report, the AED Acting Director was led to believe the
property management issues were "minor."
6. On page 2, the draft report states "Under the supervision of the Deputy National Director for Ecology..."
RESPONSE: This should be" the NHEERL Associate Director for Ecology."
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7. On page 11, the draft report states "1) the former ADPO was not fully qualified.
" RESPONSE: Request to change word "former" to "Acting."
Discussion: "Former" refers to the previous permanent ADPO, which is not the case here.
8. On page 11, the draft report provides the actual performance ratings of the PO. We believe
this is subject to Privacy Act concerns and should be removed.
9. On pages 12 and 20, the draft report leaves the impression that AED did not seek the advice or support
of the Contracting Officer (e.g., "AED kept to themselves.")
RESPONSE: We request the following text be included into the text of the draft report:
The O&M Contract was awarded by CMD-Cincinnati and was subsequently moved to CMD- RTP in
March 1997. The individual that the OIG spoke with was the Contracts Specialist at the time of the audit.
Over the course of this contract, AED's EMS contacted at least eight different Contracting Officers and
Specialists about contract management issues related to this specific contract. In fact, the EMS sent a copy
of her June 1996 internal review of this contract to CMD- Cincinnati. In addition, some of these issues
were raised again with the CMD-RTP Contracts Specialists who visited AED in 1997. However, AED was
not successful in obtaining assistance from CMD. The inability to obtain assistance from CMD further
hindered AED in their management of this contract.
Discussion: We feel strongly that this leaves the reader with a false impression, and that there were
extenuating circumstances surrounding the O&M contract, which made it exceedingly difficult to improve
management.
10. On page 16, the draft report states:
"We are concerned that NHEERL's comments may impair one of AED's effective means of overseeing
extramural management.... We would not be writing this report if the 1996 EMS recommendations had
been resolved."
RESPONSE: The NHEERL Management Review report did not question the EMS's reviews of extramural
management. That is one of the important duties of the EMS. What was of concern in the review was the
effectiveness of the extensive documentation that the EMS put in the PO's files as a result of the review.
The NHEERL Management Review recommended that a more concise and effective means of
communication (e.g., advising, counseling) be utilized by the EMS to help the AED PO's in solving their
extramural management problems.
11. On page 16, under the Conclusion: As noted in our cover memo, we would like to see some reference to
the fact that the key administrative operations position-that of ADPO, was without a
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permanent, well-qualified person, from February 1996 to April 1998. The absence of a permanent ADPO
is critical to understanding why most of these findings were not dealt with in a timely and effective manner.
12. On pages 19 and 20, the draft report refers to a poorly written SOW, which was vague and ambiguous.
RESPONSE: The complexity and ambiguities of the SOW of this contract were also noted in the 1997
NHEERL Management Review. It was the opinion of the two former Contracting Officers on that team
that the contract was so complex and ambiguous that it would be difficult for anyone to manage. This is
why we strongly feel that it is of the utmost importance for the Contracting Officer to work with the Project
Officer and EMS to ensure the award of a clearly written, sound contract. We believe that contract
management is a team effort and that CMD has shared responsibility in ensuring that EPA can hold
contractors responsible for the work that they are getting paid to do.
13. On page 22, the draft report states:
"The Project Officer stated the Contractor, not AED, filled-out on the work order form, the start and
completion dates, estimated and actual hours to complete the work, as well as estimated and actual material
costs. The Contractor physically possessed all work order documents."
RESPONSE: We request the following change to this portion of the draft report:
"The Project Officer stated that the Contractor, not AED, entered data from Work Orders into the status
program including the start and completion dates. The Contractor also filled-out the portion of the Work
Order form dealing with estimated and actual hours to complete the work as well as estimated and actual
material costs."
Discussion: AED believes that there was a misunderstanding on this issue. An AED employee always
originates work order forms. While the Project Officer did not complete the estimates or dates on the forms,
the Project Officer did have a log of all Work Orders submitted to the Contractor which indicated the date
each was forwarded to the Contractor for action. The confusion may be in that the Contractor was the only
one who entered information into the status log.
14. On page 25, the draft report states:
"The AED Acting Director also stated that the principal purpose of the laboratory was science
and although he realized there was no excuse for poor contract management. However, he stated he didn't
believe the nature of the problems with the O&M contract management affected laboratory operations and
he was assured by his managers that corrective actions from previous audits were in place."
RESPONSE: We request the following change to this portion of the draft report:
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"The AED Acting Director also stated that the principal purpose of the laboratory was science and,
although he realized there was no excuse for poor contract management, he didn't believe the nature of the
problems with the O&M contract affected laboratory operations. He also stated that he was assured by his
managers that corrective actions from previous audits were in place."
Discussion: Correct sentence fragment in first sentence.
15. On page 26, the draft report states:
"On September 14, 1999, the Contracting Officer sent a letter
RESPONSE: We request the following change to the sentence:
"In response to. a memo initiated by the AED PO, on September, 14, 1999, the Contracting
Officer sent a letter
Discussion: This documents the fact that the PO initiated the letter written by the CO.
16. On page 36 and throughout this chapter, the draft report states:
"As a result not adequately safeguarded."
RESPONSE: We request the following change to this portion of the draft report:
Change word "safeguarded" to "inventoried."
Discussion: There are other important ways to "safeguard" property. Inventories are only one.
17. On page 38, the draft report states:
"Without properly designated Custodial Officers, all these activities were not carried out at
AED."
RESPONSE: We request the following change to this portion of the draft report:
"Without a full complement of properly designated Custodial Officers, all these activities were
not carried out for all Custodial Areas at AED."
18. On pages 39-40, the draft report states that in 1997 the Property Officer sent a memo to the Acting
ADPO, requesting training for custodial officers.
RESPONSE: We request the following sentence be added to the text:
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"There was no further evidence that the Property Officer raised this concern again with either the Acting
AED Director or the permanent ADPO until the time of the OIG's visit."
Comment: We would like the report to reflect that Property Officer did not bring this issue to the attention
to anyone else again, including the AED Acting Director or the permanent ADPO, who was appointed in
April 1998.
19. On page 54, and throughout this chapter, as noted in our cover memo, we do not believe the general
conclusion that there had been no improvement in the management of I AGs is a fair statement, based on a
sample of one IAG.
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Attachment 2
Proposed Corrective Action Plan to OIG Draft Audit Report #1999-211
Follow-up Audit of Management of Extramural Resources
at the
Atlantic Ecology Division
Kcc.
-
Draft Report Recommendation
Corrective Action
Action
Official
Due Date
2-1
Instruct the ADPO to establish contract and
property management procedures which will
assure that resources are used effectively and
safeguarded. Also, the ADPO should routinely
monitor progress to assure that the procedures are
followed and delivering results.
1. Due to changes in CMD policy, property
issues with contracts are moot. AED will
not propose providing arty property under
contract except for "purpose of "property
for maintenance and repair.
2. As part of corrective actions initiated by
the last Management Review, AED is in the
process of updating all Standard Operating
Procedures (SOPs). SOP 8.1 Property
Management is scheduled to be re-written
from ERL-Narragansett SOP B-5. This will
furnish guidance to employees.
3. Verification that the annual Property
Inventory has been completed will be part of
the FMF1A process and will be reported in
the Annual Assurance Letter.
Acting
AED
Director
1. N/A
2. Tied to Union
Negotiations
3. 9/00 and
ongoing
-------
3-3
Define time frames such as "routine",
"emergency", etc. given to the Contractor.
Paragraph EE of the Statement of Work
included in solicitation PR-NC-99-12745
provide the contractor with the following
definitions (see attachment):..
Emergency - respond within 1 hour and
continue until corrections
complete
Urgent - completed within five (5)
workdays after receipt of an
approved Work Order by the
contractor
Routine - completed within twenty (20)
workdays after receipt of an
approved Work Order by the
contractor
The Project Officer shall hold the contractor
accountable for these response times.
Acting
AED
Director
Completed 12/99
3-4
Develop a tracking system to assure that work
was completed and completed on a timely basis
by Contractor.
The Project Officer has indicated thai he
will develop a system to track work. He is in
the process of reviewing the current system
which will be relinquished by the incumbent
contractor. In the interim, he may use a
manual system.
Acting
AED
Director
9/30/00
-------
2-2
Assure that staff understand their responsibilities
and are held accountable.
1. Training and reminders will be provided
throughout the year.
2. Annual and Semi-Annualperformance
reviews will provide an opportunity for
supervisors to remind staff of specific duties.
3. The Property Officer shall notify SMT of
the status of Custodial Area inventories
prior to review periods.
Acting
AED
Director
1. Ongoing
2. Annually &
Semi-Annually
3. Annually &
Semi-Annually
2-3
Develop a formal system to resolve weaknesses
identified in Event Cycle Reports. A corrective
action plan should be developed with specific
staff identified to carry out actions. Milestones
should be set and progress along with success
should be measured.
1. AED will develop a formal system to
resolve weaknesses identified in Event Cycle
Reports. The IT Coordinator is reviewing
software packages for milestone charts.
2. The ADPO will be responsible for the
corrective action plan. It will be reviewed as
part of his annual and semi-annual
performance review.
Acting
AED
Director
1. 9/30/00
2. Annually &
Semi-Annually
2-4
Seek out expert assistance from Headquarters,
Research Triangle Park, etc.
Subject matter specialists within AED have
made contact with their counterparts as well
as levels above at Headquarters, RTP, etc.
Management can secure points of contact
from them as well as through the NHEERL
chain of command.
Acting
AED
Director
Ongoing
3-1
Instruct the O&M Project Officer to:
Complete estimated hours and costs on work
order forms and maintain work orders.
The Project Officer will complete estimated
hours and costs on work order forms.
Acting
AED
Director
Ongoing
-------
3-5
Use the work order form developed by ADP
Project Officer for all contracts so that requesters
or another appropriate official can sign-off as
approving completed Contractor work.
The Project Officer is in the process of
developing a Work Order Form specifically
for the new O&M Contract. It will include a
sign-off block for requestor approval. He
anticipates completion of the form by
3/13/2000. The new form will replace the
current on the AED Forms section of the
Intranet.
Acting
AED
Director
4/1/00
3-6
Instruct the ADPO to meet weekly with the
Project Officers to review the status of work
orders and take corrective action as necessary.
There is a weekly POS meeting attended by
all contract Project Officers. This is the
forum where they can bring up problems for
ADPO assistance. The status of work orders
will be reviewed during this meeting. This
semi-public forum would also allow the
SHEMP and the Security Officer as well as
other Project Officers needing coordination
with the O&M contractor to bring up issues.
Acting
AED
Director
Ongoing weekly
meetings
3-7
Instruct the Extramural Management Specialist to
review Project Officer procurement requests to
assure that contract provisions are met.
1. The new Project Officer for the O&M
contract has excellent contract management
skills, and knowledge of the contract. He
will carefully ensure that all contract
provisions are met.
2. A review of the contract will be scheduled
as part of the events cycle documentation.
At that time, this decision can be revisited.
Acting
AED
Director
1. Ongoing
2. 9/01
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4-1
Ensure that current Custodial Officers
immediately accept responsibility of their
property accounts by providing written
acceptance.
This action is complete. A chart has been
developed which shows the date each
Custodial Officer signed acceptance of his
or her property account. The chart will be
continuously updated ly the Property Officer
and provided to supervisors prior to Annual
and Semi-annual performance reviews.
Acting
AED
Director &
ADPO
9/99 and ongoing
4-2
Establish the practice of designating new
Custodial Officers prior to the departure of the
current Custodial Officers. Before the current
Custodial Officer leaves, the current and new
Custodial Officers along with the Property
Officer should inventory the property account.
All discrepancies should be resolved and the new
Custodial Officer should sign for the property
account at the completion of the inventory.
This practice was initiated with the turnover
from the prior Property Officer to the
current one. The Properly Officer has
provided a list of all AED Custodial Officers
to the Personnel Assistant. She has agreed
to notify' the Property Officer as much in
advance as possible of the departure of
anyone on that list. This will allow the
Property Officer time to secure the name of
a new Custodial Officer from the
appropriate supervisor. AED has already
initiated a sign-out sheet for all personnel
leaving AED. An individual is required to ,
secure the signature of the officers of all
accountable areas prior to his or her
departure. Since the final paycheck comes
to the Personnel Assistant, there is an
automatic enforcement mechanism.
Acting
AED
Director &
ADPO
Ongoing -
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4-3
Ensure that the Property Officer and Custodial
Officers are adequately trained and receive
updated training as needed.
GSA is offering a two day training course
"Property Management for Custodial
Officers" in Washington, DC March 15-16
and August 16-11, 2000. AED plans to send
one person to this training. That person and
art HQ property expert, will return and train
all AED Custodial Officers.
Acting
AED
Director &
ADPO
9/1/00
4-4
Document weekly meetings between the ADPO
and the Property Officer to ensure that all
property concerns discussed are corrected.
Due to the extensive attention and corrective
actions already taken we believe that a
separate meeting is no longer needed. T he
ADPO meets weekly with the POSstaff
including the Property Officer. The POS
Secretary records the minutes which are
transcribed and sent to the ADPO for
editing. Beyond being able to add items to
the agenda, at these meetings, all members
of the staff have the opportunity to make
public issues in their areas. If an issue
requires more time than is appropriate
during a full staff meeting, the ADPO and
the Property Officer will set a lime for a
separate meeting to continue the discussion
and resolve the issue. The POS Secretary's
notes will reflect the time and date of the
subsequent meeting and the resolution of the
issue will be presented at a subsequent
weekly meeting.
Acting
AED
Director &
ADPO
Ongoing
-------
4-5
Certify annually as part of the organization's
Internal Control review that all Custodial Officers
within the organization have been appointed and
received training and that annual accountable
properly inventories have been conducted and
submitted to the Property Accountable Officer.
Each September, the Property Officer will
provide a copy of the latest information on
training and custodial officer inventories to
the MIC to use as documentation supporting
a statement in the Annual-Assurance Letter.
Acting
AED
Director &
ADPO
9/00 and ongoing
4-6
Instruct the Property Officer to evaluate the use
and need of property during annual inventories.
The Custodial Officer sign off sheet for
inventories will be adapted to include a
choice of statements that either states that
all property remains necessary or gives
specific disposition instructions.
Acting
AED
Director &
ADPO
Completed 9/99
and ongoing
4-7
Ensure that the Property Officer routinely
corrects IFMS based upon resul ts of annual
inventory..
Due to workload variations during sampling
season, all custodial officer inventories will
be completed during the month of December
each year. The Property Officer will update
IFMS as reports are turned in and will
certify accuracy as part of the annual
inventory.
Acting
AED
Director &
ADPO
12/00 and
ongoing
4-8
Establish a system of internal controls to ensure
all current and future loaned Government
property is properly documented and accounted
for.
SOP 8.1 will include a section on procedures
for RLA which will discuss the internal
controls.
Acting
AED
Director &
ADPO
Tied to union
negotiations
4-9
Perform a complete inventory of all returned
equipment (loaned through an RLA) ensuring all
property is accurately accounted for and timely
entered into IFMS.
A complete inventory of all returned
equipment is complete.
Acting
AED
Director &
ADPO
Completed 3/00
8
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5-1
Instruct the Project Officer to obtain supporting
documentation as required by the IAG for all
costs charged to date and in the future.
1. A Written request will be sent to NOAA.
2. Received documentation will be reviewed
within 30 days of receipt.
Acting
AED
Director
1.4/1/00
2. 6/1/00
5-2
Ensure the cost breakdown of the expenses is
attached to the invoice.
See 5-1 above
Acting
AED
Director
6/1/00
5-3
Review cost breakdowns for allowability and
applicability to the IAG.
See 5-1 above
Acting
AED
Director
6/1/00
5-4
Maintain the cost breakdown in the Project
Officer's records...
Pre-award, the negotiated cost breakdown is
documented in the Decision Memorandum.
Post award records of the cost breakdown
will include copies of fully supported
invoices and progress reports as described
in the award document.
Acting
AED
Director
Ongoing
5-5 '
Obtain quarterly status reports as specified in the
IAG. [f there has been no activity a note should
be written to the file.
The EMS now performs a quarterly review
of active and planned vehicles in OMIS.
When a vehicle is awarded, the Project
Officer will provide the EMS with a list of
required reports/deliverables and the
applicable dates. This information will be
included in the OMIS ETS entry for the
vehicle and the EMS will send out reminder
notices on a quarterly basis.
Acting
AED
Director
Quarterly
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Audit of Extramural and
Property Management at the
Atlantic Ecology Division
APPENDIX 5
DISTRIBUTION
Office of Inspector General
Inspector General (2410)
Office of Inspector General - Headquarters (2421)
Executive Assistant to Inspector General (2410)
Assistant Inspector General for Audit (2421)
Deputy Assistant Inspector General for External Audits (2421)
Deputy Assistant Inspector General for Internal Audits (2421)
Assistant Inspector General for Planning, Analysis, and Results (2421)
Divisional Inspectors General for Audit
Headquarters
Assistant Administrator for Research and Development (8101 R)
Associate Director Office of Resource Management and Administration (8102R)
Audit Liaison (8102R)
Agency Audit Follow-up Coordinator (2724)
Agency Audit Follow-up Official (2710)
Associate Administrator for Congressional and Legislative Affairs (1301)
Associate Administrator for Communications, Education, and Public Affairs (1701)
EPA Library (3403)
Research Triangle Park. North Carolina
Director National Health and Environmental Effects Research Laboratory (MD-51)
Management Deputy Director National Health and Environmental Effects Research
Laboratory (MD-51)
Director National Accountability and Resources Management Staff (MD-85)
Audit Follow-up Coordinator (MD-85)
Associate Director for Ecology (MD-87)
Director Contracts Management Division (MD-33)
96
Report No. 2000-P-00015
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Audit of Extramural and
Property Management at the
Atlantic Ecology Division
Atlantic Ecology Division
Acting Director
Associate Director Program Operations
Extramural Management Specialist
Other
General Accounting Office
97
Report No. 2000-P-00015
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