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*. U.S. Environmental Protection Agency	12-R-0749

|	\ Office of Inspector General	September 4,2012
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At a Glance
Why We Did This Review
The U.S. Environmental
Protection Agency (EPA),
Office of Inspector General,
reviewed the amounts drawn
by Cascade Sierra Solutions
(CSS) under Cooperative
Agreement (CA) 2A-83440701.
The purpose of the audit was to
determine whether CSS
complied with federal
requirements and terms and
conditions for Diesel Emission
Reduction Act grants or
cooperative agreements
awarded under the American
Recovery and Reinvestment
Act of 2009 (Recovery Act).
EPA awarded the CA to CSS in
August 2009 under the
Recovery Act. The CA provides
$9 million to create a revolving
loan program for heavy duty
diesel trucks to save fuel and
reduce emissions.
This report addresses the
following EPA Goal or Cross-
Cutting Strategy:
• Taking action on climate
change and improving air
quality
For further information, contact
our Office of Congressional and
Public Affairs at (202) 566-2391.
The full report is at:
www.epa.qov/oiq/reports/2012/
20120904-12-R-0749.pdf
Examination of Costs Claimed Under EPA
Cooperative Agreement 2A -83440701A warded
Underthe Recovery Act to Cascade Sierra
Solutions, Eugene, Oregon
What We Found
CSS' financial management system did not support that funds drawn are
reasonable, allocable, and allowable in accordance with applicable laws,
regulations, and CA terms and conditions. In particular, CSS':
•	Financial management system pertaining to cash draws, revolving fund
accounting, project costs, and progress reporting does not meet the
requirements of the Code of Federal Regulations (CFR) under 40 CFR
Part 30 and 2 CFR Part 230, and the CA.
•	Procurements did not meet competition or cost and price analysis
requirements of 40 CFR Part 30, the recipient's procurement policy, or
CA requirements.
•	Reporting of the number of jobs created or retained with Recovery Act
funds did not comply with Office of Management and Budget guidance.
As a result, we are unable to provide an opinion on the financial resources,
related liabilities, revenue, expenses, and residual balances of the CA-funded
revolving loan program. Therefore, we have questioned the $9 million drawn
underthe CA as unallowable costs.
Recommendations and Planned Agency Corrective Actions
We recommend that the Director for the Office of Grants and Debarment disallow
and recover $9 million in questioned costs; consider suspension and debarment
of CSS on current and future awards; require CSS to ensure that the use of funds
meets federal criteria; require special conditions for future awards to CSS; and
provide clarifying guidance to CSS on progress reporting requirements. We also
recommend that the Director require CSS to comply with pertinent procurement
requirements; disallow pre-2007 model year trucks as project costs; and assist
CSS with developing a methodology to calculate number of jobs created and
direct CSS to correct the numbers reported, with documentation. The Agency
generally agreed with the findings and said that it has initiated corrective actions
to address some of the weaknesses identified in the report. CSS disagreed with
most of the findings and two of the recommendations. CSS partially agreed with
one recommendation and neither agreed nor disagreed with six
recommendations. CSS described actions planned to document compliance with
EPA procurement regulations and is willing to work with EPA on developing a
Recovery Act job reporting methodology.

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