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U.S. Environmental Protection Agency
Office of Inspector General
At a Glance
2005-P-00015
June 16, 2005
Catalyst for Improving the Environment
Why We Did This Review
As a followup to a prior audit
on the Alaska Village Safe
Water Program, we sought to
answer the following question:
Did Environmental Protection
Agency (EPA) Region 10
meet EPA guidelines before
awarding the program grant of
$34 million in 2004?
Background
In 1996, Congress amended
Section 303 of the Safe
Drinking Water Act to
authorize grants to fund
mostly infrastructure under
Alaska's Village Safe Water
Program. Prior to August
2004, Region 10 had awarded
$232 million to Alaska to fund
the Village Safe Water
Program. On August 18,
2004, the Region awarded an
additional $34 million.
Region 10's Grant for Alaska Village Safe Water
Program Did Not Meet EPA Guidelines
What We Found
Region 10 did not meet EPA guidelines before awarding the Village Safe Water
Program grant to the State of Alaska Department of Environmental Conservation.
The Region did not ensure that specific environmental objectives and the scope of
the work were clear, or assess whether there was a reasonable chance that overall
environmental objectives could be achieved.
Further, the Region did not complete the cost review of the individual projects
until 3 months after awarding the grant. After the grant award, the Region
recommended eliminating six ineligible projects valued at almost $4.8 million, so
the Region needs to amend the grant to exclude the ineligible projects. Timely
cost reviews could have prevented inclusion of these ineligible projects.
The Region needs to modify the grant to remove approval for advance draws that
are contrary to Federal cash management requirements. Also, the Region needs to
document the cost review of $1.6 million in administrative costs, and clarify the
period they cover. While the grant has project and budget periods of 5 years, the
Region stated that the administrative costs only covered a 1-year period. The
Region needs to clarify this matter to ensure sufficient administrative support for
the entire 5-year budget period and compliance with Congressional limitations.
The conditions noted occurred even though Region 10 was aware of the findings
and recommendations in our previous report that identified improvements were
needed in the award and oversight of Village Safe Water Program grants. The
Region stated that it made the 2004 grant award because of financial concerns
over the State's program. However, without performing the necessary steps, there
were no assurances that the proposed projects met technical and programmatic
guidelines and achieved maximum value.
For further information,
contact our Office of
Congressional and Public
Liaison at (202) 566-2391.
To view the full report,
click on the following link:
www.epa.qov/oiq/reports/2005/
20050616-2005-P-00015.pdf
What We Recommend
We recommend that Region 10 suspend work under the grant until all pre-award
steps are completed, and establish controls to ensure that Region 10 fulfills all
EPA requirements before awarding grants. The Region believed that it had
already taken the action needed to fulfill all pre-award steps and that it was
unnecessary to suspend the grant.
Based on the Region's response to the draft report, we revised our
recommendations to have Region 10 assure that the State's accounting of
administrative costs meet regulatory and statutory requirements. We also
recommend that Region 10 place the State on a reimbursement payment basis until
compliance with cash management requirements are verified.

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