Acquisition Management Review of Personal
Services
Office of Inspector General
Audit Report
Acquisition Management Review of Personal Services
E1BMF7-23-0012-8100251
September 29,1998
EXECUTIVE SUMMARY
PURPOSE
In 1997, we reviewed EPA's progress since 1992 in addressing contracts management deficiencies identified by the
Agency's Standing Committee on Contracts Management (Standing Committee). One of the seven problem areas
identified by the Standing Committee was personal services. During our 1997 review, 38 percent of the contracts we
reviewed for personal services showed indications of such relationships between EPA and contractors. EPA personnel
were co-located with contractors on all of these contracts, and indications of personal services relationships occurred
throughout the Agency's programs.
The objectives of this audit were to determine: (1) the extent EPA contracts included personal services relationships, and
(2) the adequacy of the Agency's controls to prevent personal services contracts.
RESULTS IN BRIEF
We found specific instances of personal services problems, or the appearance of such, in over half of the contracts
reviewed, and among nearly all of the major program offices. In several instances, the agency has taken action to correct
the problems. We also found indicators of personal services in two additional contracts (see exhibit 1). Because of the
number and distribution of such instances across the Agency, the potential exists that personal services is a continuing
systemic problem. On-site contracts are especially vulnerable to personal services situations because of the potential for
daily face-to-face interaction between EPA staff and contractors. Program offices and contracting divisions each must
share the role of ensuring that personal services do not occur. Program offices, with the help of contracting offices, should
attempt to eliminate unnecessary interactions with contractors, including shifting work off-site if possible.
Instances of personal services, or the appearance of such, occurred in 13 of 23 (56 percent) contracts, primarily because:
(1) EPA program office employees exercised excessive supervision of contractor and subcontractor staff, (2) close
working arrangements existed, or (3) contract language and oversight needed improvement (see chapter 2). EPA
improperly treated contractor staff as Government employees. Normally, the Government directly hires its employees
under competitive appointment or other procedures mandated by civil service laws. Obtaining personal services by
contract, rather than by direct hire, circumvents those laws and Office of Management and Budget personnel ceilings.
Also, in some cases, contractors performed work outside the scope of their contracts.
The Agency's controls generally seemed adequate. However, EPA personnel were not always committed to following the
controls, resulting in the above instances of personal services. Assigning knowledgeable and committed project officers to
monitor contracts and awarding fixed-priced contracts, in some cases, significantly reduced the risk of personal services.
% PRO^S
RECOMMENDATIONS

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We recommend that the Acting Administrator for Administration and Resources Management and the Agency Senior
Resource Officials:
1.	Identify all contracts where EPA and contractors are co-located, and evaluate and document whether any on-site
contracts can be moved off-site.
We recommend that the Acting Administrator for Administration and Resources Management:
2.	Direct contracting divisions to incorporate a contract clause similar to the one used by the Cincinnati Contracts
Management Division ("Government Contractor Relations") in all EPA contracts.
3.	Direct Agency contracting officers to conduct a site visit at least annually for all on-site contracts and document whether
personal services deficiencies were identified. If deficiencies are identified, the contracting officer should provide needed
guidance or recommendations to the project officer.
AGENCY COMMENTS
The Acting Assistant Administrator for Administration and Resources Management provided a written response to our
draft report on September 4, 1998. The Acting Assistant Administrator agreed with all recommendations in this report.
The Acting Assistant Administrator plans to: (1) coordinate with EPA program offices to complete a review and analysis,
within 90 days of this report's issuance, determining whether contractors working at EPA locations can be moved off-site;
(2) develop an Agency-wide contract clause to clarify allowable Government/ Contractor Relations; and (3) modify EPA's
Acquisition Regulation to include the requirement to use this Agency-wide clause. Modification of EPA's Acquisition
Regulation is to be completed by February 1999. Contracting officers will also perform site visits for all on-site contracts,
and contracting officers will discuss personal services issues with project officers for such contracts on an annual basis.
The Office of Acquisition Management plans to issue a memo to contracting officers informing them of this requirement by
December 1998.
We have included a summary of the Acting Assistant Administrator's comments in appropriate sections of this report. His
entire response is included as appendix 1 to this report.
OIG EVALUATION
The actions described above, when completed, and the actions taken to date, will adequately address the findings and
recommendations in this report.

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