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* *. U.S. Environmental Protection Agency	18-P-0231
J" ftS \ Office of Inspector General	August 16,2018
At a Glance
Why We Did This Project
We conducted this audit to
determine whether the
U.S. Environmental Protection
Agency (EPA) implemented a
contract invoice payment
process that allows for the
efficient processing of accurate
and supportable invoice
payments and that complies
with federal laws, federal
regulations and agency
The Prompt Payment Act
requires executive branch
agencies to pay interest
penalties when they do not pay
their invoices by the due date.
As a result, invoice reviews and
approvals are critical functions
that impact the management of
public funds. The EPA's policy
is to review invoices thoroughly
to determine whether adequate
information, proper rationale
and documentation exist to
support the payment of contract
invoices in a timely manner.
Responsibility for invoice
review and approval is first
vested with the contracting
officer (CO), who may delegate
this authority to the contracting
officer representative (COR).
This report addresses the
 Operating efficiently and
Send all inquiries to our public
affairs office at (202) 566-2391
or visit www.epa.gov/oia.
Without E-lnvoicing and Stronger Payment Process
Controls, EPA Is Placing $1.2 Billion at Risk Annually
What We Found
The EPA can maximize the efficiency
of its contract invoice payment
process by focusing on four areas:
The EPA places an annual average of
$1.2 billion in taxpayer funds at greater
risk by not using an e-invoicing
process, not taking advantage of
prompt payment discounts, not
avoiding interest penalties and not
performing critical oversight duties.
	Implementing an electronic
invoicing (e-invoicing) system.
	Addressing administrative and
contract modification processing errors.
	Taking prompt payment discounts offered on contract invoices.
	Performing critical CO and COR oversight duties.
The EPA does not have a plan to implement an e-invoicing system, even though
the Office of Management and Budget directed agencies to transition to
e-invoicing by the end of fiscal year 2018. Also, the EPA's administrative and
contract modification processing errors result in interest penalties, and the EPA
does not always take discounts when offered. In addition, agency COs and
CORs could not provide or locate documentation demonstrating the performance
of their oversight duties.
If the EPA does not address these areas, the agency will remain vulnerable to
waste, fraud and abuse; will continue to put taxpayer dollars at risk due to
discounts lost and interest penalties paid; and will miss opportunities to put these
funds to better use to protect human health and the environment.
Recommendations and Planned Agency Corrective Actions
We recommend that the Chief Financial Officer develop a plan with milestone
dates to implement an e-invoicing system. We also recommend that the Chief
Financial Offer develop and implement measurable controls that address
processing delays, provide staff with guidance on taking prompt payment
discounts, and notify approving officials of expiring discount periods.
In addition, we recommend that the Assistant Administrator for Administration
and Resources Management, in coordination with the Office of the Chief
Financial Officer, develop and implement measurable controls for each office's
role in processing contract invoices and contract modifications to address
administrative and processing errors. Also, we recommend that the Assistant
Administrator for Administration and Resources Management verify that COs are
performing oversight responsibilities per the agreed-upon corrective actions from
prior Office of Inspector General reports and implement agencywide measurable
controls to address nonperformance of CO oversight responsibilities.
Listing of OIG reports.
The agency did not provide a response to our draft report within 30 days, as
required by EPA Manual 2750. We will meet with the agency to obtain resolution
for our recommendations.