<
33
\
^t0SrX
PRO"**-0
O
2
Lll
o
J
OFFICE OF INSPECTOR GENERAL
Catalyst for Improving the Environment
Public Liaison Report
Review of Complaint on the
University of Nevada, Reno,
Regional Environmental
Monitoring and Assessment
Program Cooperative Agreement
CR 826293-01
Report 2006-P-00008
December 28, 2005

-------
Report Contributors:
Dan Cox
Les Partridge
Abbreviations
BRRC	Biological Resources Research Center
EPA	U.S. Environmental Protection Agency
OIG	Office of Inspector General
REMAP	Regional Environmental Monitoring and Assessment Program

-------
£
<
33
V
^£DS^
PRO^t&
z
LU
o
<7
U.S. Environmental Protection Agency
Office of Inspector General
At a Glance
2006-P-00008
December 28, 2005
Why We Did This Review
A complainant expressed
concern regarding activities on
the Office of Research and
Development Regional
Environmental Monitoring and
Assessment Program
cooperative agreement with the
University of Nevada, Reno.
This review addresses issues
based on the complainant's
concerns.
Background
The Office of Research and
Development of the U.S.
Environmental Protection
Agency (EPA) awarded a
$400,000 cooperative agreement
to the University of Nevada,
Reno (the University). The
agreement created a biological
baseline for the Humboldt
watershed and devised
bioassessment protocols for the
State that can effectively assess
the biological conditions of
perennial streams and rivers.
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/2006/
20051228-2006-P-00008.pdf
Catalyst for Improving the Environment
Review of Complaint on the University of
Nevada, Reno, Regional Environmental
Monitoring and Assessment Program
Cooperative Agreement CR 826293-01
What We Found
Did the recipient complete the project with the required final
products?
The recipient has not submitted a complete report.
Did recipient personnel work on other grants while charging to
EPA funds?
Recipient personnel were working on other Federal grant projects
while paid from EPA funds.
Did the recipient properly record revenues and expenses?
The recipient did not allocate expenses to the appropriate Federal
grant or cooperative agreement.
Did EPA require the recipient to submit work plans, status
reports, and progress reports?
The project officer did not require the recipient to complete work
plans, progress reports, and status reports. In the absence of
compliance reports, the project officer could not determine the status
of the project or guarantee its success.
What We Recommend
We recommend that EPA
•	require the recipient to submit a complete report,
•	require the recipient to repay $21,260 in unallowable costs,
•	require the University to establish better control over the
recipient's accounting practices to make sure University
policies and practices are followed, and
•	emphasize to this project officer the importance of carrying
out his duties and responsibilities in the most effective and
efficient manner and establish a process for measuring his
accountability and performance.

-------
$
<
73
\
Ml
r
ppo^
O
2
Lll
O
T
A?
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D.C. 20460
OFFICE OF
INSPECTOR GENERAL
December 28, 2005
MEMORANDUM
SUBJECT:
FROM:
Review of Complaint on the University of Nevada, Reno, Regional
Environmental Monitoring and Assessment Program Cooperative
Agreement CR 826293-01
Paul D. McKechnie /s/
Director for Public Liaison
Office of Congressional and Public Liaison
TO:
George Gray
Assistant Administrator
Office of Research and Development
Attached is our final report, Review of Complaint on the University of Nevada, Reno, Regional
Environmental Monitoring and Assessment Program (REMAP) Cooperative Agreement CR
826293-07, conducted by the Office of Inspector General (OIG). The Public Liaison office
initiated this audit from an anonymous complaint.
This report contains findings and recommendations the OIG has identified as well as
Environmental Protection Agency Office of Research and Development comments relevant to
our recommendations. This report represents the opinion of the OIG and the findings contained
in this report do not necessarily represent the final EPA position. Final determinations on
matters in this report will be made by EPA managers in accordance with established audit
resolution procedures.
Action Required
Based on the Office of Research and Development concurrence with the findings, acceptance of
the recommendations, and creation of a corrective actions schedule, the OIG recommends this
report be closed upon issuance.

-------
We appreciate the efforts of EPA officials and staff working with us to develop this report. If
you or your staff has any questions regarding this report, please contact me at (617) 918-1471, or
Dan Cox, Assignment Manager, at (916) 498-6592.
cc:
Cheryl Varkalis, Audit Followup Coordinator, Office of Research and Development

-------
Table of Contents
At a Glance
Purpose		1
Background 		1
Scope and Methodology		1
Results of Review		2
Did the recipient complete the project with the required final products?		2
Did recipient personnel work on other grants while charging to EPA funds?		3
Did the recipient properly record revenues and expenses?		4
Did EPA require the recipient to submit work plans, status reports, and
progress reports?		4
Recommendations		5
Agency Response and OIG Evaluation		5
Appendices
A Agency Response		6
B Distribution		9

-------
Purpose
The Office of Inspector General (OIG) of the U.S. Environmental Protection Agency (EPA)
conducted a review of issues that a complainant brought to the OIG's attention related to the
University of Nevada, Reno, Biological Resources Research Center (BRRC) Regional
Environmental Monitoring and Assessment Program (REMAP) cooperative agreement, in Reno,
Nevada. Based on the issues raised, we sought to determine the following:
•	Did the recipient complete the project with the required final products?
•	Did recipient personnel work on other grants while charging to EPA funds?
•	Did the recipient properly record revenues and expenses?
•	Did EPA require the recipient to submit work plans, status reports, and progress reports?
Background
On February 24, 2004, we met with the complainant to discuss problems with a cooperative
agreement at the BRRC. At that meeting, the complainant laid out the issues that we include in
this review.
The purpose of this cooperative agreement was to create a biological baseline for the Humboldt
watershed, and devise bioassessment protocols for the State of Nevada that can effectively assess
the biological conditions of perennial streams and rivers. The initial cooperative agreement
started December 1, 1997, for 2 years at a cost of $200,000. The agreement was amended once
to add an additional $200,000 for work on the Walker and Virgin-Muddy Watersheds and extend
the performance period 2 more years; and then a second time to extend the ending date. The
performance and budget period ran out May 31, 2002. The cooperative agreement has not been
extended further.
We found the originators based the funding on an arbitrary amount for the samples gathered and
analyzed. From the outset they felt the project should run for 4 years and that they collect 160
samples at a cost of $2,500 per site sampled for a total of $400,000.
During the evaluation phase, prior to award, a peer review panel found the project flawed in
meeting the REMAP concept and on its technical merit. Specifically they found problems with
the design of the study, objectives that were not well focused, lack of questions and hypotheses,
previous work that was not referenced, and protocols used by United States Geological Service
that were not mentioned. Despite these shortcomings, the project moved forward to award.
As the project began, the co-principal investigator in charge of the project suffered a heart attack
and died. The co-principal investigator was one of the originators of the project and a key
component to the success of the project.
Scope and Methodology
We performed our review in accordance with Government Auditing Standards, issued by the
Comptroller General of the United States. We conducted the review from November 1, 2004,
1

-------
through July 12, 2005. We did not review the system of internal controls due to the limited
scope of our evaluation and the fact that such a review was not relevant to our objectives.
To accomplish our objectives, we conducted interviews with the complainant, the University, the
BRRC, and EPA representatives. We researched laws, rules, and regulations applicable to the
issues raised by the complainant; and reviewed relevant documents obtained from the
complainant, the University, the BRRC, and EPA representatives. We reviewed the accounting
records of the cooperative agreement in the University accounting system and those records kept
by the BRRC.
Results of Review
In March 2003, the EPA OIG report, EPA Must Emphasize Importance of Pre-Award Reviews
for Assistance Agreements, reported that EPA leadership did not always stress the importance of
project officer duties, and did not hold project officers accountable for conducting complete pre-
award surveys. Our report found that the project officer should have maintained more positive
control over his duties on this cooperative agreement.
In September 2005, the EPA OIG audit report, EPA Managers Did Not Hold Supervisors and
Project Officers Accountable for Grants Management, identified that EPA did not hold
supervisors and project officers accountable for grants management because there is no process
to measure most grants management practices. Also, project officers' duties were not discussed
in year-end evaluations. The EPA OIG identified these problems in past OIG reports; they are a
continuing weakness in the EPA. Because EPA managers do not stress the importance of
carrying out project officer duties and responsibilities in the most effective and efficient manner
and establishing a process of measuring project officer accountability and performance,
weaknesses in EPA grants management continue. We found these problems to exist with the
project officer on this cooperative agreement.
In response to the complaint, we found the following regarding each of our questions.
Did the recipient complete the project with the required final products?
The complainant alleged the recipient did not submit the agreed deliverables timely or in a
completed form.
We found the BRRC did not submit a final report until OIG involvement, 2Vi years late. The
project officer accepted an incomplete report on May 18, 2005, nearly 3 years late. This report
was not compiled or supervised by a qualified principal investigator. Although not determined
to be a deliverable, the project also required the BRRC to submit laboratory data to the EPA for
entry into the EPA environmental mapping database. When the BRRC submitted the final
report, some of the required laboratory data the BRRC submitted were questionable and had to
be re-evaluated. Submission of an incomplete final report happened because of the following:
2

-------
•	On the death of the original principal investigator, the BRRC did not have a qualified
person to take over. Although listed as a co-principal investigator, the director of the
BRRC did not consider himself qualified.
•	The project officer allowed the project to continue even though the BRRC lost the
original principal investigator and the project was given a questionable chance of success
by the peer review process. The peer review panel found the project lacked consistency,
stating "objectives were very general and not well focused," and on technical merit,
stating "data analysis was not adequately addressed."
•	The project officer allowed the BRRC to receive reimbursement of all EPA cooperative
agreement funds without receiving the deliverable.
•	The BRRC placed the responsibility for writing the final report on two graduate
assistants. According to the project officer, he received "one good report and one
incomplete and middling report."
•	The University did not maintain oversight control over the BRRC to make sure the
BRRC submitted a complete and timely final report.
Did recipient personnel work on other grants while charging to EPA funds?
The complainant suggested that recipient personnel were working on other Federal grants and
paid from EPA cooperative agreement funds.
We found that employees of the recipient were working on specific Fish and Wildlife Service
grants, Department of Agriculture grants, and other grants (State grants) and paid from EPA
funds for salaries, travel, and tuition. It was a common recipient practice to charge another grant
that had funding while waiting for grant funds to begin. This reimbursement procedure did not
apply to the amounts questioned. These funds were not reimbursed from other grants.
Table 1. Schedule of Questioned Costs

Salaries
and
Wages
Travel
Fringe
Benefits &
Tuition
Supplies &
Other
Costs
Indirect
Costs
Total Costs
Claimed
$228,515
$7,130
$29,129
$54,791
$80,129
$399,694
Questioned
$ 10,411
$1,516
$ 4,946
$ -0-
$ 4,387
$ 21,260
The director of the BRRC told us that three specific personnel worked on the EPA project. We
found that these three employees did not work on the project, but worked on other Fish and
Wildlife Service grants. According to OMB Circular A-21, this practice is not allowed. We
questioned $10,411 in salaries paid to these employees.
The BRRC office manager furnished us a listing identifying all personnel working for the
BRRC. From the listing we identified several BRRC employees not working on the EPA
agreement but charging travel costs to the EPA agreement. We questioned $1,516 in travel costs
not chargeable to the cooperative agreement.
We also found the BRRC used EPA funds to pay tuition for three employees that should have
been charged to a Fish and Wildlife Service grant, a Department of Agriculture grant, and a
3

-------
private scholarship. We questioned $4,946 of tuition costs as not chargeable to the EPA
agreement; we also questioned $4,387 in indirect costs.
When EPA funds ran out, we found the BRRC paid the remaining graduate assistant $13,750 in
salary from earmarked Fish and Wildlife Service grant money.
These errors occurred because the project officer did not maintain sufficient awareness and
control of the project through work plans, progress reports, and financial reports to make sure the
BRRC had proper accounting on the cooperative agreement. The University, in its fiduciary
role, did not make sure the BRRC followed established policies and practices.
Did the recipient properly record revenues and expenses?
The complainant felt that the recipient was not recording expenses properly.
We found the BRRC used EPA cooperative agreement funds to pay for work performed on other
agencies' grants. We also found other agencies' grant funds paid for work on the EPA
cooperative agreement. The BRRC did not record expenses in compliance with OMB Circular
A-21. The circular states that expenses are properly allocable to the grant account to which they
are applicable. The BRRC used EPA cooperative agreement funds until the other agencies'
grant funds became available and then reversed the charges to correct the accounts. The BRRC
followed this practice even though the University had a procedure to set up temporary (memo)
accounts just for this purpose. Because the BRRC did not follow this procedure, we found costs
claimed and reimbursed that were not properly chargeable to the EPA cooperative agreement.
The inappropriate charging happened because the University did not make sure the BRRC
maintained proper accounting of grant and cooperative agreement funds. The project officer did
not maintain sufficient awareness and control of the project through work plans, progress reports,
and financial reports to make sure the cooperative agreement had proper accounting.
Did EPA require the recipient to submit work plans, status reports, and progress
reports?
We found the recipient had not submitted the required reports during the period of the
cooperative agreement.
The cooperative agreement and the Code of Federal Regulations required the BRRC to submit
work plans, progress reports, and status reports. The project officer's responsibility was to
require the recipient to furnish the required reports. However, the project officer relied on
another EPA employee to furnish him information and control the project. This person was not a
project officer and yet was allowed to act like the project officer on site. Without compliance
reports, the project officer could not determine the status of the project or guarantee the success
of the project. Examples of negative indicators were that no qualified principal investigator was
available to take over, funds were spent on other grants, errors occurred in accounting records,
and no qualified BRRC personnel were available to complete a final report.
4

-------
Recommendations
We recommend that the Assistant Administrator for the Office of Research and Development
1.	Require the recipient to submit a completed report.
2.	Require the recipient to repay $21,260 in costs not allowed on this cooperative
agreement.
3.	Require the University establish better control over the recipient's accounting
practices to make sure University policies and practices are followed.
4.	Emphasize to this project officer the importance of carrying out his duties and
responsibilities in the most effective and efficient manner and establish a process for
measuring his accountability and performance.
Agency Response and OIG Evaluation
EPA's Office of Research and Development concurred with the findings and content of the draft
report. Further, the Office of Research and Development has prepared a corrective action report
and initiated immediate corrective actions to address the draft report recommendations.
In August 2005, the project officer received two reports from the University satisfying the
requirements for final product delivery.
Upon receipt of the OIG final report, the Office of Research and Development will notify the
recipient and EPA Grants Administration Division about the unallowable costs. The Grants
Administration Division will help arrange for the recipient to repay $21,260 in unallowable
costs.
The Office of Research and Development, with the assistance of the Grants Administration
Division, will require the University to establish better control over the recipient's accounting
practices to make sure University policies and practices are followed. The Environmental
Services Division intends to change future cooperative agreement practices allowing project
officers greater awareness in tracking and reporting Agency funds. Also, the Environmental
Services Division plans to work with the Grants Administration Division in establishing
practices whereby project officers are more cognizant of actual expenses for which funds are
used.
The Director, Environmental Services Division, recognizes the seriousness of project officer
duties and responsibilities and has directed that all Division Branch Managers receive additional
extramural management training. The Environmental Services Division will pursue additional
databases to aid project officers in managing their cooperative agreements and have progress
reports and associated billings sent to the project officers for their review.
The Office of Research and Development has completed action on the first recommendation and
has included a corrective action plan for agreed-upon actions and milestone dates on the other
recommendations. For these reasons this audit should be closed upon issuance.
5

-------
Appendix A
? mrm \
S7:%
V-i
Agency Response
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D.C. 20460
November 28, 2005
OFFICE OF
RESEARCH AND DEVELOPMENT
MEMORANDUM
SUBJECT: Response to OIG Draft Public Liaison Report, "Review of Complaint
on the University of Nevada, Reno, Regional Environmental
Monitoring and Assessment Program Cooperative Agreement," CR
The purpose of this memorandum is to provide the Office of Research and
Development's (ORD) comments on the subject draft report.
Background/Discussion
In response to your October 28, 2005 memorandum, we have reviewed the subject
draft public liaison report. We concur with the findings and content of the draft report and
have initiated immediate corrective actions to address the draft report recommendations.
Along with the internal management controls identified in the attached Corrective Action
Plan, ORD will continue to work with the Grants Administration Division to resolve the
findings that fall under its direct authority. Since ORD has already completed one of the
required actions and identified milestones for others, we believe the final report should
state this and be closed upon issuance.
826293-01
FROM:	George Gray /s/Lek Kadeli for
Assistant Administrator (8101R)
TO:
Paul D. McKechnie
Director for Public Liaison
Office of Congressional and Public Liaison
Purpose
6

-------
We would like to thank Mr. Dan Cox and Mr. Les Partridge, Office of Inspector
General, for their professionalism and helpfulness during their investigation and reporting.
If you have any questions or require additional information, please contact Cheryl Varkalis
of my staff at (202) 564-6688.
Attachment
cc: LekKadeli
Jack Puzak
Alice Sabatini
Jorge Rangel
Cheryl Varkalis
7

-------
November 28, 2005
ORD Corrective Action Plan
for
OIG Draft Public Liaison Report, dated October 28, 2005
Review of Complaint on the University of Nevada, Reno
Regional Environmental Monitoring and Assessment Program (REMAP)
Cooperative Agreement CR 826293-01
Rec
#
Report
Recommendation
Action
Official
Corrective
Action
Due
Date
1
Require the recipient
to submit a complete
report.
Daniel Heggem,
Project Officer
(PO)
Two reports were received in August 2005.
The reports satisfied the requirements for final product
delivery. On 8/22/05, PO requested the Grants
Administration Division (GAD) to close the Cooperative
Agreement since the final deliverables were received.
Complete
2
Require the recipient
to repay $21,260 in
unallowable costs.
GAD and PO
Notify the recipient to submit a credit for these
unallowable costs.
Upon
receipt of
OIG final
report
3
Require the
University to
establish better
control over the
recipient's
accounting practices
to make sure
University policies
and practices are
followed.
GAD, PO and Sue
Jackson,
Extramural
Management
Specialist (EMS)
Notify the University to establish better control over
recipient's accounting practices. For future
Environmental Sciences Division cooperative
agreements, include in the Terms and Conditions that our
funding must be tracked and reported separately from
other entities funds. Work with GAD to set up future
cooperative agreements as reimbursable agreements; in
this way the PO will be cognizant of actual expenses for
which funds are used, and the recipient will be
reimbursed accordingly.
Upon
receipt of
OIG final
report
4
Emphasize to the PO
the importance of
carrying out his
duties and
responsibilities in
the most effective
and efficient manner
and establish a
process of
measuring his
accountability and
performance.
Dr. John Lyon,
Supervisor of the
PO and EMS
The Director, Environmental Sciences Division, has
already discussed the seriousness of this matter with the
PO and has directed that all Division Branch Managers
receive additional extramural management training.
EMS will meet with all POs on cooperative agreements
to introduce databases that can be used to track and
monitor costs, including the Grants Data Warehouse
where the PO can track the Document Control Number
and the disbursements that are paid out under the
agreement. In Terms and Conditions, will have progress
reports required and the billings associated with those
reports be sent to the PO.
1/15/06
8

-------
Appendix B
Distribution
Office of the Administrator
Assistant Administrator for Research and Development
Director, Grants Administration Division
Agency Followup Official (the CFO)
Agency Followup Coordinator
Audit Liaison, Office of Research and Development
Associate Administrator for Congressional and Intergovernmental Relations
Associate Administrator for Public Affairs
General Counsel
Inspector General
9

-------