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U.S. ENVIRONMENTAL PROTECTION AGENCY
OFFICE OF INSPECTOR GENERAL
Improving EPA research programs
EPA Paid $14.5 Million to
Foreign Fellows that
Could Have Funded
Research by U.S. Citizens
or Permanent Residents
Report No. 18-P-0288
September 26, 2018
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Report Contributors:
Catherine Allen
Melinda Burks
Junior Correa
Heriberto Ibarra
Michael Petscavage
Mary Anne Strasser
Abbreviations
AAAS
American Association for the Advancement of Science
ASPPH
Association of Schools and Programs of Public Health
CFR
Code of Federal Regulations
EPA
U.S. Environmental Protection Agency
FY
Fiscal Year
NAS
National Academy of Sciences
NCER
National Center for Environmental Research
OGD
Office of Grants and Debarment
OIG
Office of Inspector General
ORD
Office of Research and Development
Cover Image: Research conducted by an NAS fellow at an EPA facility. (EPA photo)
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U.S. Environmental Protection Agency 18-P-0288
I" \ Office of Inspector General September 26,2018
v At a Glance
Why We Did This Audit
The Office of Inspector
General (OIG) conducted this
audit to determine
(1) whether the U.S.
Environmental Protection
Agency's (EPA's)
non-competitive awards to
nonprofit organizations for
fellowships are in the public's
best interest and an effective
use of taxpayer dollars,
(2) whether the EPA's
execution of the fellowship
program maximizes the
environmental research
results and meets the EPA's
mission, and (3) the accuracy
and allowability of costs
reported by nonprofit
organizations from fellowship
cooperative agreements.
The EPA provides financial
support for research
fellowships and professional
development opportunities to
encourage students to obtain
advanced degrees in the
environmental sciences, and
to pursue science,
technology, engineering and
math-related careers, to
bolster the workforce needed
to generate solutions to
environmental issues.
This report addresses the
following:
• Improving EPA research
programs.
Send all inquiries to our public
affairs office at (202) 566-2391
or visit www.epa.gov/oiq.
EPA Paid $14.5 Million to Foreign Fellows that
Could Have Funded Research by U.S. Citizens
or Permanent Residents
We found that
64 percent of EPA
fellowships awarded
to NAS were to
foreign nationals.
What We Found
Of the 166 fellows hosted at EPA laboratories over an
11-year period under EPA cooperative agreements
awarded to the National Academy of Sciences (NAS),
107 of those fellows were foreign nationals or persons
who were not citizens or permanent residents of the
United States. When the EPA directly awards
fellowships, it requires U.S. citizenship or permanent residency. However, the EPA
does not specify citizenship requirements for fellowships awarded through
cooperative agreements.
Although two of the three cooperative agreement recipients audited require
citizenship eligibility similar to the EPA's requirements, the third—NAS—did not.
NAS awarded $14.5 million to foreign nationals over the past 11 years. EPA
officials said they did not believe the EPA can establish criteria forspending
federal funds for fellowships awarded through cooperative agreements. We
believe the taxpayer dollars will be put to better use if the EPA's cooperative
agreements included the same citizenship requirements for fellowships.
Reported expenses to the EPA from the other two nonprofit organizations audited
were sometimes inaccurate. In the drawdown requests audited, two fellows were
overpaid $11,965. Neither the applicable EPA grant specialists nor project officers
received any financial documentation to explain why additional funds were
requested. Consequently, the EPA was not aware of potential unallowable costs.
Recommendations and Planned Agency Corrective Actions
We recommend that the EPA stipulate in future applicable grants and cooperative
agreements that fellowships can only be awarded to U.S. citizens or those holding
a visa permitting permanent residence in the United States. We also recommend
that the EPA develop a policy for fellowships awarded under cooperative
agreements. Further, we recommend that the EPA perform advanced
administrative monitoring reviews for the two audited cooperative agreement
recipients that reported inaccurate expenses to ensure the recipients comply with
cooperative agreement terms and conditions.
The EPA agreed with the recommendations and provided planned corrective
actions and completion dates that are acceptable and meet the intent of the
recommendations.
Listing of OIG reports.
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UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D.C. 20460
THE INSPECTOR GENERAL
September 26, 2018
MEMORANDUM
SUBJECT: EPA Paid $14.5 Million to Foreign Fellows that Could Have Funded Research by
U.S. Citizens or Permanent Residents
This is our report on the subject audit conducted by the Office of Inspector General (OIG) of the
U.S. Environmental Protection Agency (EPA). The project number for this audit was OA-FY17-0156.
This report contains findings that describe the problems the OIG has identified and corrective actions the
OIG recommends. This report represents the opinion of the OIG and does 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.
The EPA offices responsible for the issues in this report are the Office of Grants and Debarment, within
the Office of Administration and Resources Management, and the Office of Research and Development.
In accordance with EPA Manual 2750, your office provided acceptable corrective actions and milestone
dates in response to OIG recommendations. All recommendations are resolved and no final response to
this report is required. However, if you submit a response, it will be posted on the OIG's website, along
with our memorandum commenting on your response. Your response should be provided as an Adobe
PDF file that complies with the accessibility requirements of Section 508 of the Rehabilitation Act of
1973, as amended. The final response should not contain data that you do not want to be released to the
public; if your response contains such data, you should identify the data for redaction or removal along
with corresponding justification.
FROM:
Arthur A. Elkins Jr.
TO:
Donna Vizian, Principal Deputy Assistant Administrator
Office of Administration and Resources Management
We will post this report to our website at www.epa.gov/oig.
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EPA Paid $14.5 Million to Foreign Fellows that Could Have
Funded Research by U.S. Citizens or Permanent Residents
18-P-0288
Table of C
Chapters
1 Introduction 1
Purpose 1
Background 1
Responsible Offices 3
Scope and Methodology 3
Prior Audit Coverage 5
2 EPA Fellowship Citizenship Requirements Differ 6
Citizenship Requirements for Fellowships Awarded Directly by EPA
Versus Through Cooperative Agreements Differ 6
Majority of EPA Fellowships Awarded by NAS Were to Foreign
Nationals Because EPA Did Not Establish Citizenship Criteria 7
Taxpayer Dollars Could Be Put to Better Use 8
Recommendations 9
Agency Response and OIG Evaluation 9
3 Reported Expenses by Nonprofit Organizations
Sometimes Inaccurate, and EPA Reviews Limited 10
Advanced Monitoring Reviews Are In-Depth Assessments
of Recipient's Progress, Management and Expectations 10
EPA's Execution of Fellowship Program Maximizes
Environmental Research Results and Meets Agency's Mission 10
EPA Unaware that Reported Expenses by Nonprofit Organizations
Are Sometimes Inaccurate 11
Cursory Reviews Do Not Allow EPA to Determine
Accuracy of Reported Costs 13
Inadequate Reviews Resulted in Overpayments and
Unallowable Costs 14
Recommendation 14
Agency Response and OIG Evaluation 14
Status of Recommendations and Potential Monetary Benefits 15
Appendices
A Sample of Drawdown Requests Audited 16
B Agency Response to Draft Report 17
C Distribution 21
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Chapter 1
Introduction
Purpose
The U.S. Environmental Protection Agency's (EPA's) Office of Inspector
General (OIG) conducted this audit to determine:
• Whether the EPA's non-competitive awards to nonprofit organizations for
fellowships are in the public's best interest and are an effective use of
taxpayer dollars.
• Whether the EPA's execution of the fellowship program maximizes the
environmental research results and meets the EPA's mission.
• The accuracy and allowability of costs reported by nonprofit organizations
from fellowship cooperative agreements.
Background
The EPA provides support for research fellowships and professional development
opportunities to encourage students to obtain advanced degrees in the
environmental sciences and to pursue science, technology, engineering and math-
related careers, all in an effort to bolster the workforce that is needed to generate
actionable solutions to environmental issues. The EPA has awarded multiple
non-competitive cooperative agreements to nonprofit organizations to assist with
managing and administering the fellowship programs. Cooperative agreements
are used when substantial involvement is anticipated between the federal
government and the recipient. From fiscal year (FY) 2007 through calendar year
2017, the EPA awarded two consecutive non-competitive cooperative agreements
each to the following nonprofit organizations:
• American Association for the Advancement of Science (AAAS).
• Association of Schools and Programs of Public Health (ASPPH).
• National Academy of Sciences (NAS).
Following are details on the three organizations.
American Association for the Advancement of Science
AAAS manages and administers the Science & Technology Policy
Fellowships program for several federal agencies. The program is designed to
provide an opportunity for scientists, mathematicians and engineers with
doctoral-level degrees in environmental management and administration,
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environmental science and public relations, and communications. Fellows
work in offices throughout the EPA for 1 year, with an option for renewal, on
projects of mutual interest to the fellows and the hosting offices.1 Eligibility
for selection under the AAAS fellowship programs requires an individual to
be a U.S. citizen.
Association of Schools and Programs of Public Health
The ASPPH Environmental Health Fellowship Program is open to candidates
who have received their master's or doctoral degrees from an ASPPH-member
school or program of public health within the last 5 years. These placements are
for 1 year, with a possible 1-year extension. ASPPH, like AAAS, selects, places
and approves expenses—including stipends—for the fellows. A primary EPA
mentor is assigned to each fellow who is available and accessible on a regular
basis, and the mentor is responsible for ensuring compliance with EPA policies
and procedures. The EPA staff mentor fellows but do not supervise them or
assign EPA work. Fellows are encouraged to deliver technical and scientific
presentations and co-author papers with the EPA. Eligibility for selection under
the ASPPH fellowship programs requires an individual to be a U.S. citizen or
permanent resident.
National Academy of Sciences
The NAS Fellowships Office recommends and awards fellowships after
consultation with the EPA. The fellows are postdoctoral and senior scientists
and engineers who serve as guest researchers at EPA laboratories. The fellows
are considered research associates and are not employees of the EPA.2
Fellowships are for a 1-year term, generally with a 1-year extension; some
fellows have remained at the EPA for 4 years. When a fellow's tenure ends, a
final report is submitted to the EPA. The NAS fellowship eligibility for
selection allows U.S. citizens, legal permanent residents and non-U.S.
citizens.
Figure 1 lists the total expenses the EPA paid to the three nonprofit organizations
between October 2006 through December 2017—an approximate 11-year period.
From October 2006 through December 2017, $47 million was expended on these
programs and $26 million remained.
1 According to the EPA Policies and Procedures Pertaining to the Cooperative Agreements with American
Association for the Advancement of Science and Association of Schools and Programs of Public Health, "[t]hose who
accept placement in the EPA are 'program participants' of the cooperative agreements between the EPA and their
sponsoring organizations." For the purposes of this report, we use the terms "fellow" or "fellows" when referring to
those who accept EPA placement through the AAAS and ASPPH.
2 According to the NAS website, the guest investigators are considered "research associates." For the purposes of
this report, we use the terms "fellow" or "fellows" when referring to those who accept EPA placement through the
NAS.
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Figure 1: FY 2007 through calendar year 2017 costs for the three programs audited
Indirect costs
57,608,713
TOTAL
Fellows cost
$39,697,191
Nonprofits audited:
AAAS [ ASPPH NAS
(85 Fellows) I (74 Fellows) I (166 Fellows)
$3,136,403
$1,116,342
$3,355,968
$11,017,868
$6,913,355
$21,765,968
Source: OIG image derived from analysis of data provided by EPA Office of Research and
Development master list and Compass Data Warehouse.
Responsible Offices
The EPA's Office of Research and Development (ORD) manages cooperative
agreements for the fellowships program. ORD's National Center for Environmental
Research (NCER) manages cooperative agreements with the AAAS' Science &
Technology Policy Fellowship Program and the ASPPH's Environmental Health
Fellowship Program. A project officer within
ORD's Extramural Management Division manages
the cooperative agreement with the NAS Research
Associateship Program.
The EPA's Office of Grants and Debarment (OGD),
within the Office of Administration and Resources
Management, provides cradle-to-grave
administrative management of all EPA
EPA fellows sharing research. (EPA photo) headquarters-administered grants, loans, cooperative
agreements, fellowships and interagency
agreements. The OGD develops national policies, guidance and training, and
provides national compliance support. The EPA's Grants Management Plan states
that the agency awards grants and cooperative agreements as a means to help the
EPA achieve its mission. The Grants Management Plan establishes the long-term
goals and performance measures for ensuring the proper stewardship of grant funds
awarded by the EPA.
Scope and Methodology
We conducted this performance audit from March 2017 to May 2018 in
accordance with generally accepted government auditing standards. Those
standards require that we plan and perform the audit to obtain sufficient,
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appropriate evidence to provide a reasonable basis for our findings and
conclusions based on our audit objectives. We believe that the evidence obtained
provides a reasonable basis for our findings and conclusions based on our audit
objectives.
To determine whether the EPA's non-competitive awards to nonprofit
organizations for fellowships are in the public's best interest and an effective use
of taxpayer dollars, we reviewed relevant laws, policy and procedures.
We interviewed the EPA's OGD staff regarding the use of non-competitive
cooperative agreements to determine whether the use of non-compete exceptions
is justified. We also interviewed the EPA's Office of General Counsel for its
interpretation of what it considers to be "in the public's best interest." We did not
find any material issues related to the three non-competitive awards, as the agency
was not able to find similar providers for the services offered.
To evaluate whether the EPA's execution of the fellowship program maximizes
the environmental research results and meets the EPA's mission to protect human
health and the environment, we reviewed the fellowship annual reports, which
included fellow research results and fellow permanent job placement. We also
conducted interviews with ORD management and staff. We discussed the use of
nonprofit organizations to administer the fellowship programs and whether ORD
inquired with other organizations to administer the fellowship programs, and
whether ORD believed it was using the most efficient mechanism to administer its
fellowship programs. We also discussed ORD's responsibilities regarding
fellowship monitoring, evaluation, standards and performance. We interviewed
and sent questionnaires to EPA staff acting as mentors to the fellows regarding
their roles and responsibilities, and the fellow's research and work performed at
EPA offices and laboratories.
To determine the accuracy and allowability of costs reported by nonprofit
organizations from fellowship cooperative agreements, we reviewed the relevant
laws and regulations. We selected and reviewed three continuously funded
nonprofit organizations. We selected their currently open
and most recently closed cooperative agreements awarded.
In total, the six cooperative agreements drew down
fellowships funds periodically between October 1, 2006,
through December 31, 2017.
We interviewed staff from AAAS, ASPPH and NAS to
discuss their understanding of cooperati ve agreement terms
and conditions, and fellowship performance supporting the
EPA's mission. We conducted onsite reviews of financial
and accounting records at AAAS, ASPPH and NAS offices.
Research conducted at EPA laboratory
in Cincinnati, Ohio. (EPA photo)
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Prior Audit Coverage
We reviewed EPA OIG Report No. 14-P-0357. Recipient Subawards to Fellows
Did Not Comply with Federal Requirements and EPA 's Involvement in Fellow
Selection Process Creates the Appearance EPA Could Be Circumventing the
Hiring Process, issued September 17, 2014. The report found that per the
agreement between the Association of Schools of Public Health3 and fellows, the
Association of Schools of Public Health considered fellows subgrantees. The report
found that the individuals were ineligible as subgrantees under 40 CFR Part 30.5.4
The report also found that the EPA's involvement in the selection process for
fellowship candidates created the appearance that the agency could be
circumventing the hiring process and recruiting fellows in place of permanent
employees. The EPA agreed with our two recommendations and completed
corrective actions. The EPA stated that fellows should have been classified as
"program participants" receiving stipends and other financial assistance under the
"participant support cost" under provision of 2 CFR Part 230 (Office of
Management and Budget Circular A-122), Appendix B, Item 33.5
3 The Association of Schools of Public Health changed its name to the Associations of Schools and Programs of
Public Health. Both refer to the same organization.
4 40 CFR Part 30 is no longer in effect; its provisions have been reorganized within the CFR and the applicable
provisions may now be found at 2 CFR Part 200.
5 2 CFR Part 230 is no longer in effect; the Cost Principles may now be found at 2 CFR Part 200 Subpart E—
Cost Principles.
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Chapter 2
EPA Fellowship Citizenship Requirements Differ
When the EPA directly awards fellowships it requires fellowship recipients to be
U.S. citizens or permanent residents, but fellowships awarded through an EPA
cooperative agreement do not specify eligibility criteria for citizenship. Although
two of the three recipients audited require citizenship or permanent residency
similar to the EPA's, which we consider a best practice, the third—NAS—does
not. Consequently, the NAS spent $14.5 million in funding for foreign nationals
over the past 11 years. This occurred because an EPA official did not believe the
EPA could establish criteria or citizenship eligibility requirements for spending
federal funds pursuant to a fellowship awarded by a cooperative agreement. As a
result, the EPA did not include language requiring U.S. citizenship or permanent
residency as it does when it directly awards fellowships.
While there are differences between fellowships, the fellowships are similar in
that both the EPA's fellowships and the fellowships awarded through cooperative
agreements are mainly for the benefit of the fellow. Therefore, we believe that
EPA-funded fellowships should be consistent and contain a citizenship
requirement regardless of to whom and how they are awarded. We believe funds
could be put to better use if the EPA's cooperative agreements included a
provision stipulating a similar citizenship requirement that the EPA has for its
own directly funded fellowships.
Citizenship Requirements for Fellowships Awarded Directly by EPA
Versus Through Cooperative Agreements Differ
When the EPA directly awards a fellowship, the applicable regulations specify
eligibility criteria, including citizenship requirements. Specifically, 40 CFR
46.135, Applying for Fellowships, states:
If you wish to apply for an EPA fellowship, you must be:
(a) A citizen of the United States, its territories, or possessions, or
lawfully admitted to the United States for permanent residence.
However, AAAS, ASPPH and NAS award fellowships to individuals using EPA
funds, pursuant to the organizations' cooperative agreements with the agency; the
provisions governing the EPA's directly awarded fellowships do not apply to
fellowships awarded through the cooperative agreements. Consequently, the EPA
did not include any citizenship eligibility requirements in the cooperative
agreements. Nonetheless, AAAS and ASPPH included similar citizenship
requirements in their fellowship applicant criteria, which we consider a best
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practice. However, NAS allowed non-U.S. citizens to apply for the fellowships
awarded through its cooperative agreement. Table 1 shows details.
Table 1: Fellow eligibility requirements of the grantees
Organization
Language related to citizenship
1
AAAS
Under "Are you Eligible?" there is a requirement that reads
"I am a U.S. Citizen."
2
ASPPH
Candidates must be a U.S. citizen or permanent resident
(Green Card).
3
NAS
U.S. citizens, legal permanent residents and non-residents
are eligible for selection.
Sources: AAAS arid ASPPH websites and NAS/EPA memorandum
Majority of EPA Fellowships Awarded by NAS Were to Foreign
Nationals Because EPA Did Not Establish Citizenship Criteria
For the cooperative agreements awarded to NAS in our sample, 107 of the 166
fellows hosted at the EPA laboratories, or 64 percent, were foreign nationals.
Allowing foreign nationals to participate in the fellowships is inconsistent with
the EPA practice of awarding fellowships to U.S. citizens, which is required for
the EPA's directly awarded fellowships.
The EPA did not believe it could establish
citizenship criteria for spending federal funds
awarded pursuant to cooperative agreements.
When asked why the EPA did not address the
citizenship of the fellows in our sample, an
EPA Office of General Counsel attorney
indicated that the EPA is reluctant to tell
grantees what to do and therefore must allow
the grantees' criteria. However, a cooperative
agreement is different from a grant.
Cooperative agreements are used when
substantial involvement is anticipated
between the federal government and the
recipient, while grants are used when substantial involvement is not anticipated.
The EPA Office of General Counsel attorney's answer is contrary to the reason
for using a cooperative agreement in lieu of a grant.
The ORD Office of Administrative and Research Support project officer for the
cooperative agreement with the NAS said that the NAS is the administrator of the
EPA's cooperative agreement, and the EPA is inclusive and open to obtaining the
best research associates. The project officer also said that the NAS facilitates the
program, is the EPA's advisor, and was welcome to choose the best candidates.
However, per the NAS fellowships director, the issue of including foreign
nationals is entirely at the discretion of the sponsor (in this case, the EPA). The
EPA did not establish criteria or exercise administrative controls over its
EPA NAS fellow working in an EPA
field lab. (EPA photo)
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agreement with the NAS to establish citizenship requirements. It allowed federal
appropriated funds that benefit the fellow to be spent on foreign nationals and
reduced fellowship opportunities for U.S. citizens and permanent residents.
Taxpayer Dollars Could Be Put to Better Use
The fellowships provide the EPA with participation in new research, potential
future employment of the fellow, acknowledgment of support in the fellow's
publications, diverse perspectives from recent graduates, experienced professors,
specialized researchers and public health officials. The fellowships also contribute
to the overall research efforts of the EPA laboratories. However, EPA policies and
procedures pertaining to the cooperative agreements state the placement of
program participants in the EPA is primarily for the benefit of the program
participant and society through the advancement of science, technology and
public health. From November 2006 through December 2017, 107 of the 166
fellows were not U.S. citizens or permanent residents. The cost of the foreign
national fellows totaled $14,537,956, as shown in Figure 2.
Figure 2: NAS foreign national fellows and funding over 11 years
Indirect costs:
$3,355,968
107 foreign
Fellows:
$14,537,956
r
166 Fellows
TOTALCOST
59 U.S. citizen
Fellows:
$7,228,012
Source: OIG analysis of NAS data.
According to the NAS, U.S. citizens were not given priority as positions were
based on the quality of the applicant and application regardless of nationality.
Therefore, by funding research by foreign nationals through the agreement with
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the NAS, the EPA was not following the best practice pertaining to citizenship
requirements established for fellowships awarded directly by the EPA. The
fellows are the direct beneficiaries of the fellowship program, as they gain
knowledge from EPA mentors and through the use of the EPA's equipment.
When the fellowships are completed, that gained knowledge often leaves the
United States because the fellows return to their countries.
Recommendations
We recommend that the Assistant Administrator for Administration and
Resources Management:
1. Stipulate in future grants and cooperative agreements that result in
fellowship awards that the fellowships can only be awarded to U.S.
citizens or those holding a visa permitting permanent residency in the
United States, consistent with citizenship requirements for fellowships
awarded directly by the EPA.
2. Develop a policy for fellowships funded through EPA cooperative
agreements. The policy should include citizenship requirements for such
fellowships.
Agency Response and OIG Evaluation
For Recommendation 1, while we recommended that the EPA require citizenship
or permanent residency for fellowships in current and future cooperative
agreements, the EPA believes it would be inappropriate to unilaterally revise the
terms and conditions of the current cooperative agreements. The EPA proposed
instead to include such requirements in future cooperative agreements. We agree
with the agency and removed the current requirement from the original
recommendation. We accept the proposed alternative corrective action because it
meets the intent of the recommendation. The estimated completion date for this
corrective action is December 31, 2018.
For Recommendation 2, the EPA concurred and indicated it will revise its
December 2014 policy on EPA involvement in selecting fellows for cooperative
agreement-funded fellowship programs. The agency indicated the revised policy
will specify that the terms and conditions of fellowship cooperative agreements
require that program participants be U.S. citizens or permanent residents. The
estimated completion date for this corrective action is October 1, 2019. We
confirmed with the Office of Administration and Resources Management that all
future fellowship awards, regardless of agreement type or participant titles, will
only be awarded to U.S. citizens or permanent residents.
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Chapter 3
Reported Expenses by Nonprofit Organizations
Sometimes Inaccurate, and EPA Reviews Limited
For AAAS and ASPPH, support for reported expenses of EPA cooperative
agreement funds was sometimes inaccurate. As part of its advanced monitoring,
the EPA is to conduct in-depth assessments of a recipient's progress, management
and expectations. EPA staff performed a cursory review of drawdown requests
and did not ask for or receive supporting documentation for those requests. The
project officers and grant specialist only verified that the amounts requested
matched the amounts provided to the nonprofit organizations. Consequently, the
EPA did not have reasonable assurance that funds were used responsibly and for
the intended purpose. We determined that $11,965 of taxpayer dollars could have
been put to a better use if the EPA had monitored just the drawdown requests that
we reviewed. We found no issues with NAS drawdown requests.
Advanced Monitoring Reviews Are in-Depth Assessments of
Recipient's Progress, Management and Expectations
According to EPA Order 5700.6A2 CHG 2, Policy on Compliance, Review and
Monitoring, the purpose of advanced monitoring is to conduct in-depth assessments
of a recipient's administrative and financial progress, the project's programmatic
and technical progress, management, and expectations. Baseline monitoring is the
periodic review of a recipient's progress in, and compliance with, a specific
award's scope of work, terms and conditions, and regulatory requirements.
Documented programmatic and administrative baseline monitoring is required for
all awards covered by this order. After the initial baseline monitoring, all
subsequent baseline monitoring is required within 12 months of the last baseline or
advanced monitoring activity recorded in the Integrated Grants Management
System; that system streamlines and automates the grant process from the initial
negotiation of the grant workplan through to the final closeout of the grant.
EPA's Execution of Fellowship Program Maximizes
Environmental Research Results and Meets Agency's Mission
We found that the EPA's execution of the fellowship program maximizes the
environmental research results and meets the EPA's mission. EPA staff acting as
mentors to the fellows provided examples of how the work performed by fellows
met the EPA mission. Examples included:
• Helping the Water Quality Standards Program meet its mission to provide
technical support to states and regions on science and science policy to
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assist state adoption of scientifically defensible criteria that are protective
of designated uses in surface waters, and to develop national policy and
guidance to increase national consistency in the implementation of the
Water Quality Standards program.
• Working and communicating with the EPA and tribes to support the
EPA's primary oversight role of the tribal drinking water program.
• Performing laboratory tests using standardized quantitative test methods
on several microbial agents, including showing that bacterial spores are
more tolerant to disinfectants than vegetative bacteria. The data have been
used to further establish and validate test methodology for potential
regulatory purposes.
EPA Unaware that Reported Expenses by Nonprofit Organizations Are
Sometimes Inaccurate
The EPA was unaware that two of the three nonprofit organizations reported
expenses supporting drawdown requests of EPA funds that were sometimes
inaccurate. In a judgmental sample of 11 drawdowns (see Appendix A), we found
issues with stipend payments and relocation allowances. Details follow.
American Association for the Advancement of Science
For the AAAS, of the 37 drawdowns made between FYs 2014 and 2016, we
selected the highest dollar drawdown of FY 2015 and the three highest dollar
drawdowns in FY 2016, for a total of four. We found one fellow was overpaid
a total of $2,546.46 over six pay periods, as shown in Table 2.
Table 2: AAAS overpayment to an EPA fellow
Payment date
Stipend
received
Stipend per
agreement
Overpayment
September 15, 2015
$3,606.83
$3,182.42
$424.41
September 30, 2015
3,606.83
3,182.42
424.41
May 15, 2016
3,606.83
3,182.42
424.41
May 31, 2016
3,606.83
3,182.42
424.41
June 15,2016
3,606.83
3,182.42
424.41
June 30, 2016
3,606.83
3,182.42
424.41
Total
$2,546.46
Source: OIG analysis of AAAS data.
AAAS staff could not find the appropriate documentation to substantiate the
change in the stipend-level payments. As a result of our finding of an
overpayment to one fellow, the AAAS calculated the adjustment to be made
for the outstanding questioned item for 18 pay periods in addition to the six
pay periods identified. For this fellow, the AAAS made an adjustment to the
salary, Social Security and medical insurance for the 24 pay periods in the
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2015-2016 fellowship year, for a total of $10,965.12. The adjustment made
for $10,965.12 was later credited to the cooperative agreement by the AAAS.
Once again, by not reviewing the drawdowns or requesting support or
documentation, the EPA was unaware of incorrect drawdown amounts
requested by the nonprofit organization.
Association of Schools and Programs of Public Health
For the ASPPH, we selected the three highest dollar value drawdowns for the
period of January 2016 through July 2017. We found that one fellow
incorrectly received a $1,000 relocation allowance. ASPPH fellows receive a
one-time $1,000 relocation allowance if the fellow lives outside of the
Washington, D.C., metro area. For one fellow, the permanent address was in
Arlington, Virginia, which is considered to be inside the D.C. metro area.
According to the ASPPH recordkeeping system, the fellow received a $1,900
payment: $900 for local travel and $1,000 for relocation. Based on the
fellow's permanent address, the fellow should not have received a $1,000
relocation allowance. During discussions with the OGD, we learned that the
ASPPH agreed to deduct the $1,000 relocation allowance on its August 2018
drawdown.
National Academy of Sciences
For the NAS, we judgmentally selected four drawdown requests: the final
drawdown of FY 2013 and the highest dollar value drawdowns for FYs 2014,
2015 and 2016. We found no errors regarding NAS drawdowns.
Table 3 summarizes the two types of errors found in the 11 drawdowns reviewed
that represent ineligible costs not permitted under the cooperative agreements.
Table 3: Unsupported nonprofit drawdown expenses
Unallowed expense
Drawdown
AAAS stipend
$10,965.12
ASPPH relocation allowance
1,000.00
Total
$11,965.12
Source: OIG analysis of the 11 drawdowns.
The two nonprofit organizations claimed $11,965 in stipend and moving costs that
were ineligible because the expenses did not meet cost principles specified by
2 CFR Part 200.405, which states:
(a) A cost is allocable to a particular Federal award or other cost
objective if the goods or services involved are chargeable or
assignable to that Federal award or cost objective in accordance
with relative benefits received.
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The current cooperative agreement awarded to the ASPPH expired on August 31,
2018. The EPA should recover the $1,000 from the ASPPH prior to the closing of
the cooperative agreement.
Cursory Reviews Do Not Allow EPA to Determine Accuracy of
Reported Costs
EPA staff performed only cursory reviews of drawdown requests. Compass Data
Warehouse—the agency's financial system—provides information about
obligations, drawdowns and remaining fund balances on grant accounts. During
our review, one ORD project officer indicated that for the AAAS and ASPPH,
funds are obligated through mixed appropriations. As a result, the Office of the
Chief Financial Officer draws down and takes varying percentages from each
appropriation code. This made it difficult for project officers to know what was
expensed as they did not receive "per-fellow" expense information. Instead, they
only verified that requested drawdown amounts matched what was drawn down.
Another ORD project officer indicated that the OGD grant specialist sent a copy
of the drawdown request and asked the project officer about the reasonableness of
the drawdown request amount. According to the grant specialist, she reviewed
Compass Data Warehouse to make sure that the
requested funds were withdrawn. In addition, the
grant specialist verified that the amount
requested matched the amount paid to the
nonprofit organizations. Neither the grant
specialists nor the project officers received any
financial documentation supporting the
drawdown requests. According to the OGD
Branch Chief, she did not believe the OGD could
support a recommendation to withhold payment
without a reason. Nonetheless, the OGD serves
as the national program manager for
administrative grants management, including
responsibility for assistance regulations, policy and guidance, and assistance-
related training. The OGD's Grants and Interagency Agreements Management
Division is responsible for cradle-to-grave administrative management for all
assistance programs administered by EPA headquarters.
According to EPA Las Vegas Finance Center staff, the grant specialists do not
receive documentation from the nonprofit organizations for drawdowns unless the
recipients are high risk. When asked how the finance center knew if the nonprofit
organization requested too many EPA funds, Las Vegas Finance Center staff said
it was subjective. The finance center said it could review the last 10 payments,
amounts awarded and amounts remaining, but would not receive any actual
documentation.
An EPA NAS fellow performs research. (EPA photo)
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Inadequate Reviews Resulted in Overpayments and
Unallowable Costs
We determined that $11,965 of taxpayer dollars could have been put to better use
if the EPA had monitored just the drawdown requests that we reviewed. We
reviewed only 11 drawdowns and found inaccuracies in four of the reported costs;
there may be additional overpayments of which the EPA was unaware. Without
the appropriate assessment and evaluation, and by not requesting supporting
documentation for the drawdowns, the EPA was unaware of incorrect drawdown
amounts requested by the nonprofit organizations. Consequently, the EPA does
not have reasonable assurance that funds were used responsibly and for the
intended purpose. In addition, when documents are not reviewed, the risk of
fraud, waste and abuse increases.
Recommendation
We recommend that the Assistant Administrator for Administration and
Resources Management:
3. Perform advanced administrative monitoring reviews for the American
Association for the Advancement of Science and the Association of
Schools and Programs of Public Health, to ensure that recipients complied
with cooperative agreement terms and conditions. The results of each
review must be transmitted to the recipient and recorded in the Integrated
Grants Management System database.
Agency Response and OIG Evaluation
The EPA agreed with Recommendation 3 and indicated the agency will perform
advanced monitoring reviews to include transaction testing of a sample of
drawdowns documentation to ensure that payments to the cooperative agreement
recipients are accurate and adequately supported by source documentation. The
EPA provided an estimated completion date of December 31, 2018.
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Status of Recommendations and
Potential Monetary Benefits
RECOMMENDATIONS
Potential
Planned
Monetary
Rec.
Page
Completion
Benefits
No.
No.
Subject
Status1
Action Official
Date
(in $000s)
14
Stipulate in future grants and cooperative agreements that result
in fellowship awards that the fellowships can only be awarded to
U.S. citizens or those holding a visa permitting permanent
residency in the United States, consistent with citizenship
requirements for fellowships awarded directly by the EPA.
Develop a policy for fellowships funded through EPA cooperative
agreements. The policy should include citizenship requirements
for such fellowships.
Perform advanced administrative monitoring reviews for the
American Association for the Advancement of Science and the
Association of Schools and Programs of Public Health, to ensure
that recipients complied with cooperative agreement terms and
conditions. The results of each review must be transmitted to the
recipient and recorded in the Integrated Grants Management
System database.
Assistant Administrator for 12/31 /18
Administration and
Resources Management
Assistant Administrator for 10/1 /19
Administration and
Resources Management
Assistant Administrator for 12/31 /18
Administration and
Resources Management
$12
1 C = Corrective action completed.
R = Recommendation resolved with corrective action pending.
U = Recommendation unresolved with resolution efforts in progress.
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Appendix A
Sample of Drawdown Requests Audited
Date of drawdown
Amount
AAAS
1
October 16, 2014
$176,824.77
2
October 19, 2015
234,961.96
3
June 23,2016
244,178.64
4
July 20, 2016
253,419.99
Total
$909,385.36
ASPPH
1
January 20, 2016
$318,725.30
2
March 8, 2016
285,623.66
3
March 15, 2017
294,368.60
Total
$898,717.56
NAS
1
September 13, 2013
$294,489.36
2
April 28, 2014
267,862.06
3
August 13, 2015
144,414.63
4
August 22, 2016
193,442.04
Total
$900,208.09
Source: OIG analysis of AAAS, ASPPH and NAS data.
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Appendix B
Agency Response to Draft Report
p ro UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
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fellowships for U.S. citizens. ORD believes that allowing cooperative agreement recipients to
decide whether to impose citizenship or residency requirements was sound program policy in
that it led to a diverse group of program participants who brought different perspectives on
environmental science and engineering. Additionally, ORD has determined based on advice from
the Office of General Counsel and OARM that it would be inconsistent with EPA Order 5700.1,
EPA's policy for interpreting the Federal Grants and Cooperative Agreement Act, for EPA to use
fellowship programs funded through cooperative agreements to recruit federal employees. ORD,
however, agrees with the OIG that it is within the EPA's discretion to impose citizenship and
residency requirements on fellowship program participants. Such a requirement will be included
in the terms and conditions of future fellowship program cooperative agreements.
Attached is ORD's analysis which discusses suggested technical corrections to the draft audit
necessary for accuracy.
Although OARM does not agree with the OIG's assertion that the Office of Grants and
Debarment is not providing proper oversight of fellowship cooperative agreements, OARM
accepts the OIG's recommendation to perform advanced monitoring on the fellowship program
cooperative agreements for the American Association for the Advancement of Science and the
Association of Schools and Programs of Public Health.
OGD, as the National Program Manager for administration of financial assistance agreements, is
adhering to the agency's guidance and protocols for post award monitoring. Monitoring includes
but is not limited to programmatic/administrative baseline (cursory reviews) and
programmatic/administrative advanced monitoring reviews (in-depth assessment). These
monitoring techniques do not include prepayment reviews of recipient drawdown requests which
the draft report implies are required for effective monitoring of payments to recipients. Under 2
CFR 200.305(b)(1), the EPA must pay recipients in advance unless the agency finds that their
disbursement procedures are inadequate or there is a reasonable basis to place the recipient in
reimbursement status using the "high risk" specific condition criteria and procedures described at
2 CFR 200.207. The draft report does not cite any regulation or term and condition of the
cooperative agreements which authorizes OGD to request documentation to support drawdowns
prior to payment in the absence of a properly imposed reimbursement condition.
Over the years, advanced monitoring reviews have been performed based on a random statistical
selection unless an 010 audit or other review indicates a need for advanced monitoring of a
particular recipient. OGD's resource limits preclude the use of advanced monitoring on a more
frequent basis. Since the recipients reviewed during this audit have not been randomly selected
for an advanced monitoring review in recent years, and the OIG has identified potential financial
management weaknesses, OGD agrees to perform advanced monitoring reviews on both
recipients. The reviews will include transaction testing of a sample of drawdowns based on
source documentation to ensure that payments to the recipients are accurate.
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AGENCY'S RESPONSE TO DRAFT REPORT RECOMMENDATIONS
No.
Recommendation
High-Level Intended Corrective
Action(s)
Estimated
Completion
Date
1
Stipulate in current and future
grants and cooperative
agreements that results in
fellowship awards that the
fellowships be awarded to
U.S. citizens or those holding
a visa permitting permanent
residence in the United States,
consistent with citizenship
requirements for
fellowships awarded directly
by the EPA.
In future cooperative agreements, ORD
will include programmatic terms and
conditions requiring that fellowship
program participants be citizens or
permanent residents. It would be
inappropriate for EPA to unilaterally
revise the terms and conditions of current
agreements.
12/31/18
2
Develop a policy for
fellowships funded through
EPA
cooperative agreements. The
policy should include
citizenship
requirements for such
fellowships.
OARM, in consultation with OGC and
ORD, will revise EPA's December 2014
policy on EPA's involvement in selecting
fellows for
cooperative agreement funded fellowship
programs. The revised policy will specify
that the terms and conditions of
fellowship cooperative agreements
require that program
participants be U.S. citizens or
permanent residents.
10/1/19
AGREEMENTS
No.
Recommendation
High-Level Intended Corrective
Action(s)
Estimated
Completion
Date
3
Perform advanced
administrative
reviews for the American
Association for the
Advancement of Science and
the Association of Schools
and
Programs of Public Health to
ensure the recipients complied
with cooperative agreement
terms and conditions.
OARM will perform advanced
monitoring reviews to include transaction
testing of a sample of drawdowns
documentation to ensure that payments to
the cooperative agreement recipients are
accurate and adequately supported by
source documentation.
12/31/18
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CONTACT INFORMATION
If you have any questions regarding this response, please contact Denise Polk, director, Office of
Grants and Debarment on (202) 564-5306.
Attachments
cc: John Showman
Marian Cooper
Lauren Lemley
Denise Polk
Laurice Jones
Kysha Holliday
Michael Osinski
Brandon McDowell
Jennifer Hublar
Lynnann Hitchens
Michael Hardy
Joanne Hogan
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Appendix C
Distribution
The Administrator
Deputy Administrator
Chief of Staff
Chief of Operations
Special Advisor, Office of the Administrator
Agency Follow-Up Official (the CFO)
Agency Follow-Up Coordinator
General Counsel
Associate Administrator for Congressional and Intergovernmental Relations
Associate Administrator for Public Affairs
Director, Office of Continuous Improvement, Office of the Administrator
Assistant Administrator for Administration and Resources Management
Deputy Assistant Administrator for Administration and Resources Management
Director, Office of Acquisition Management, Office of Administration and Resources
Management
Director, Office of Grants and Debarment, Office of Administration and Resources Management
Director, Grants and Interagency Agreements Management Division, Office of
Administration and Resources Management
Director, Office of Resources, Operations and Management, Office of Administration
and Resources Management
Deputy Director, Office of Resources, Operations and Management, Office of Administration
and Resources Management
Principal Deputy Assistant Administrator for Science and EPA Science Advisor,
Office of Research and Development
Associate Director for Science, Office of Research and Development
Associate Assistant Administrator, Office of Research and Development
Deputy Assistant Administrator for Management, Office of Research and Development
Audit Follow-Up Coordinator, Office of the Administrator
Audit Follow-Up Coordinator, Office of Administration and Resources Management
Audit Follow-Up Coordinator, Office of Research and Development
Audit Follow-Up Coordinator, Office of Grants and Debarment, Assistance Agreements,
Office of Administration and Resources Management
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