Cheyenne River Sioux Tribe Outlays Reported Under Five EPA Assistance Agreements


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OFFICE OF INSPECTOR GENERAL
Catalyst for Improving the Environment
Attestation Report
Cheyenne River Sioux Tribe
Outlays Reported Under
Five EPA Assistance Agreements
Report No. 2007-4-00078
September 24, 2007

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Report Contributors:	Keith Reichard
Leah Nikaidoh
Lela Wong
Lawrence Gunn
Abbreviations
Agreements	V99888401, X98841901, BG98804602, RP98897001, and BG98804603
ATV	All-Terrain Vehicle
CFR	Code of Federal Regulations
EPA	U.S. Environmental Protection Agency
PPG	Performance Partnership Agreement
OIG	Office of Inspector General
OMB	Office of Management and Budget
Tribe	Cheyenne River Sioux Tribe

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^	U.S. Environmental Protection Agency	2007-4-00078
f JUL, \ Office of Inspector General	September 24,2007

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At a Glance
Catalyst for Improving the Environment
Why We Did This Review
We conducted this examination
to determine whether the
Cheyenne River Sioux Tribe
(Tribe): (1) complied with the
applicable laws, regulations,
and special conditions of the
agreements; and (2) achieved
the intended result of the
agreements. The U.S.
Environmental Protection
Agency (EPA) Region 8
requested this audit due to
financial management
problems it identified during an
onsite review.
Background
EPA awarded five agreements
to the Tribe to fund a variety
of environmental activities
authorized under the
Comprehensive Environmental
Response, Compensation, and
Liability Act Sections
104(d)(1) (Superfund) and
128(a) (Brownfields); the
Clean Water Act; and the
Appropriations Act of 1996.
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.aov/oia/reports/2007/
20070924-2007-4-00078.pdf
Cheyenne River Sioux Tribe Outlays Reported
Under Five EPA Assistance Agreements
What We Found
The Tribe did not comply with the financial and program management standards
under Title 40 Code of Federal Regulations Parts 31 and 35, and Office of
Management and Budget Circular A-87. We questioned $3,101,827 of the
$3,736,560 outlays reported because the Tribe did not:
•	Follow the labor cost documentation requirements for Federal grants;
•	Compete contracts, justify sole-source procurement, or perform cost analyses;
•	Demonstrate that fuel costs charged were equitably allocated;
•	Account for vehicle leases properly;
•	Comply with Federal procurement regulations and its internal policy when
purchasing equipment;
•	Compute and claim indirect costs in accordance with Federal cost principles,
indirect cost rate agreements, and grant conditions; and
•	Maintain documentation for recipient share of costs reported.
The Tribe's internal controls were not sufficient to ensure that outlays reported
complied with Federal cost principles, regulations, and grant conditions. In some
instances, the Tribe also was not able to demonstrate that it has completed all work
under the agreements and has achieved the intended results of the agreements.
What We Recommend
We recommend that EPA Region 8's Regional Administrator disallow and recover
the Federal share of ineligible costs of $64,765. The Region should require the
Tribe to provide sufficient documentation for the remaining $3,037,062 questioned,
and disallow and recover the Federal share of any outlays the Tribe cannot support.
The Region should require the Tribe to adjust its indirect costs claimed. The Region
should provide training to the Tribe on Federal regulations and grant requirements,
and review the Tribe's solicitations and contracts under EPA agreements until the
Tribe has adequate procedures in place. The Region should confirm that all work
under the agreements have been satisfactorily completed prior to agreement
closeout. The Region should maintain the Tribe's "high risk" designation until all
audit issues have been resolved.

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UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D.C. 20460
OFFICE OF
INSPECTOR GENERAL
September 24, 2007
MEMORANDUM
SUBJECT: Cheyenne River Sioux Tribe
Outlays Reported Under Five EPA Assistance Agreements
Report No. 2007-4-00078
V\ ,\A
FROM: Melissa M. Heist
Assistant Inspector General for Audit
TO: Robert E. Roberts
This is our report on the subject audit conducted by the Office of Inspector General (OIG) of the
U.S. Environmental Protection Agency (EPA). 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.
EPA managers, in accordance with established audit resolution procedures, will make final
determination on matters in this report.
The estimated cost of this report - calculated by multiplying the project's staff days by the
applicable daily full cost billing rates in effect at the time - is $241,026.
Action Required
In accordance with EPA Manual 2750, Chapter 3, Section 6(f), you are required to provide us
your proposed management decision for resolution of the findings contained in this report before
any formal resolution can be completed with the recipient. Your proposed decision is due on
December 24, 2007. To expedite the resolution process, please email an electronic version of
your proposed management decision to kasper.ianet@epa.gov.
We have no objections to the further release of this report to the public. For your convenience,
this report will be available at http://www.epa.gov/oig. We want to express our appreciation for
the cooperation and support from your staff during our review. If you have any questions, please
contact Janet Kasper, Director, Assistance Agreement Audits, at (312) 886-3059.
Regional Administrator
Region 8

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Cheyenne River Sioux Tribe Outlays Reported Under Five EPA Assistance Agreements
Table of C
Background 		1
Independent Auditor's Report		3
Results of Examination		5
Unsupported Labor and Fringe Benefit Costs		5
Procurements Did Not Comply with Standards		8
Fuel Costs Not Charged Based on Benefits Received		12
Unsupported and Unallowable Equipment Purchases		13
Unsupported Other Costs Claimed		15
Indirect Costs Not Properly Calculated and Reported		16
Recipient Share of Outlays Not Supported		17
Financial Status Reports Not Submitted Timely		18
Work Progress Needs to be Reported According to Regulations		18
Recommendations		20
Status of Recommendations and Potential Monetary Benefits		21
Schedules
1	Questioned Costs for Assistance Agreement V99888401 		22
2	Questioned Costs for Assistance Agreement X98841901 		23
3	Questioned Costs for Assistance Agreement BG98804602		24
4	Questioned Costs for Assistance Agreement RP98897001		26
5	Questioned Costs for Assistance Agreement BG98804603		28
6	Small Purchase Contract Costs Questioned by Award and Contractor		30
7	Small Purchase Equipment Costs Questioned 		31
Appendices
A Scope and Methodology		32
B Status of Onsite Review Findings for Brownfields Agreement		33
C Recipient Response		37
D Distribution		45

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Background
The Cheyenne River Sioux Tribe (Tribe) is a federally recognized Indian tribe located in
South Dakota, with headquarters in Eagle Butte. Tribal enrollment is at approximately
14,200 individuals. The reservation covers about 1,400,000 trust acres. The Tribe provides
various services to its members, and funds many of these services through Federal assistance
agreements (agreement) and contracts. The U.S. Environmental Protection Agency (EPA) has
awarded various agreements to the Tribe.
In May 2005, EPA Region 8 (Region) conducted an onsite review of the Tribe under its
Brownfields agreement and identified significant financial issues. As a result, on August 10,
2005, the Region requested that we examine five agreements awarded to the Tribe. As part of
our examination, we reviewed the issues identified in the onsite review, and assessed the status
of those issues and the Tribe's corrective actions. Our assessment is in Appendix B, Status of
Onsite Review Findings for Brownfields Agreement.
The Region designated the Tribe as a "high risk" grantee on September 13, 2005. On
October 13, 2005, the Tribe submitted a formal dispute to the "high risk" designation. As of the
end of our fieldwork on June 4, 2007, the Region had not made a decision on the Tribe's dispute
of the "high risk" designation.1
We reviewed $3,736,560 in reported outlays under the five EPA agreements listed in Table 1.
The table also provides some basic information about the authorized project periods and funds
awarded under each of the agreements.
Table 1: Grant and Outlay Summary
Assistance
Agreement
Award
Date
EPA
Share
Recipient's
Share
Total
Outlays
Financial Status
Report Period
V99888401
(Superfund)
07/15/98
$ 588,695
$ 0
$ 588,695
07/15/98-6/30/05
X98841901
(Clean Water)
05/15/01
299,347
15,755
315,102
05/15/01 -09/30/04
BG98804602
(2001 PPG)
08/28/01
1,233,470
56,962
1,290,432
10/01/01 -09/30/03
RP98897001
(Brownfields)
08/22/03
404,189
0
404,189
09/01/03-05/31/06
BG98804603
(2003 PPG)
09/11/03
1,081,235
56,907
1,138,142
10/01/03-09/30/05
Total

$3,606,936
$129,624
$3,736,560

Sources: The award dates were from assistance agreement documents. All other information was from the
recipient's Financial Status Reports.
1 Under Title 40 Code of Federal Regulations (CFR) 31.12, a grantee may be considered "high risk" if the awarding
agency determines that the grantee has financial or grants management concerns. The awarding agency can impose
special conditions or restrictions on grant awards, accordingly.
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EPA awarded the five assistance agreements for a variety of environmental activities authorized
under the Comprehensive Environmental Response, Compensation, and Liability Act
Sections 104(d)(1) (Superfund) and 128(a) (Brownfields), the Clean Water Act, and the
Appropriations Act of 1996. Details follow.
Agreement V99888401: This agreement funded a Superfund Pilot Project Manager. It
provides management assistance funding to enable the Tribe to coordinate data
collection, human health and ecological risk assessment planning, and response activities
with EPA and other Federal agencies. In the report, we refer to this agreement as the
"Superfund" agreement.
Agreement X98841901: This agreement provided funds to assist the Tribe in
establishing and maintaining adequate measures for the prevention and control of surface
and groundwater pollution under Section 106 of the Clean Water Act. In the report, we
refer to this agreement as the "Clean Water" agreement.
Agreements BG98804602 and BG98804603: These performance partnership
agreements (PPGs) provided funding to the Tribe for water pollution control (Clean
Water Act, Section 106), pesticides enforcement, and general assistance in implementing
environmental programs (Indian General Assistance Program). In the report, we refer to
these agreements as the 2001 and 2003 "PPGs."
Agreement RP98897001: This agreement provided funding for the Tribe to develop the
Brownfields program components, to timely survey and inventory sites, and to attend
training to enhance the capabilities of the program. In the report, we refer to this
agreement as the "Brownfields" agreement.
To assist the reader in obtaining an understanding of the report, key terms are defined below:
Reported Outlays: Program expenses or disbursements reported by the
recipient on the Federal Financial Status Reports.
Questioned Outlays: Outlays that are (1) contrary to a provision of a law,
regulation, agreement, or other documents governing the
expenditures of funds; or (2) not supported by adequate
documentation.
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Independent Auditor's Report
We have examined the total outlays the Tribe reported under the five assistance agreements
awarded by EPA, as shown below:
Table 2: Outlays Reported
Assistance Agreement
Financial Status Reports
Date
Submitted
Period
Ending
Total
Outlays
Reported
Federal Share
of Outlays
Reported
V99888401 (Superfund)
12/14/05
06/30/05
$ 588,695
$ 588,695
X98841901 (Clean Water)
08/24/05
09/30/04
315,102
299,347
BG98804602 (2001 PPG)
08/03/04
12/31/03
1,290,432
1,233,470
RP98897001 (Brownfields)
09/07/06
05/31/06
404,189
404,189
BG98804603 (2003 PPG)
10/03/06
06/30/05
1,138,142
1,081,235
Total


$3,736,560
$3,606,936
Source: All information was from the recipient's Financial Status Reports.
The Tribe certified that the outlays reported in the Financial Status Reports, Standard Form 269,
were correct and for the purposes set forth in the agreements. The preparation and certification
of the Financial Status Reports were the responsibility of the Tribe. Our responsibility is to
express an opinion on the reported outlays based on our examination.
We conducted our examination in accordance with the Government Auditing Standards issued by
the Comptroller General of the United States, and the attestation standards established by the
American Institute of Certified Public Accountants. We examined, on a test basis, evidence
supporting the reported outlays, and performed such other procedures, as we considered
necessary under the circumstances. We believe that our examination provides a reasonable basis
for our opinion.
We questioned $3,101,827 of the $3,736,560 in outlays reported because the Tribe did not:
•	Follow the labor cost documentation requirements for Federal grants;
•	Compete contracts, justify sole-source procurement, or perform cost analyses;
•	Demonstrate that fuel costs charged were equitably allocated;
•	Account for vehicle leases properly;
•	Comply with Federal procurement regulations and its internal policy when purchasing
equipment;
•	Compute and claim indirect costs in accordance with Federal cost principles, indirect cost
rate agreements, and assistance agreement conditions; and
•	Maintain documentation for recipient share of costs reported.
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In our opinion, due to the issues summarized above, the outlays reported in the Financial Status
Reports do not present fairly, in all material respects, the allowable outlays incurred in
accordance with the terms and conditions of the agreements and applicable laws and regulations.
Details of our results are included in the Results of Examination section that follows.
Janet G. Kasper
Office of Inspector General
U.S. Environmental Protection Agency
June 4, 2007
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Results of Examination
We questioned outlays of $3,101,827 because the Tribe claimed ineligible and unsupported
outlays for labor and fringe benefit costs, contractual services, fuel charges, equipment and
vehicle purchases, indirect costs, and recipient cost share. The Tribe's internal controls were not
sufficient to ensure that outlays reported complied with Federal cost principles, regulations, and
grant conditions. Below is a summary of the questioned costs. Schedules 1 through 5 provide
supporting detail.
Table 3: Summary of Questioned Costs
Assistance Agreement
Outlays
Reported
Costs
Questioned
Amount Due
EPA
Schedule
V99888401 (Superfund)
$ 588,695
$554,633
$554,633
1
X98841901 (Clean Water)
315,102
238,237
226,325
2
BG98804602 (2001 PPG)
1,290,432
1,085,603
1,036,158
3
RP98897001 (Brownfields)
404,189
287,378
287,378
4
BG98804603 (2003 PPG)
1,138,142
935,976
885,882
5
Total
$3,736,560
$3,101,827
$2,990,376

Sources: Outlays reported were from the recipient's Financial Status Reports. Costs questioned and
amount due EPA were based on Office of Inspector General (OIG) analysis.
We issued a draft report to the Tribe on June 28, 2007. The Tribe requested and we granted an
extension for the response. We received the Tribe's response on August 31, 2007. The Tribe did
not comment on the recommendations. In most instances, the Tribe did not explicitly state
whether it agreed with the findings. However, the Tribe did provide additional information and
clarifications on some of the issues reported and status of corrective actions. We have
summarized the Tribe's response in the sections below and included it verbatim in Appendix C
of this report.
In response to our findings and recommendations, the Tribe met with EPA Region 8 from
August 6 to August 10, 2007, to work on the issues. The Tribe has scheduled another technical
assistance meeting with EPA Region 8 from September 17 to September 21, 2007, to update
written policies and procedures and to resolve the issues the OIG raised.
Unsupported Labor and Fringe Benefit Costs
The recipient could not provide source documentation for its labor costs that clearly showed the
projects or Federal awards the employees worked on. As a result, we questioned all labor and
related fringe benefit costs as unsupported, totaling $1,971,816.
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Table 4: Labor Costs Questioned
Assistance
Agreement
Labor
Fringe
Benefits
Total
Questioned
V99888401 (Superfund)
$ 358,462
$90,356
$ 448,818
X98841901 (Clean Water)
74,849
24,286
$99,135
BG98804602 (2001 PPG)
513,129
132,115
645,244
RP98897001 (Brownfields)
130,163
39,881
170,044
BG98804603 (2003 PPG)
471,168
137,407
608,575
Total
$1,547,771
$424,045
$1,971,816
Sources: Labor and fringe benefit costs were from the recipient's general ledger.
Claimed labor costs did not meet the documentation requirements of Office of Management and
Budget (OMB) Circular A-87, Attachment B, paragraph 11(h). Under the regulation:
•	Where employees are expected to work solely on a single Federal award or cost
objective, the recipient can use periodic certifications to charge employee salaries and
wages. These certifications will be prepared at least semiannually and will be signed by
the employee or supervisory official having firsthand knowledge of the work performed
by the employee, and will certify that the employee spent 100 percent of his or her time
on one award or cost objective.
•	Where employees work on multiple activities or cost objectives, a distribution of their
salaries or wages will be supported by personnel activity reports or equivalent
documentation. The reports or equivalent documentation must be prepared and signed by
the employee at least monthly to reflect an after-the-fact distribution of the actual activity
of each employee and account for the total activity for which each employee is
compensated.
•	Budget estimates or other distribution percentages determined before the services are
performed may be used for interim accounting purposes, but must be reviewed and
adjusted to actual costs at least quarterly. Adjustments may be made annually if the
variance is less than 10 percent.
According to the Tribe, it hired most employees to work on a single project, such as a Federal
award. However, the Tribe did not use the periodic certification process for labor charging,
relying instead on employee timesheets to support payroll costs. Therefore, the timesheet
became the original source documentation for charging payroll costs to projects.
The Tribe's payroll documentation did not contain adequate information to ensure that the
payroll department properly recorded an employee's actual time worked on individual projects.
An employee's timesheet contains a variety of information - including the employee's name,
identification number, department, pay period, total hours worked, leave earned or taken, and
employee's signature - certifying that the number of hours worked is correct. However, the
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timesheet missed a key piece of information - the project number or a description of the actual
work the employee performed.
According to the Tribe, it assigns a fixed account number to each employee it hires. When the
payroll department records the employee's hours from the timesheet into the payroll system, the
system automatically charges all the hours and costs to the employee's fixed account number.
The payroll department prepares reports that the Tribe uses to charge payroll costs to projects,
based on the employee's fixed account number. However, the employees do not review or sign
the payroll reports. Therefore, the payroll reports do not constitute the employee's certification
that the employee worked on the project identified in the report.
The lack of project identification constitutes an internal control weakness. It is possible for an
employee the Tribe hires for a specific project to assist on another project from time to time. For
example, according to one program coordinator/project manager, while being paid under the
Superfund agreement, he supervised the work under the Clean Water project. There was no way
for the employees to record such an event on their timesheets. Thus, there was no way for the
payroll department to properly allocate employees' time between their regular fixed account and
other projects they might have worked on. Tribal employees said they did not comply with the
requirements because they were unaware of them.
If an employee does not record the time spent on each project in a timely manner, the employee
may not remember the details when asked later. For example, the Tribe charged hours for an
employee for the Holloway Garage Site cleanup. When we interviewed the employee in
December 2006, he said he never worked on the project. When we discussed this work with him
again in April 2007, he said he was at the site but could not be certain about the date or the work
he did. Having the project information (number or description) on the source documentation
employees and the supervisor sign would allow verification that costs are allocable to a certain
project and there is no mischarging.
Certain employees charged time to more than one agreement based on budgeted percentages and
did not maintain personnel activity reports to track actual work performed. For example, the
Director of the Environmental Protection Department charges 75 percent of his hours to the PPG
agreements and 25 percent to the Tribe's general fund. The Director's administrative assistant
split her time equally between the Brownfields and PPG grants. These employees did not track
the actual projects worked on. As a result, the Tribe was not able to quarterly adjust the budget
amounts to actual costs, as the OMB Circular requires.
Auditee Response
The Tribe stated that it has instituted a revised timesheet recording process as of May 6, 2007.
The revised timesheet records time on a daily basis by grant number, and includes certification
by the employee of time worked on each grant. The Tribe also stated that it had in place since
May 2004 a Daily Time Log recorded by each employee documenting work performed and the
grant for which the work was performed. As of September 1, 2007, the Tribe implemented a
requirement for employees to sign and certify that the Daily Time Log is accurate.
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OIG Analysis
We continue to question the labor and fringe benefit costs of $1,971,816 as unsupported. The
Tribe has not provided additional supporting documentation for the $1,971,816. While the
revised timesheet the Tribe provided in Exhibit 1 of its response seems adequate for
documenting labor and fringe benefit costs incurred under each project, the Tribe did not use it
during the period when it incurred the $1,971,816. Therefore, these costs remain questioned as
unsupported. While the revised timesheet appears acceptable, we did not verify the
implementation of the new timesheet and are unable to opine on the adequacy of the Tribe's new
timekeeping procedures.
Procurements Did Not Comply with Standards
Many of the Tribe's procurements under the agreements did not comply with Federal
procurement standards and tribal policies. The Tribe:
• Awarded small purchase orders without obtaining adequate price or rate quotations, as
required under Title 40 CFR 31.36(d) and 35.6565 as well as the Tribe's internal policies;
• Awarded a noncompetitive contract without documented justification, EPA approval, or
cost or price analysis required under Title 40 CFR 35.6565;
• Claimed unallowable contract costs for building improvements; and
• Included labor costs as part of the claimed contractual costs.
As a result, we questioned unsupported contract costs of $428,732 and equipment costs of
$113,792. We also questioned ineligible contract and labor costs of $6,736 because these costs
were not allowable under the assistance agreements. Details follow.
Small Purchase Orders
The Tribe did not comply with the Federal procurement requirements and its internal
policies when making small purchases. The Tribe did not obtain the required price or
rate quotations, so we have no assurance that the prices were fair and reasonable. As a
result, we questioned contract outlays of $410,896 and equipment outlays of $113,792
claimed under the five agreements. Questioned costs are summarized in Table 5 by
agreement. A detailed list of contract costs questioned by contractor is in Schedule 6:
Small Purchase Contract Costs Questioned by Award and Contractor. A detailed
list of questioned equipment costs is in Schedule 7: Small Purchase Equipment Costs
Questioned.
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Table 5: Small Purchases Questioned
Assistance Agreement
Contract Costs
Questioned
Equipment Costs
Questioned
V99888401 (Superfund)
$ 32,470
$ 0
X98841901 (Clean Water)
94,034
2,677
BG98804602 (2001 PPG)
184,055
40,245
RP98897001 (Brownfields)
46,853
8,531
BG98804603 (2003 PPG)
53,484
62,339
Total
$410,896
$113,792
Sources: Contract and equipment costs questioned were based on OIG analysis.
According to Title 40 CFR 31.36(d) and 35.6565, the recipient may procure goods and
services using one of four methods - small purchase, sealed bid, competitive bid, and
noncompetitive bid. Small purchase procedures are those relatively simple and informal
procurement methods for securing services, supplies, or other property that do not cost
more than the simplified acquisition threshold fixed by the Federal Government. The
threshold is currently $100,000 for non-Superfund contracts under Title 40 CFR 31.36
and $25,000 for Superfund contracts under Title 40 CFR 35.6565. If small purchase
procedures are used, the recipient must obtain price or rate quotations from an adequate
number of qualified sources.
The Tribe's internal policy for property and supply purchases requires the buyer to obtain
and document bids for items with a unit cost of over $500, or when competitive bidding
is practical or advantageous to tribal programs. For items purchased with Federal or
State funds, the policy also requires the Tribe to consult the granting agency and grant
guidelines.
We reviewed 46 contracts and consultant agreements (contracts) awarded under the five
EPA assistance agreements examined and judgmentally selected equipment transactions.
We found that the Tribe did not obtain price or rate quotations from more than 1
contractor or vendor for all but 2 contracts reviewed and 21 out of 26 equipment
transactions tested. We questioned costs claimed for contracts and equipment where the
Tribe did not comply with Federal procurement requirements and internal policies.
Auditee Response
The Tribe did not comment on this issue.
OIG Analysis
We continue to question the contract outlays of $410,896 and equipment outlays of
$113,792 claimed under the five agreements.
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Noncompetitive Contract
According to regulations, contracts exceeding the small purchase order thresholds are to
be competitively bid. The current threshold is $25,000 for Superfund contracts. Of the
contracts reviewed, one awarded under the Superfund agreement exceeded the small
purchase threshold of $25,000. The Tribe did not comply with the Federal procurement
requirements when awarding the noncompetitive contract. As a result, we questioned
contract outlays of $17,836.
The Tribe noncompetitively awarded the contract under the Superfund agreement.
According to the Tribe, it advertised the request for proposal. Two people responded to
the advertisement. The Tribe hired one as an employee and awarded a contract to the
other person. Under Title 40 CFR 35.6565, the Tribe may use noncompetitive awards
under one of four circumstances. One of these circumstances notes that if after
solicitation of a number of sources competition is determined inadequate, cost analysis is
required. The Tribe did not have adequate competition in the award of this contract, and
did not conduct the required cost or price analysis. The regulations also allow the use of
a noncompetitive award if the awarding agency approves it. The Tribe stated that it
obtained verbal approval from EPA for the contract, but the approval was not
documented. As a result, we have no assurance that the costs are fair and reasonable.
The Tribe did not maintain the required procurement documentation. Title 40 CFR
31.36(b)(9) requires grantees to maintain records sufficient to detail the significant
history of their procurements. These records should include the rationale for the method
of procurement, selection of contract type, contractor selection or rejection, and the basis
for the contract price. The Tribe's records should have included both bidders' original
proposals, the reasoning for subsequently awarding the contract noncompetitively and
choosing to hire one of the bidders as an employee, the cost analysis for the awarded
contract, and EPA's approval to award a contract without competition.
Auditee Response
The Tribe stated that the OIG draft was not clear on what actually occurred. The Tribe
stated that it had three proposals for legal services. One bidder withdrew his proposal;
another was selected, but the bidder requested an increase in pay after selection. The
final proposal was accepted and the Tribe entered into a contract with the attorney. The
contract was renewed for a second year. The Tribe stated that its performance reports
included the contract, but EPA never raised any issue about it
The Tribe stated that it has received and reviewed EPA Region 10's guidance for tribes
and tribal consortium for purchasing supplies, equipment and services under EPA grants.
It fully intends to implement the guidance as written procurement procedures for the
Tribe's Environmental Protection Department no later than October 1, 2007. The Tribe
plans to work with EPA Region 8 during its scheduled technical assistance meeting in
September 2007 to finalize written procurement procedures in time for the October 1,
2007, implementation.
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OIG Analysis
We disagree with the Tribe's statement that our report is not factually accurate. When we
performed our fieldwork, the Tribe told us that there were two bidders, but did not
provide us any written documentation to support this statement. In its response, the Tribe
told us there were three bidders, but again did not provide any documentation to support
its statement. Therefore, we cannot confirm that the Tribe's response is correct. We
continue to question the noncompetitive contract costs of $17,936 as unsupported.
Although the Tribe provided additional explanations, there was no documentation to
show adequate competition or EPA's approval for noncompetitive award as required
under Title 40 CFR 35.6565, therefore, does not meet the requirements of Title 40 CFR
31.36(b)(9).
Unallowable Contract Costs
We questioned ineligible contractual outlays of $2,034 claimed under the 2001 PPG
agreement because the costs are not allowable as direct costs under OMB Circular A-87.
According to the purchase order, the cost was incurred for "walkway, steps, garage pad,
ramp apron, hand rail and gravel driveway." The Tribe charged these costs directly to the
EPA agreement. OMB Circular A-87, Attachment B, paragraph 15, requires the Tribe to
recover fixed asset costs, such as cost of a building and its accessory structures, through
depreciation or use allowance. Therefore, these costs are not allowable as a direct cost to
EPA.
Audltee Response
The Tribe explained that the work was performed to construct a new storage building for
Section 106 equipment under the PPG grant. According to the Tribe, it did not have
sufficient building space to store the EPA-funded equipment and meet its obligation to
safeguard equipment purchased with Federal funds. The Tribe stated that it contacted
EPA Region 8 and received authorization to construct a new concrete pad and connection
concrete from the new building to the existing Environmental Protection Department
building.
OIG Analysis
We have not changed our position on the $2,034 questioned. Costs for constructing a
new building should be capitalized and recovered through depreciation or use allowance
in accordance with OMB Circular A-87, Attachment B, paragraph 15.
Duplicate Labor Costs
We questioned duplicate labor costs of $4,702 claimed under the Brownfields agreement.
The Tribe incurred direct labor costs for tribal employees to conduct the Holloway
Garage Site cleanup. As discussed in the Unsupported Labor and Fringe Benefit
Costs section, all dedicated tribal employees' labor are charged to the various EPA
agreements using the employees' fixed account numbers. The labor costs incurred are
11

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part of payroll costs, which the Tribe claimed under "salaries" and "fringe benefits."
However, the Tribe also claimed these labor costs as a contractual expense. Therefore,
we questioned the $4,702 as duplicate costs claimed.
Auditee Response
The Tribe stated that it would work with EPA Region 8 to ensure the reimbursement to
the grant occurs in a timely manner and submit amended financial reports on the affected
grant.
OIG Analysis
We agree with the Tribe's proposed actions.
Fuel Costs Not Charged Based on Benefits Received
The Tribe did not charge fuel costs to the agreements based on relative benefit received. As a
result, the recipient did not allocate fuel charges equitably to the EPA assistance agreements,
resulting in questioned travel costs of $36,624, as summarized below.
Table 6: Fuel Charges Questioned
Assistance Agreement
Costs Questioned
V99888401 (Superfund)
$2,438
X98841901 (Clean Water)
0
BG98804602 (2001 PPG)
17,976
RP98897001 (Brownfields)
5,186
BG98804603 (2003 PPG)
11,024
Total
$36,624
Source: Fuel charged questioned were based on OIG analysis.
Instead of refueling program vehicles at a gas station, the Tribe maintained a central fuel tank
and purchased fuel in bulk. According to the Tribe, prior to October 1, 2005, it charged fuel
costs to the agreements on a rotational basis when the Tribe purchased gas for the central fuel
tank. The Tribe's accounting records showed $36,624 was charged to the various agreements for
fuel prior to October 1, 2005. However, based on our review of the accounting records, it
appears that the charges were made on a random, rather than rotational, basis. While the Tribe
did keep some type of log for checking out vehicles, these logs were incomplete and the Tribe
did not use these logs to charge fuel costs to the agreements.
According to OMB Circular A-87, Attachment A, in order for a cost to be allowable under
Federal grants, it must be allocable to the grant. A cost is allocable to a particular cost objective
if the goods or services involved are chargeable or assignable to such cost objective in
accordance with relative benefits received.
12

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The Tribe corrected this issue as of October 1, 2005. The Tribe started to track actual fuel usage
by project, and charged the agreements based on the number of gallons used. Each time the
driver refuels a vehicle at the central tank, the driver initials and logs the gallons used, mileage,
vehicle identification number, and applicable project. The Tribe applies the per gallon purchase
price for the central tank purchase to the gallons of gas the driver used on the day the gas is used.
The Tribe then allocates this computed total to the appropriate project. We believe this allocation
method is adequate.
Auditee Response
The Tribe stated that it would work with EPA Region 8 during its scheduled onsite technical
assistance meeting in September 2007 to review how the fuel costs were allocated between
grants prior to October 1, 2005, reallocate fuel costs, and amend grant reporting documents
accordingly.
OIG Analysis
We agree with the Tribe's proposed actions.
Unsupported and Unallowable Equipment Purchases
We questioned equipment costs of $55,961 because the Tribe did not follow Federal
procurement regulations and assistance agreement requirements, as summarized below:
Table 7: Equipment Purchases Questioned
Assistance Agreement
Mischarged and
Unapproved
Vehicle Costs
Improper
Vehicle
Lease
Total
Questioned
V99888401 (Superfund)

X98841901 (Clean Water)
$7,760

$ 7,760
BG98804602 (2001 PPG)

RP98897001 (Brownfields)

$20,975
20,975
BG98804603 (2003 PPG)

27,226
27,226
Total
$7,760
$48,201
$55,961
Source: Equipment costs questioned were based on OIG analysis.
Mischarged and Unapproved Vehicle Costs
We questioned equipment costs of $7,760 claimed under the Clean Water agreement for
an all-terrain vehicle (ATV) purchase and its protection plan because the costs were
incurred outside of the grant period. The project period for the Clean Water agreement
ended on September 30, 2004; the purchase order for the ATV was dated October 6,
2004. The invoice was dated November 30, 2004, and was paid on December 7, 2004.
13

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Auditee Response
The Tribe stated that it would work with EPA Region 8 to resolve the issue. The grant
period for the 106 Special Project (Clean Water agreement) where the ATV was
authorized to be purchased from was extended by EPA Region 8, so the purchase was
within an allowable period. According to the Tribe's response, the EPA project officers
approved the purchase and the time extension.
OIG Analysis
We continue to question the equipment costs of $7,760 as ineligible costs. Although the
Tribe provided in its response a progress report showing work performed in October
2004, the Tribe did not have any documentation to show that the grant was modified to
extend the performance period. Neither the Tribe nor EPA provided us with a grant
amendment to show that EPA extended the grant period beyond September 30, 2004.
Even if EPA extended the grant period to October 2004, we do not believe that a 1-month
use of the ATV would have been sufficient to justify its purchase.
Improper Vehicle Leases
The Tribe did not properly account for and claim vehicle lease costs. As a result, we
questioned $48,201 claimed, as shown in Table 7 ($20,975 under the Brownfields
agreement and $27,226 under the 2003 PPG agreement).
The Tribe charged the total lease amounts, equal to 100 percent of the vehicles' purchase
prices, to the EPA agreements within 1 week of purchase. Under Financial Accounting
Standards 13, issued by the Financial Accounting Standards Board, a lease must be
treated as a capital lease if it meets any one of four conditions. One of these conditions is
that the present value of the lease payments exceeds 90 percent of the fair market value of
the asset. Since the lease prices were 100 percent of fair market value, the leases must be
accounted for as capital leases. According to OMB Circular A-87, Attachment B,
paragraph 38, only expenses such as depreciation or use allowance, maintenance, and
insurance are allowed under a capital lease. In essence, the total lease payment is to be
charged over the life of the lease, not as a lump-sum amount at the beginning of the lease.
Further, there is no evidence that EPA approved the vehicle leased under the 2003 PPG
agreement. According to OMB Circular A-87, Attachment B, paragraph 19(c), capital
expenditures for equipment are allowable as a direct cost when approved by the awarding
agency. Since the vehicle lease was not in the budget or scope of work of the agreement,
and the Tribe did not provide any documentation that EPA subsequently approved its
purchase, the leased vehicle did not meet the requirements of the Federal regulations.
Auditee Response
According to the Tribe, EPA Region 8 approved the vehicle leases and provided technical
assistance to the Tribe in drafting the lease agreements. Under EPA Region 8 policies,
14

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the Tribe cannot lease General Services Administration vehicles. Therefore, to perform
the work under the EPA agreements, which require fieldwork over an area spanning 2.8
million acres, roughly the size of Connecticut, a vehicle purchase or lease is required.
EPA provided assistance in drafting the lease agreement, but did not indicate this was a
capital lease. The Tribe will obtain further training on this area from EPA Region 8
during its scheduled technical assistance meeting in September 2007.
OIG Analysis
We continue to question the $48,201 equipment lease costs. The Tribe did not provide
any evidence of EPA's approval of the leases. However, even if the EPA approved the
leases and assisted in the drafting the agreement, the Tribe is responsible for accounting
for its costs in accordance with general accepted accounting principles and the applicable
laws and regulations.
Unsupported Other Costs Claimed
We questioned unsupported other costs of $7,671 claimed under the 2003 PPG agreement
because the claimed costs lacked sufficient supporting documentation. We questioned $4,200 of
repair, labor, and material costs the Tribe claimed because it did not provide us with complete
supporting documentation. The Tribe charged $4,200 to the agreement as an adjusting entry.
The Tribe had not provided the original source documentation to demonstrate that the costs were
allocable to the agreement and allowable under OMB Circular A-87.
We questioned vehicle insurance costs of $3,471 because we were unable to determine whether
the vehicles insured were used under the 2003 PPG. According to the invoice from the Tribe's
Property and Supply Department, the $3,471 was insurance for vehicle numbers 9847, 1860,
1036, 8545, 4577, 3368, 0355, 9135, and 6159. However, these numbers were either not on the
inventory list or the vehicle descriptions on the invoice did not match the inventory list.
Auditee Response
The Tribe stated that it has already reimbursed the EPA grant for the $4,200 of repair, labor, and
material costs. It will review the remaining costs with EPA Region 8 during its scheduled
meeting in September 2007.
OIG Analysis
We continue to question the $7,671 as unsupported costs. Although the Tribe has provided
evidence to show that it has corrected its accounting records to credit the EPA program for the
$4,200 of repair, labor, and material costs, the Tribe did not provide documentation that it
actually reimbursed EPA for this amount. The Tribe did not provide additional information or
supporting documentation on the vehicle insurance costs of $3,471, therefore, the amount
remains questioned.
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Indirect Costs Not Properly Calculated and Reported
We questioned indirect costs of $348,803 because the Tribe did not compute and report indirect
costs according to OMB Circular A-87, indirect cost rate agreements, and the terms under the
Superfund agreement, as summarized below.
Table 8: Indirect Costs Questioned
Assistance Agreement
Costs Questioned
V99888401 (Superfund)
$ 53,071
X98841901 (Clean Water)
18,876
BG98804602 (2001 PPG)
137,019
RP98897001 (Brownfields)
31,087
BG98804603 (2003 PPG)
108,750
Total
$348,803
Sources: Indirect costs questioned were from recipient's general ledger.
OMB Circular A-87, Attachment E, paragraph D. 1 .d requires indirect cost rate proposals to be
developed and, when required, submitted within 6 months after the close of the government
unit's fiscal year, unless an exception is approved by the cognizant Federal agency. According
to the Tribe's indirect cost agreements, the indirect cost fixed carryforward rate is based on an
estimate of costs that will be incurred during the period for which the rate applies. New indirect
cost proposals are necessary to obtain approved indirect cost rates for future years.
The Tribe did not track the indirect cost base (i.e., direct costs incurred less capital expenditures)
by fiscal year and apply the indirect cost rate for that year to the appropriate base. Instead, the
Tribe took the most recently approved indirect cost rate and applied it to all claimed costs,
regardless of the fiscal year under which those costs were incurred. For example, the Tribe's
negotiated indirect rate for the fiscal year end September 30, 2000, was 16.8 percent. The Tribe
applied this indirect rate to all direct costs incurred under the Clean Water agreement for the
period May 15, 2001, through September 30, 2004.
Of the $348,803 questioned, the Tribe charged $53,071 to the Superfund agreement. Under
General Provision No. 9 of the agreement, the Tribe will not charge nor claim for reimbursement
any indirect costs until it has negotiated a current, acceptable indirect cost rate with a Federal
agency. The Tribe's cognizant agency is the U.S. Department of the Interior. According to the
agreement, the Tribe must submit a copy of the Indirect Cost Negotiation Agreement to EPA
within 30 days after the cognizant agency accepted the indirect cost rate in order to be eligible to
claim indirect costs against the agreement. The Tribe claimed indirect costs under the agreement
in years when indirect cost rates had not been approved. The Department of the Interior approved
the indirect cost rate agreements much later. For example, the Department of the Interior did not
approve the Fiscal Years 2002 and 2003 rates until February 2006, and Fiscal Years 2004-2006
rates until April 2007.
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The Tribe did not adjust its indirect costs claimed to actual costs because of the lack of current
approved indirect cost rates. However, the Tribe has received approved rates for all fiscal years
as of April 2007. The costs will remain questioned until the Tribe correctly recalculates the
indirect costs for each year, adjusts the costs claimed to reflect the approved rates, and submits
revised Financial Status Reports as necessary.
Auditee Response
The Tribe stated that its contracting officer and Environmental Protection Department staff met
with EPA Region 8 in August 2007 to review the newly approved indirect cost rates and to work
on applying those rates to EPA grant expenditures. The Tribe will work with EPA during its
scheduled meeting in September 2007 to complete adjustment of EPA grant indirect cost charges
and to complete amended Financial Status Reports.
OIG Analysis
We agree with the Tribe's proposed actions.
Recipient Share of Outlays Not Supported
The Tribe claimed its recipient share of assistance agreement costs without any supporting
documentation. In its grant applications, the Tribe stated it intended to use in-kind contributions
to satisfy its matching requirement and provided budgets showing what costs would be used as
its share. According to Title 40 CFR 31.24(b)(6), costs and third party in-kind contributions
counting toward satisfying a cost sharing or matching requirement must be verifiable from the
records of grantees, subgrantees, or cost-type contractors. These records must show how the
value placed on the third party in-kind contributions was derived.
The Tribe could not provide after-the-fact, specific cost documentation to support costs claimed.
According to the Tribe's Contract Specialist, total outlay and recipient share amounts reported in
the Financial Status Reports were simply mathematically calculated amounts based on Federal
share amounts recorded in the general ledger. During our discussion with the Tribe, it indicated
that the "costs" shown in its proposed budgets provided adequate recipient cost share support.
However, budgeted amounts in the Tribe's proposals would not constitute actual incurred costs.
Therefore, we have questioned as unsupported all claimed recipient share costs, totaling
$129,624.
Auditee Response
The Tribe did not comment on this issue.
OIG Analysis
We will continue to question the $129,624 as unsupported.
17

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Financial Status Reports Not Submitted Timely
The Tribe did not submit Financial Status Reports timely in accordance with Title 40 CFR
31.41(b). Under the regulation, final Financial Status Reports are due 90 days after the
expiration or termination of the agreement. Of the four agreements where Financial Status
Reports were due, the Tribe submitted final Financial Status Reports for three of the agreements
at least 7 months after the due date, as shown in Table 9:
Table 9: Financial Status Reports
Agreement
Expiration
Date
Final Financial
Status Report
Due Date
Date Final
Financial Status
Submitted
Elapsed
Months
V99888401 (Superfund)
07/15/06
10/15/06
11/13/06
1
X98841901 (Clean Water)
09/30/04
12/30/04
08/24/05
7
BG98804602 (2001 PPG)
09/30/03
12/30/03
08/03/04
7
BG98804603 (2003 PPG)
09/30/05
12/30/05
10/11/06
9
Sources: Expiration dates were from assistance agreement documents. Dates submitted were from
the recipient's Financial Status Reports. Due dates and elapsed months were based on
OIG analysis.
Auditee Response
The Tribe did not comment on this issue.
OIG Analysis
We have not changed our position on this issue.
Work Progress Needs to be Reported According to Regulations
The Tribe did not submit performance reports as required under the Federal regulations. Title 40
CFR 31.40(b) requires the recipient to submit an annual performance report within 90 days after
the reporting period and a final report within 90 days after the expiration or termination of the
agreement.
To evaluate whether the Tribe achieved the intended results of the agreements, we requested
copies of annual and final performance reports from EPA and the Tribe. The Tribe did not
submit final performance reports under these agreements. As of the end of our fieldwork, we
had not received all annual performance reports. For example, we have not received
performance reports for the Superfund agreement after Fiscal Year 2000. Although EPA project
officers certified that they have received and accepted all deliverables required under the 2001
and 2003 PPG agreements, the annual performance reports for the general assistance portions of
18

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these agreements do not address specific tasks. As a result, we are unable to determine whether
the Tribe has completed all tasks and achieved the intended result of the agreements.
Auditee Response
The Tribe stated that it has sent the final progress reports to the OIG and provided emails as
support. The Tribe was under the impression that all reports requested were provided to the
OIG. The Tribe was not aware of potential insufficiency of reporting under the PPG agreements
because EPA accepted all performance reports submitted without any request for additional
information.
The Tribe did not violate EPA regulations with the format of the report submitted. The
performance reports included significant grant activity information, but the format of the reports
submitted prior to 2006 did not mirror the structure of the grant proposals, which set forth goals
and objectives. Therefore, it was difficult to determine the accomplishments of the Tribe on the
grant goals, objectives, and tasks. In the Tribe's view, it is EPA's responsibility to provide
technical guidance or direction on report formats. EPA Region 8 changed the reporting format in
2006 and can now track progress on grant goals and objectives and more readily understood.
The Tribe has requested EPA Region 8 to work with the Tribe on developing a new performance
report format to assist non-EPA staff in reviewing the accomplishment under the grant.
The Tribe has had an annual evaluation on every grant every year. The EPA has not provided
the Tribe with a written annual evaluation. The responsibility for documenting this event rests
with EPA as it is an EPA obligation to perform annual evaluations.
OIG Analysis
We have not changed our overall position on this issue. The Tribe only provided some annual
progress reports, not final progress reports. When we interviewed a Region 8 project officer
regarding final progress report submission, she stated that the annual progress reports constituted
the final progress reports; therefore, in her opinion, no further reporting was needed. However,
since we could not relate grant tasks to actual accomplishments, as discussed above, there was no
way for us to determine if, overall, the grant accomplishments were met. We concur with the
Tribe's plan to work with EPA Region 8 to revise its performance report formats to better
identify and track grant accomplishments. However, for grants that are already completed, we
continue to recommend Region 8 confirm that all work under the agreements has been
satisfactorily completed prior to closeout of the agreements.
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Recommendations
We recommend that EPA Region 8's Regional Administrator:
1.	Disallow and recover the Federal share of ineligible costs of $64,765, as identified in
Schedules 1 through 5 of this report.
2.	Require the Tribe to provide adequate support for the remaining $3,037,062 questioned,
and disallow and recover the Federal share of any outlays the Tribe cannot support.
3.	Require the Tribe to adjust its indirect costs claimed to actual costs based on approved
rates and submit revised Financial Status Reports.
4.	Provide training or technical assistance to the Tribe to improve its compliance with
timekeeping, procurement, and recipient cost share documentation and compliance.
5.	Require the Tribe to establish procedures to ensure that:
a.	Procurements are conducted in accordance with Title 40 CFR 31.36, Title 40 CFR
Part 35 Subpart O, and the Tribe's internal policies;
b.	Labor and fringe benefit costs are documented and supported in accordance with
OMB Circular A-87;
c.	Indirect costs are calculated and reported in accordance with OMB Circular A-87,
indirect cost rate agreements, and grant conditions; and
d.	Recipient's share of costs are documented in accordance with Title 40 CFR 31.24 and
OMB Circular A-87.
6.	Review and approve the Tribe's solicitations and contracts under EPA assistance
agreements until EPA determines that the Tribe has adequate procedures to ensure
compliance with all applicable Federal regulations and cost principles.
7.	Confirm that all work under the agreements has been satisfactorily completed prior to
closeout of the agreements, and require the Tribe to submit progress reports in
accordance with Title 40 CFR 31.40(b).
8.	Maintain the Tribe's "high risk" designation until all issues identified in this report and
Region 8's onsite review (addressed in Appendix B of the report) have been resolved.
20

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Status of Recommendations and
Potential Monetary Benefits
RECOMMENDATIONS
POTENTIAL MONETARY
BENEFITS (In $000s)
Rec.
No.
Page
No.
Subject
Status1
Planned
Completion
Action Official	Date
20 Disallow and recover the Federal share of ineligible
costs of $64,765, as identified in Schedules 1
through 5 of this report.
20 Require the Tribe to provide adequate support for
the remaining $3,037,062 questioned, and disallow
and recover the Federal share of any outlays the
Tribe cannot support.
20 Require the Tribe to adjust its indirect costs
claimed to actual costs based on approved rates
and submit revised Financial Status Reports.
20 Provide training or technical assistance to the Tribe
to improve its compliance with timekeeping,
procurement, and recipient cost share
documentation and compliance.
20 Require the Tribe to establish procedures to ensure
that:
a.	Procurements are conducted in accordance
with Title 40 CFR 31.36, Title 40 CFR Part 35
Subpart O, and the Tribe's internal policies;
b.	Labor and fringe benefit costs are documented
and supported in accordance with OMB
Circular A-87;
c.	Indirect costs are calculated and reported in
accordance with OMB Circular A-87, indirect
cost rate agreements, and grant conditions; and
d.	Recipient's share of costs are documented in
accordance with Title 40 CFR 31.24 and OMB
Circular A-87.
20 Review and approve the Tribe's solicitations and
contracts under EPA assistance agreements until
EPA determines that the Tribe has adequate
procedures to ensure compliance with all
applicable Federal regulations and cost principles.
20 Confirm that all work under the agreements has
been satisfactorily completed prior to closeout of
the agreements, and require the Tribe to submit
proqress reports in accordance with Title 40 CFR
31.40(b).
20 Maintain the Tribe's "high risk" designation until all
issues identified in this report and Region 8's onsite
review (addressed in Appendix B of the report)
have been resolved.
Claimed
Amount
Agreed To
Amount
EPA Region 8
Regional Administrator
EPA Region 8
Regional Administrator
EPA Region 8
Regional Administrator
EPA Region 8
Regional Administrator
EPA Region 8
Regional Administrator
EPA Region 8
Regional Administrator
EPA Region 8
Regional Administrator
TBD
TBD
TBD
TBD
TBD
$ 65
$3,037
TBD
TBD
EPA Region 8	TBD
Regional Administrator
1 O = recommendation is open with agreed-to corrective actions pending;
C = recommendation is closed with all agreed-to actions completed;
U = recommendation is undecided with resolution efforts in progress
21

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Schedules
Schedule 1
Questioned Costs for Assistance Agreement V99888401
(Superfund)
Cost Category
Outlays
Reported
Costs Questioned
Note
Ineligible
Unsupported
Total
Salaries
$358,462

$358,462
$358,462
1
Fringe Benefits
90,356

90,356
90,356
1
Contract
62,858

50,306
50,306
2
Travel
28,646

2,438
2,438
3
Supplies
1,640

0
0

Equipment
0

0
0

Other
34,111

0
0

Indirect Costs
53,071

53,071
53,071
4
Amount Not Claimed Due to
Budget Ceiling
(40,449)

0
0

Recipient Share
0

0
0

Total Costs
$588,695
$0
$554,633
$554,633

Amount Due EPA
$554,633




Sources: Outlays reported were from the recipient's Financial Status Reports and general ledger. Costs questioned
were based on OIG analyses.
Note 1: See discussion under Unsupported Labor and Fringe Benefit Costs in the Results of
Examination section.
Note 2: See discussion under Procurements Did Not Comply with Standards in the Results
of Examination section.
Note 3: See discussion under Fuel Costs Not Charged Based on Benefits Received in the
Results of Examination section.
Note 4: See discussion under Indirect Costs Not Properly Calculated and Reported in the
Results of Examination section.
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Schedule 2
Questioned Costs for Assistance Agreement X98841901
(Clean Water)

Outlays
Costs Questioned

Cost Category
Reported
Ineligible
Unsupported
Total
Note
Salaries
$74,849

$74,849
$74,849
1
Fringe Benefits
24,286

24,286
24,286
1
Contract
150,228

94,034
94,034
2
Travel
1,480

Supplies
2,450

Equipment
22,120
$7,760
2,677
10,437
3
Other
5,058

Indirect Costs
18,876

18,876
18,876
4
Recipient Share
15,755

15,755
15,755
5
Total Costs
$315,102
$7,760
$230,477
$238,237

Less: Questioned Costs
(238,237)

Adjusted Total Outlays
$76,865

Recipient Share (5%)
3,843

Revised Federal Share
$73,022

EPA Payments
299,347

Amount Due EPA
$226,325

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Schedule 3
Questioned Costs for Assistance Agreement BG98804602
(2001 PPG)
Cost Category
Outlays
Reported
Costs Questioned
Note
Ineligible
Unsupported
Total
Salaries
$513,129

$513,129
$513,129
1
Fringe Benefits
132,115

132,115
132,115
1
Contract
182,737
$2,034
180,703
182,737
2
Travel
69,451

17,369
17,369
3
Supplies
22,388

0
0

Equipment
83,757

40,245
40,245
4
Other
90,806

3,959
3,959
5
Indirect Costs
137,019

137,019
137,019
6
Unreconciled
Overpayment
2,068
2,068

2,068
7
Recipient Share
56,962

56,962
56,962
8
Total Costs
$1,290,432
$4,102
$1,081,501
$1,085,603

Less: Questioned Costs
(1,085,603)




Adjusted Total Outlays
$204,829




Recipient Share (3.67%)
7,517




Revised Federal Share
$197,312




EPA Payments
1,233,470




Amount Due EPA
$1,036,158




Sources: Outlays reported were from the recipient's Financial Status Reports and general ledger. Costs
questioned were based on OIG analyses.
Note 1: See discussion under Unsupported Labor and Fringe Benefit Costs in the Results of
Examination section.
Note 2: Contract outlays of $182,737 questioned consist of:
a.	Costs of $180,703 paid under contracts not procured in accordance with Federal
procurement regulations, as outlined under Title 40 CFR 31.36. See discussion
under Procurements Did Not Comply with Standards - Small Purchase
Orders in the Results of Examination section.
b.	Costs of $2,034 for building improvements are unallowable under OMB
Circular A-87, Attachment B, paragraphs 15 and 28. See discussion under
Procurements Did Not Comply with Standards - Unallowable Contract
Costs in the Results of Examination section.
Note 3: See discussion under Fuel Costs Not Charged Based on Benefits Received in the
Results of Examination section.
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Note 4: See discussion under Procurements Did Not Comply with Standards - Small
Purchase Orders in the Results of Examination section.
Note 5: Other outlays of $3,959 questioned consist of:
a)	Attorney fees of $3,352 paid under a contract for legal consulting. We questioned
the costs because the contract was not procured in accordance with the Federal
procurement regulations established under Title 40 CFR 31.36. See discussion
under Procurements Did Not Comply with Standards - Small Purchase Orders
in the Results of Examination section
b)	Fuel charges of $607. See discussion under Fuel Costs Not Charged Based on
Benefits Received in the Results of Examination section.
Note 6: See discussion under Indirect Costs Not Properly Calculated and Reported in the
Results of Examination section.
Note 7: We questioned $2,068 of ineligible claimed costs in excess of costs incurred. We
performed a reconciliation of costs claimed in the recipient's final Financial Status
Report to the recipient's general ledger. We identified $2,068 in costs the recipient
claimed that were not recorded in the general ledger.
Note 8: See discussion under Recipient Share of Outlays Not Supported in the Results of
Examination section.
25

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Schedule 4
Questioned Costs for Assistance Agreement RP98897001
(Brownfields)
Cost Category
Outlays
Reported
Costs Questioned
Note
Ineligible
Unsupported
Total
Salaries
$130,163

$130,163
$130,163
1
Fringe Benefits
39,881

39,881
39,881
1
Contract
91,860
$4,702
33,773
38,475
2
Travel
33,217

7,416
7,416
3
Supplies
8,306

0
0

Equipment
20,702

8,531
8,531
4
Other
48,973
20,975
10,850
31,825
5
Indirect Costs
31,087

31,087
31,087
6
Recipient Share
0

0
0

Total Costs
$404,189
$25,677
$261,701
$287,378

Amount Due EPA
$287,378

Sources: Outlays reported were from the recipient's Financial Status Reports and general ledger. Costs questioned
were based on OIG analyses.
Note 1: See discussion under Unsupported Labor and Fringe Benefit Costs in the Results of
Examination section.
Note 2: Contract outlays of $38,475 questioned consist of:
a. Costs of $33,773 paid under contracts not procured in accordance with Federal
procurement regulations, as outlined under Title 40 CFR 31.36. See discussion
under Procurements Did Not Comply with Standards - Small Purchase Orders
in the Results of Examination section.
Of the $33,773 questioned, $5,250 paid to a contractor for the Holloway Garage
Site cleanup also did not comply with Title 40 CFR 31.36(b)(2). According to the
regulation, the grantee will maintain a contract administration system that ensures
that the contractor performs in accordance with the terms, conditions, and
specifications of the contracts or purchase orders. The Tribe did not have contracts
for the work performed by contractor. Therefore, the Tribe was unable to ensure
that the contractor performed in accordance with the terms, conditions, and
specifications of the contracts.
Auditee Response
The Tribe stated that it entered into a verbal agreement with the contractor because
it was an emergency. The EPA authorized the Tribe to make payments on this
expenditure after the fact. The Tribe certified to the EPA that the work requested
was satisfactorily completed, and EPA accepted the work. A written contract
entered into after the fact would not be legally binding on the contractor.
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OIG Analysis
We did not change our position on the $5,250 questioned. Although EPA
authorized the cleanup, and the Tribe is allowed to entered into verbal agreement in
an emergency situation, in order to comply with the requirements of Title 40 CFR
31.36(b)(2), the Tribe and the contractor should have signed the contract after the
fact to documented what was verbally agreed upon. This would allow the Tribe to
ensure that the contractors performed in accordance with the contract terms.
b. Labor costs of $4,702. See discussion under Procurements Did Not Comply with
Standards - Duplicate Labor Costs in the Results of Examination section.
Note 3: Travel outlays of $7,416 questioned consist of:
a.	Fuel charges of $5,186. See discussion under Fuel Costs Not Charged Based on
Benefits Received in the Results of Examination section.
b.	Travel costs of $2,230 paid to a contractor. See discussion under Procurements
Did Not Comply with Standards - Small Purchase Orders in the Results of
Examination section.
Note 4: See discussion under Procurements Did Not Comply with Standards - Small
Purchase Orders in the Results of Examination section.
Note 5: Other outlays of $31,825 questioned consist of:
a.	A vehicle lease of $20,975 not properly accounted for and claimed. See discussion
under Unsupported and Unallowable Equipment Purchases - Improper Vehicle
Leases in the Results of Examination section.
b.	Contract costs of $10,850. We questioned the costs because the contracts were not
awarded in accordance with the requirements of Title 40 CFR 31.36. See
discussion under Procurements Did Not Comply with Standards - Small
Purchase Orders in the Results of Examination section.
Note 6: See discussion under Indirect Costs Not Properly Calculated and Reported in the
Results of Examination section.
27

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Schedule 5
Questioned Costs for Assistance Agreement BG98804603
(2003 PPG)

Outlays
Reported
Costs Questioned

Cost Category
Ineligible
Unsupported
Total
Note
Salaries
$471,168

$471,168
$471,168
1
Fringe Benefits
137407

137,407
137,407
1
Contract
52,164

52,164
52,164
2
Travel
73,395

11,024
11,024
3
Supplies
24,931

0
0

Equipment
130,679
$27,226
62,339
89,565
4
Other
82,839

8,991
8,991
5
Indirect Costs
108,750

108,750
108,750
6
Amount Not Claimed Due to
Budget Ceiling
(98)

Recipient Share
56,907

56,907
56,907
7
Total Costs
$1,138,142
$27,226
$908,750
$935,976

Less: Questioned Costs
(935,976)

Adjusted Total Outlays
$202,166

Recipient Share (3.37%)
6,813

Revised Federal Share
$195,353

EPA Payments
1,081,235

Amount Due EPA
$885,882

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Procurements Did Not Comply with Standards - Small Purchase Orders in the
Results of Examination section.
Note 5: Other outlays of $8,991 questioned consist of:
a.	Contract outlay of $1,320 paid to Energy Laboratories. We questioned the amount
because the contract was not procured in accordance with the Federal procurement
regulations outlined in Title 40 CFR 31.36. See discussion under Procurements
Did Not Comply with Standards - Small Purchase Orders in the Results of
Examination section.
b.	Repair/Labor/Material of $4,200 and vehicle insurance costs of $3,471. We
questioned the amounts because the Tribe has not provided us with adequate
supporting documentation. See discussion under Unsupported Other Costs
Claimed in the Results of Examination section.
Note 6: See discussion under Indirect Costs Not Properly Calculated and Reported in the
Results of Examination section.
Note 7: See discussions under Recipient Share of Outlays Not Supported in the Results of
Examination section.
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Schedule 6
Small Purchase Contract Costs Questioned
by Award and Contractor
Contractor
V99888401
(Superfund)
X98841901
(Clean
Water)
BG98804602
(2001 PPG)
RP98897001
(Brownfields)
BG98804603
(2003 PPG)
Total
Contractual






Cherokee Data Fusions



$ 1,705

$ 1,705
Energy Laboratory

$ 780
$45,959
2,818
$16,679
66,236
Erickson Environmental


8,536

8,206
16,742
Farlee Trenching



5,250

5,250
First Priority

79,174



79,174
Gunderson, Palmer,
Goodsell & Nelson/Pam
Snyder


95,453

4,325
99,778
IECIS Group
$ 5,000




5,000
Inter-Mountain




1,574
1,574
Jerry Peacock


600


600
Mark Peacock

12,800
13,000

10,000
35,800
Matrix Consulting Group



24,000

24,000
Plateau Ecosystems
38,898
1,280
17,155

11,380
68,713
Amount Not Claimed
Due to Budget Ceiling
(11,428)




(11,428)
Sub-Total Contractual
$32,470
$94,034
$180,703
$33,773
$52,164
$393,144







Other






Energy Laboratory




1,320
1,320
Farlee Trenching



5,850

5,850
Gunderson, Palmer,
Goodsell & Nelson/Pam
Snyder


3,352


3,352
Patti Gourneau



5,000

5,000
Sub-Total Other
$0
$0
$3,352
$10,850
$1,320
$15,522







Travel






Cherokee Data Fusions



2,230

2,230
Sub-Total Travel
$0
$0
$0
$2,230
$0
$2,230







Grand Total
$32,470
$94,034
$184,055
$46,853
$53,484
$410,896
Sources: Contract costs questioned were based on OIG analyses.
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Schedule 7
Small Purchase Equipment Costs Questioned
Date
Vendor
Description
Amount Questioned
X98841901
(Clean Water)
BG98804602
(2001 PPG)
RP9889701
(Brownfields)
BG98804603
(2003 PPG)
Total
03/30/04
Best Business
Products
Canon image
runner copier
$2,677

$2,677
$5,355
$10,709
09/05/02
Cole-Palmer
Company
Four holder water
purifier

$3,035


3,035
09/05/02
Cole-Palmer
Company
Supplies

4,098


4,098
09/24/02
CRST
Telephone
Sales &
Services
Supplies

9,146


9,146
05/07/02
Dakota 2000
Dimension 4400
series
Note 1
2,186


2,186
05/07/02
Dakota 2000
Dimension 4400
series
Note 1
2,186


2,186
06/06/03
Dakota 2000
Dell Inspirion
Notebook

2,959


2,959
06/26/03
Dakota 2000
Dimension 4550
series

2,345


2,345
3/31/04
Dakota 2000
Computer system


5,854

5,854
05/19/04
Dakota 2000
Computer system



3,496
3,496
09/30/04
Dakota 2000
Computer system



2,661
2,661
11/19/04
Dakota 2000
camera, computer



7,354
7,354
12/07/04
Dakota 2000
Tower, Surge, etc



4,478
4,478
03/01/05
Dakota 2000
Time center
desktop



2,485
2,485
04/19/05
Dakota 2000
Computer system



3,481
3,481
09/30/03
Fischer
Scientific
Company
Office Equipment

7,161


7,161
09/30/03
JV
JV 03-163

4,874


4,874
12/07/04
Pierre Sports
Center
Winterizing
boat/trailer



4,033
4,033
09/22/04
Rice Honda/
Suzuki
'04 Honda ATV &
'05 snow



6,839
6,839
11/12/04
Tech Sale, Inc.
P.O. 54655



22,157
22,157
06/26/03
YSI
Environmental
Multi Parameter
Display

2,255


2,255










Totals
$2,677
$40,245
$8,531
$62,339
$113,792
Sources: Equipment costs questioned were based on OIG analyses.
Note 1: The Tribe received two bids for these purchases but purchased the equipment with higher bid without any justification.
31

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Appendix A
Scope and Methodology
We performed our examination in accordance with the generally accepted government auditing
standards issued by the Comptroller General of the United States, and the attestation standards
established by the American Institute of Certified Public Accountants. We also followed the
guidelines and procedures established in the OIG's "Project Management Handbook."
We conducted this examination to express an opinion on the reported outlays, and determine
whether the Tribe complied with all applicable laws and regulations, as well as with any special
requirements under the agreements. We conducted our fieldwork from September 27, 2006,
through June 4, 2007.
In conducting our examination, we performed procedures as detailed below:
• We interviewed EPA personnel, and reviewed grant and project files to obtain background
information on the Tribe and the agreements.
• We interviewed tribal personnel to understand the accounting system and the applicable
internal controls as they relate to the reported outlays.
• We reviewed the recipient's internal controls specifically related to our objectives.
• We performed tests of the internal controls to determine whether they were in place and
operating effectively.
• We reviewed EPA Region 8's report on the onsite review conducted at the Tribe in
May 2005 and the single audit reports for Fiscal Years 2002, 2003, and 2004, to identify
issues that might impact our examination.
• We performed followup procedures to determine the status of the issues identified in the
onsite review and their impact on our examination. See Appendix B, Status of Onite Review
Findings for Brownfields Agreement, for more details.
• We determined that no prior OIG audit reports were issued that required audit followup.
• We examined the reported outlays on a test basis to determine whether the outlays are
allowable and properly supported in accordance with the terms of the agreements and Federal
regulations and cost principles.
• We sought to determine whether the Tribe performed all tasks and provided all deliverables
required under the agreement.
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Appendix B
Status of Onsite Review Findings
for Brownfields Agreement
As part of our examination, we reviewed Region 8's report on the onsite review of the
Brownfields agreement that it conducted at the Tribe in May 2005 to identify issues that might
affect our examination. We then performed followup procedures to determine whether the Tribe
had corrected the issues. We found the following for the various issues noted by the Region.
Issue 1
What the Region 8 Review Found. The Tribe did not award its contracts in accordance with
the Federal procurement regulations of Title 40 CFR 31.36 and its internal policies and
procedures. Specifically, the Tribe awarded sole source contracts without proper justification
and documentation. The Tribe also awarded sole source contracts to related parties without EPA
project officer approval.
What the OIG Audit Found. Our examination of 46 contracts and consulting agreements
showed that the Tribe awarded sole source contracts without justification, documentation, and
EPA approval. This situation continues to be a problem because the Tribe has not amended its
written procurement policies and procedures for the Environmental Protection Department to
comply with Federal procurement regulations for sole source contracts. We questioned all costs
claimed under these sole source contracts. See discussions under Procurements Did Not
Comply with Standards in the Results of Examination section.
The Tribe noted in its draft report response that it incurred the questioned costs prior to 2006.
According to the Tribe, questioned costs continue to be a problem because the Tribe has not
amended its procurement policies or procedures for sole source contracts to meet Federal
regulations.
Our examination did not identify any evidence of the Tribe awarding contracts to related parties.
Issue 2
What the Region 8 Review Found. Tribal employees accrued labor hours and received
payment for work performed at the Holloway Garage Site as a contractor employee in addition to
their normal wages. The Tribe billed $58,088 for cleanup costs paid to "CRST Enterprise." The
amount included work performed by tribal employees and equipment rentals. The three main
concerns associated with the payment were:
a. "CRST Enterprise" was a company owned by a tribal employee.
b. Tribal employees received payment as a contractor for the hours billed as part of the
$58,088 in addition to their normal wages.
c. Cleanup was conducted without EPA's approval.
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What the OIG Audit Found. During our examination, we confirmed that "CRST Enterprises"
is in the Tribe's chart of accounts. It is the Tribe's enterprise fund, not a separate business
owned by tribal employees. Costs for all tribal-administered general programs, such as
insurance and retirement benefits, are paid to "CRST Enterprise." Tribal employees did not
receive extra pay for the time spent on the cleanup. Weekend hours worked were recorded as
compensatory time.
Based on the documentation provided to us, the Tribe started the cleanup prior to EPA's
approval due to an emergency. However, EPA later retroactively approved the cleanup. We
noted that labor costs claimed were already included under "salaries" and "fringe benefits";
therefore, we questioned the costs duplicated under the Holloway Garage Site cleanup costs. See
discussions under Procurements Did Not Comply with Standards - Duplicate Labor Costs in
the Results of Examination section.
Issue 3
What the Region 8 Review Found. The Region had questions as to whether the security panels
purchased for the Holloway Garage Site were ever put to their intended use. Also, the panels
were not tagged in the Tribe's physical inventory records. The Region was also concerned that
the Tribe purchased more panels than needed for the site.
What the OIG Audit Found. The Holloway Garage Site cleanup occurred in 2004. We can no
longer verify whether the panels were actually put to their intended use at the time. The unit price
of the panels was $6.25. According to OMB Circular A-87, Attachment B, paragraph 19(d), items
with an acquisition cost of less than $5,000 are considered supplies; therefore, inventory tagging is
not required. We noted that the Tribe sold half of the panels to a non-EPA project at the initial
purchase price a month later and credited the EPA agreement for the proceeds. No further action
is necessary.
Issue 4
What the Region 8 Review Found. The Tribe was unable to provide copies of actual contracts
to Region 8 during the onsite review.
What the OIG Audit Found. This did not appear to be an issue based on the work performed
under our audit. The Tribe provided us with all contracts requested, with the exception of the
contracts awarded to Farlee Trenching for the Holloway Garage Site cleanup. The Tribe
explained that the cleanup was due to an emergency and therefore it did not have any written
contracts.
34

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Issue 5
What the Region 8 Review Found. The Tribe had not demonstrated that the Brownfields
cleanup conducted at the Holloway Garage property has been verified/certified complete.
What the OIG Audit Found. During our fieldwork, we could not obtain a reasonable assurance
that the Tribe had completed all of the tasks outlined in the agreements. See Work Progress
Needs to be Reported According to Regulations in the Results of Examination section in the
report. The Tribe stated that EPA Region 8 has now certified the Holloway Garage Site cleanup
to be complete.
Issue 6
What the Region 8 Review Found. The Tribe's method for allocating fuel usage was not
adequate.
What the OIG Audit Found. Our review determined that prior to October 1, 2005, the Tribe
did not properly allocate fuel charges based upon actual usage. See discussions under Fuel
Costs Not Charged Based on Benefits Received in the Results of Examination section.
Issue 7
What the Region 8 Review Found. The Tribe used the Brownfields grant funds to pay for
General Assistance grant activities.
What the OIG Audit Found. We found the two instances identified in the onsite review where
training costs for General Assistance (2003 PPG agreement) employees were charged to the
Brownfields agreement. These errors occurred because the General Assistance employees
attended the training with one or more Brownfields employees. The General Assistance
agreement was supposed to reimburse the Brownfields agreement, but the reimbursement never
occurred. The Tribe stated that it will work with EPA Region 8 during its September 2007
meeting to ensure that reconciliation and modification is timely performed
Issue 8
What the Region 8 Review Found. The Tribe did not reconcile bank accounts timely.
What the OIG Audit Found. We did not follow up on the Tribe's bank account reconciliation.
However, we confirmed that the Tribe did not overdraw from the EPA agreements by comparing
the final Financial Status Report amounts to EPA's Financial Data Warehouse data. We also
performed data analyses to identify potential fraudulent transactions. We noted no issues.
35

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Issue 9
What the Region 8 Review Found. Physical inventory records were not reconciled to perpetual
inventory records.
What the OIG Audit Found. We performed a physical inventory to obtain a reasonable
assurance the Tribe tagged and safeguarded the large dollar items purchased under the EPA
agreements. We found that all of the items inventoried were physically at the Tribe and that
most items were either tagged or have a vehicle identification number. However, the Tribe's
inventory was not updated. For example, the two vehicles included in our samples were not in
the inventory list provided to us. We brought this issue to the Tribe's attention during our
fieldwork. The Tribe agreed to update its inventory.
Issue 10
What the Region 8 Review Found. The Tribe did not submit Federal Financial Status Reports
in a timely manner.
What the OIG Audit Found. We found that the Tribe continued to submit Financial Status
Reports untimely. See discussions under Financial Status Reports Not Submitted Timely in
the Results of Examination section.
Issue 11
What the Region 8 Review Found. The Tribe did not have a current indirect cost rate
agreement.
What the OIG Audit Found. As of April 2007, the Tribe was current with its indirect cost rate
agreements. See discussions under Indirect Costs Not Properly Calculated and Reported in
the Results of Examination section.
Issue 12
What the Region 8 Review Found. The Tribe's personnel procedures and property, equipment,
and procurement procedures were outdated.
What the OIG Audit Found. The Tribe has not updated its property, equipment, and
procurement procedures. According to the Tribe, as of the date of completion of fieldwork, it
was updating them.
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Appendix C
Recipient Response
Ms. Lela Wong
EPA -OIG-Office of Audit
75 Hawthorne St., 7th Floor
San Francisco, CA 94105
Mail Code: IGA-1
August 29, 2007
Dear Ms. Wong:
Enclosed you will find the Cheyenne River Sioux Tribe's Comments on the Draft
Attestation Report "Cheyenne River Sioux Tribe Outlays Reported Under Five EPA
Assistance Agreements". Thank you for providing the Tribe with the opportunity to
comment on the report. The Tribe appreciates the opportunity provided and looks
forward to working with you and with EPA Region 8 to resolve the outstanding issues
identified in the OIG Report. Pursuant to the Tribe's request for an extension of time to
submit comments filed with Washington, D.C., the Tribe was granted an extension of
time until August 31, 2007 to submit comments.
Please feel free to contact me with any questions or additional information needed at your
convenience.
Sincerely,
Joseph Brings Plenty, Chairman
Cheyenne River Sioux Tribe
37

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COMMENTS OF THE CHEYENNE RIVER SIOUX TRIBE ON EPA
ATTESTATION REPORT "CHEYENNE RIVER SIOUX TRIBE OUTLAYS
REPORTED UNDER FIVE EPA ASSISTANCE AGREEMENTS"
Submitted on August 29, 2007
The Cheyenne River Sioux Tribe would like to express it's appreciation for the
opportunity to comment on the EPA OIG Attestation Report. These comments are
organized chronologically in accordance with format of the "Draft OIG Report" the Tribe
received on July 5, 2007. The heading of the section commented on, the page number in
the Draft Report, and the actual language the Tribe requests to be modified are provided
as referents. In some instances, additional supporting documentation is attached and
referenced in these comments as "Exhibit
Comment 1: At a Glance Summary - "What We Found"
The Tribe requests that the final sentence in this section be amended by inserting the
phrase "In some instances" before the words "The Tribe was not able to demonstrate that
it has completed all work under the agreements...". The Draft OIG Report on page 15
that not all reports were received by the OIG. All Performance Reports required by
Region 8 EPA have been submitted without any information from Region 8 indicating a
need for further reporting. The Tribe would prefer to see a statement added to this
statement or a revision of this statement based on our Comments on Comment 11.
Comment 2: Results of Examination: Unsupported Labor and Fringe Benefit Costs
- PP- 7.
The Tribe requests an amendment to Paragraph 1, sentence 2 "There is currently no way
for employees to record such an event on their timesheets." In response to this issue,
which was raised with the Tribe in May 2005, the Tribe has instituted a revised timesheet
recording process as of Pay Period 17 in Fiscal Year 2007 covering May 6, 2007 through
May 19, 2007. The revised timesheet, which was developed in consultation with OIG
Staff, records time on a daily basis by grant number, and includes certification by the
employee of time worked on each grant. See Exhibit 1. Thus, this sentence should
properly reflect this adjustment, and the remainder of the paragraph be adjusted
accordingly to denote that the problem has been addressed to ensure that time is properly
recorded for employees performing work on more than one grant. In addition, the CRST
EPD Department has had in place since May 2004 a Daily Time Log recorded by each
employee documenting work performed and the grant for which the work was performed
to accomplish two purposes. First, to document Labor Costs. And second, to assist the
Grant Program Managers in verifying Work Accomplished under each Grant
administered by CRST EPD. See Exhibit 2. The EPD Department has committed to add
a signature line on the daily logs for employees to certify that the Log is accurate.This
should assist the CRST EPD Program Managers in completing Performance Reports for
each grant in a timely manner.
The Tribe would also request the addition of a Paragraph at the end of this section, which
would read as follows:
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"The Tribal Contracting Officer and CRST EPD Staff met with Region 8 Personnel in
Denver, Colorado on August 7-10, 2007 to work on this issue. In addition, the Tribe
requested Technical Assistance from EPA Region 8 to make program procedure and
policy modifications and to review OIG reported questioned costs. Region 8 EPA has
scheduled on-site technical assistance for September 17-21, 2007 with Mr. Paul Felz to
finalize review of Questioned costs for Labor and Fringe Benefits. The CRST EPD
Department has also implemented as of September 1, 2007 a Daily Time log with
certifying signature of each employee documenting work performed and the Grant for
which the work was performed to document labor costs."
Comment 3: Results of Examination: Procurements Did Not Comply With
Standards - Non-Competitive Contract pp. 8.
Paragraph 2 on pp. 9 concludes that the Tribe did not provide documentation of EPA
Approval of the Non-Competitive Award of one contract. Factually, the OIG Draft on
page 9 if not clear on what actually occurred. The Tribe had three proposals for legal
services on this issue submitted. One proposer withdrew their proposal. Another was
selected but requested an increase in pay after selection. The final proposal was accepted
and the Tribe entered into a contract with the attorney under which EPD used a portion of
its grant funds to fund the contract and the Tribe provided additional funds for the
contract. The Attorney contract was renewed for a second year as well. Attached hereto
as Exhibit 3 is the documentation of this transaction. The Tribe received approval
received from EPA Region 8 Project Officer . Exhibit 3 is
documentation of the approval of the contract approval by EPA Region 8. This should
resolve the findings with respect to this particular contract. The Tribe would request
removal of references to this contract in this section of the report. If this information is
still insufficient to remove the finding, the Tribe commits to work with Mr. Paul Felz
during our Technical Assistance review September 17-21, 2007 to resolve this issue.
In addition, the CRST EPD has reviewed EPA Region 10 "Purchasing Supplies,
Equipment and Services Under EPA Grants" Guidance attached hereto as Exhibit 4 and
fully intends to implement this guidance in writing as "Procedures for Procurement
Applicable to EPD Purchases" no later than October 1, 2007. The Tribe has scheduled
on-site Technical Assistance with EPA Region 8 for September 17-21, 2007 to finalize
Procurement Procedures in writing in time to apply these procedures as of October 1,
2007.
The Tribe would also request that the following paragraph be added to this Section of the
Draft Report at the end of this section:
"The Tribal Contracting Officer and CRST EPD Staff met with Region 8 Personnel in
Denver, Colorado on August 6-10, 2007 to work on this issue. In addition, the Tribe
requested Technical Assistance from EPA Region 8 to make program procedure and
policy modifications and to review OIG reported questioned costs. Region 8 EPA has
39

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scheduled on-site technical assistance for September 17-21, 2007 to finalize amended
procurement procedures applicable to the CRST EPD."
Comment 4: Results of Examination: Procurements Did Not Comply With
Standards - Unallowable Contract Costs - pp. 9
The OIG description of what occurred is not factually correct. The OIG concludes that
this work was an improvement to an existing building and falls under maintenance and
repair. In fact, the work was performed to construct a new storage building. For Section
106 equipment under the PPG grant. The EPD Department did not have sufficient
building space to store the EPA funded equipment and meet its obligation to safeguard
equipment purchased with federal funds. As a result, the EPD Department contacted
EPA Region 8 Project Officer Randy Brown prior to expenditure and received
authorization to construct a new concrete pad and connection concrete from the new
building to the existing EPD building, and was an eligible cost under the PGG grant.
Thus, this was new construction and not repair or maintenance of an existing building as
concluded by the OIG. Any supporting documentation required can be made available
to the OIG.
Comment 5: Results of Examination: Procurements Did Not Comply With
Standards - Duplicate Labor Costs - pp. 9
The Tribe will work with Mr. Paul Felz to ensure the reimbursement to the Grant occurs.
In this instance, which was an emergency procurement of services and labor due to the
collapse of a garage roof exposing the public to asbestos in friable form, and the
subsequent discovery of underground storage tanks that delayed removal of the
hazardous material, the EPD Department determined it would be most efficient and best
practice until all Region 8 reviews of expenditures were completed, to bill all costs
including labor costs to the Enterprise account and then to the Brownsfields grant. The
labor and costs were eligible for payment under more than one grant. The EPD
Department fully intended to complete the Budget Modification to reimburse the grant
for labor expenses but it was not completed by the staff assigned to complete that
transaction at that time. The Tribe is fully committed to completing this modification and
reimbursement in a timely manner and submitting amended financial reports on the
affected grant.
Comment 6: Fuel Costs Not Charged Based on Benefits Received
The Tribe will work with EPA Region 8 during our scheduled on-site Technical
Assistance September 17-21, 2007 to review how the fuel costs were allocated between
grants prior to October 1, 2007 and to reallocate grant funds to fuel costs on a rotational
or actual basis and amend grant reporting documents accordingly to alleviate the
questioned costs in this instance. The Tribe appreciates the OIG's recognition in its
Attestation Report that the Tribe has corrected this accounting issue.
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Comment 7: Unsupported and Unallowable Equipment Purchases - Mischarged
and Unapproved Vehicle Costs - pp. 11.
The Tribe will work with Mr. Paul Felz, EPA Region 8 on September 17, 2007 to resolve this
issue. The Grant period for the 106 SPECIAL PROJECT, where the ATV was authorized to be
purchased from was extended by EPA Region 8, so the purchase was within an allowable time
period. The EPA Project Officers approving the purchase was Doug Lofstad and Randy Brown.
Exhibit 5 includes the Grant agreement under which equipment purchase as needed was
authorized (See Budget Summary tabbed appropriately), and the extension of time.
Comment 8: Unsupported and Unallowable Equipment Purchases - Improper
Vehicle Leases - pp. 12.
These vehicle leases were approved by Region 8 Project Officer Joyce Brame, who
provided the Tribe technical assistance in drafting the Lease agreements. Under EPA
Region 8 policies, the Tribe cannot lease GSA vehicles and therefore, to perform the
work under these grants which requires field work over an area spanning 2.8 million
acres, roughly the size of Connecticut, a vehicle purchase or lease is required. EPA
Region 8 provided the EPD with guidance on the lease drafting, but did not indicate this
was a capital lease. The Tribe will conduct further training with EPA Region 8 Paul Felz
during its Technical Assistance meeting September 17-21, 2007 on this issue.
Comment 9: Unsupported Other Costs Claimed - pp. 12.
The Tribe has scheduled with Paul Felz EPA Region 8 to review the costs listed in this
section. The $4,200 questioned was already reimbursed to the grant. The attached
documentation demonstrates this has been remedied. Exhibit 5.
Comment 10: Indirect Costs Not Properly Calculated - pp. 14
The Tribe requests the insertion of an additional Paragraph to this section on Page 14 to
read as follows:
"The Tribal Contracting Officer and CRST EPD staff met with EPA Region 8 on August
6-10, 2007 to review the newly approved DOI Indirect Cost rates, which were approved
by DOI in 2007 and to work on applying those rates to EPA Grant Expenditures. The
Tribe has also scheduled On - Site Technical assistance for the week of September 17,
2007 to complete adjustment of EPA Grant Indirect Cost charges and to complete
amended Financial Status Reports."
Comment 11: Work Progress Needs to Be Reported According to Regulations
Attached hereto as Exhibit 6 you will find Final Performance Reports for all 5 EPA
Grants for the Time periods set forth in Table 1 of the Draft Attestation Report. The
CRST EPD Department was under the impression that all reports requested were
provided to the OIG and requests respectfully that the OIG review these additional
reports prior to finalizing the Draft Attestation Report. The Final Progress reports were
emailed to Ms. Lela Wong by Dave Nelson, EPD Director. We would request
adjustment after review of these records, and would request the following sentence be
added to this section:
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"EPA Region 8 has accepted all Progress reports submitted. The Tribe's Performance
reports included significant grant activity information, but the format of the Reporting did
not mirror the structure of the grant proposals which set forth goals, objectives and tasks.
Therefore, it is difficult to determine the accomplishments of the Tribe on the grant goals
objectives and tasks. The Tribe has requested EPA Region 8 to work with the Tribe on
developing a new Performance Report format to assist non-EPA Staff in reviewing the
accomplishments under the grants. The Tribe was not aware of potential insufficiency of
reporting under the PPG Agreements because all Performance reports submitted have
been accepted by Region 8 EPA without any request for additional information."
EPA regulations were not violated with the format of the reports submitted. The Tribe
would respectfully request therefore, that the conclusions reached regarding the format of
reports submitted reflect that the issue is the format of the performance report not linking
up with the format of the grant itself which lists goals objectives and tasks. This is really
an issue, in the Tribe's view, of EPA Region 8 responsibility to provide technical
guidance or direction on the format of the reports requested. The Tribe has had an annual
evaluation on every grant every year, contrary to what is reported in the OIG report. The
EPA Region 8 Staff have not provided the tribe with a written annual evaluation. The
responsibility for documenting this event rests with EPA Region 8 as it is an EPA Region
8 obligation to perform annual evaluations. The Tribe therefore respectfully requests that
the OIG report be amended to reflect the responsible party for the evaluation
documentation is not the Tribe, but EPA Region 8.
Comment 12: Schedule 4: Questioned Costs for Assistance Agreement RP98897001
(Brownfields) - Note 2a - pp. 21
The $5,250 paid to a contractor for Holloway garage was entered into as a verbal
agreement based on an emergency as explained by the Tribe. The Tribe was authorized
after the fact to make payment on this expenditure by the EPA because of the emergency
nature of the situation, as explained in Exhibit 8. Under Tribal law, a verbal contract is
binding upon both parties. The Email from EPD Director to Region 8 Dan Hofferman
documents the labor that was requested on an emergency basis. See Exhibit 8. The EPD
Director has certified to EPA that the work requested was satisfactorily completed, and
the work was accepted by Region 8 Project Officer . A written contract
entered into after the fact would not be legally binding on the contractor in any event.
Given the emergency nature of the situation, the Tribe is requesting approval of this
expenditure be allowed by the OIG as it was allowed by Region 8 EPA after review of
documents submitted by the Tribe. At a minimum the Tribe would request that the OIG
Report reflect that this expenditure was made based on an emergency.
Comment 13: Appendix B: Status of On-Site Review Findings for Brownfields
Agreement - Issue 1 - pp. 28
The Tribe requests that the wording of the paragraph under "What the OIG Audit Found"
be amended. The comment that the Tribe requests to be amended is that "This continues
to be a problem because the Tribe does not understand the Federal procurement
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regulations for sole source contracts." This comment is too general in nature to be
accurate. In addition, the OIG only reviewed Tribal Procurements under EPA Grants -
the sentence actually makes an incredibly broad comment on the Tribe in general which
in addition to being inaccurate, casts doubt on other tribal federal grants unnecessarily.
The Tribe would request this sentence be stricken and instead, a sentence stating "This
continues to be a problem as the Tribe has not yet amended its Procurement Policies or
the Environmental Protection Department Procurement Procedures to accord with
Federal procurement regulations for sole source contracts. The Tribe has scheduled on-
site technical assistance with Region 8 EPA for the week of September 17, 2007 to
complete written Procurement Procedures." In addition, in reviewing the schedules of
questioned costs, it appears to the Tribe that all questioned costs were prior to 2006. If
this is the case, the Tribe would request that a sentence be added indicating this.
Comment 14: Appendix B: Status of On-Site Review Findings for Brownfields
Agreement - Issue 3 - pp. 29
The Tribe requests that the wording of the paragraph under "What the OIG Audit Found"
be amended. The Tribe would request the additional of a conclusion from OIG that this
issue has been resolved or remedied. Under other sections, the OIG concludes whether
additional action is needed. The Tribe would request the same in this section.
Comment 15: Appendix B: Status of On-Site Review Findings for Brownfields
Agreement - Issue 4 - pp. 29
The Tribe requests that the wording of the paragraph under "What the OIG Audit Found"
be amended. The Tribe would request the additional of a conclusion from OIG that this
issue has been resolved or remedied. Under other sections, the OIG concludes whether
additional action is needed. The Tribe would request the same in this section.
Comment 15: Appendix B: Status of On-Site Review Findings for Brownfields
Agreement - Issue 5 - pp. 29
The Tribe requests that the wording of the OIG Summary of "What the Region 8 Review
Found" be amended. The Onsite Review Document provided to the Tribe by the Region
8 EPA Office has the appropriate wording and is included as Exhibit 7. The OIG
language summarizing the Region 8 report states, "Region 8 observed the Tribe was
inexperienced in the Holloway Garage Site cleanup, and had difficulty removing tanks
from the site. The Tribe was unable to complete work at the site." However, the EPA
Region 8 "On- Site Review Document on page 19 states, "CRST has not demonstrated
that the Brownfield[s] cleanup conducted at the Holloway Garage property has been
verified/Certified complete." This is the appropriate language to quote in the OIG
Attestation report. The Tribe has never received any documents from EPA Region8
concluding what the OIG Attestation Report states that Region 8 EPA concluded. In
addition, the Holloway Garage Site cleanup has now been certified completed by EPA.
As explained in the Tribe's response to the Region 8 on site review on Page 3 under
"Issue 5", which is included herein as Exhibit 8, the issue with the Holloway Garage site
cleanup was not an issue of Tribal failures. The Tribe performed its due diligence and
inventoried the site. The inventory did not reveal any evidence of underground storage
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tanks, which are subject to additional federal laws and regulations and are governed not
by the EPA Brownfields regulations only, but also by the EPA LUST Program laws and
regulations. When the roof collapsed on the site causing an immediate health hazard,
emergency action was taken. In performing emergency actions to secure public health,
the Tribe discovered evidence of an underground storage tank and immediately
implemented required LUST procedures. The Tribe respectfully requests, therefore that
the wording of the OIG summary of what EPA Region 8 Found be amended to reflect
Region 8 EPA's own language in reporting to the Tribe from the conclusions in the
Region 8 EPA report at Page 19 (Exhibit 7).
The Tribe requests that the wording of the paragraph under "What the OIG Audit Found"
be amended. This Issue in the EPA Region 8 review was related only to the Brownsfield
grant Goals and Objectives. The OIG Report references other grants not include din the
EPA Region 8 review. The OIG Report already addresses issues with other grants in the
section entitled "Progress Needs to Be Reported According to Regulations." The OIG
is in possession of every progress report on the Brownsfield grant and has not indicated
anywhere in the OIG Report that those Performance Reports were insufficient to address
this Issue. In addition, the Tribe requests that OIG review Exhibits 7 and 8 again which
document the original issue and the Tribe's additional submissions to demonstrate that all
Brownsfield Grant work was completed satisfactorily. As stated in Comment 11, infra,
the Tribe has attached all PPG Program Progress reports. Therefore, the Tribe would
respectfully request that this reference to other non-Brownsfield grants be removed and
the conclusion specific to Brownsfield grants be made based on the documentation
provided.
Comment 16: Appendix B: Status of On-Site Review Findings for Brownfields
Agreement - Issue 7 - pp. 30
The Tribe will work with Paul Felz from EPA Region 8 to ensure that this reconciliation
and modification is timely performed from September 17-21, 2007.
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Distribution
Appendix D
EPA
Regional Administrator, Region 8
Director, Grants, Audit and Procurement Program Office, Region 8
Regional Audit Followup Coordinator, Region 8
Regional Public Affairs Office, Region 8
Agency Followup Official (the CFO)
Agency Followup Coordinator
Director, Grants and Interagency Agreement Management Division
Acting Inspector General
Auditee
Chairman
Treasurer
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