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*. U.S. Environmental Protection Agency	20-P-0331
I	\ Office of Inspector General	September 25,2020
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At a Glance
Why We Did This Project
We conducted an audit of the
U.S. Environmental Protection
Agency's management of
Contract No. EP-C-16-001,
which was awarded in
December 2015 to Northbridge
Group. This audit was initiated
in response to a hotline
complaint regarding possible
irregularities in the EPA's
funding practices and payment
of invoices for the contract.
The purpose of this audit was
to determine whether:
1.	EPA funding actions are
allowable or pose risks to
the Agency.
2.	Invoices are being
approved and paid without
proper review of costs.
This report addresses the
following:
•	Operating efficiently and
effectively.
This report addresses a top EPA
management challenge:
•	Complying with internal control
(policies and procedures).
Address inquiries to our public
affairs office at (202) 566-2391 or
OIG WEBCOMMENTS@epa.gov.
List of OIG reports.
EPA's Lack of Oversight Resulted in Serious Issues
Related to an Office of Water Contract, Including
Potential Misallocation of Funds
What We Found
The EPA's management of Contract No. EP-C-16-001
lacked sufficient controls. For example, EPA contracting
staff:
• Potentially misallocated funds for the contract.
Improved contract
management will
help the EPA
become a better
fiscal steward and
potentially save
millions of
taxpayer dollars.
Violated the Inspector General Act of 1978, as
amended, by destroying certain requested documents.
As a result, neither the Agency nor the OIG can determine how the Agency
allocated over $10 million of EPA funds for Contract No. EP-C-16-001.
•	Paid invoices without input from the EPA staff more familiar with
Northbridge's work. In some cases, these EPA staff did not receive the
invoices to review and approve until months after the invoices were paid.
•	Did not perform detailed reviews of invoices. Had contracting staff thoroughly
reviewed Northbridge's invoices when they were submitted, the Agency could
have questioned why Northbridge was using more costly labor than originally
estimated. The Agency also could have saved up to $565,529 on direct labor
and associated overhead over three years if Northbridge had used its less
costly labor, as originally estimated.
•	Did not conduct required records inspections of Contract No. EP-C-16-001.
These issues occurred because (1) contracting and program staff did not follow
established policies and procedures for tracking funding decisions; (2) the
contract-level contracting officer's representative did not provide recommended
checklists to contracting staff, who consequently did not adequately monitor the
invoices; and (3) contracting staff were not aware of EPA guidance regarding
inspection requirements.
Recommendations and Planned Agency Corrective Actions
After we discussed our audit findings with the Agency, the EPA completed
corrective actions addressing some of our findings before we issued our draft
report. As a result, we have not issued recommendations regarding those
findings. To address our remaining findings, we make six total recommendations
to the assistant administrator for Water and the assistant administrator for
Mission Support, including taking action to improve contract management and
holding the EPA accountable for potential misallocation of funds on Contract
No. EP-C-16-001. The Agency disagreed with two and agreed with four of our
recommendations. The Agency did not, however, provide acceptable corrective
actions for one of the agreed-to recommendations. Therefore, three of our six
recommendations are unresolved with resolution efforts in progress.

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