Office of Inspector General

U.S. Environmental Protection Agency

At a Glance

22-E-0027
March 31, 2022

Why We Did This Evaluation

The U.S. Environmental
Protection Agency's Office of
Inspector General conducted this
evaluation of EPA
Contract EP-C-16-001, awarded
to Northbridge, to follow up on
funding and invoice irregularities
in Region 9 for the States of
Hawaii and California identified in
OIG Report No. 20-P-0331.

The purpose of this evaluation
was to determine whether (1) the
EPA properly approved, paid for,
and accounted for charges
submitted by Northbridge for
work in Region 9 for the States of
Hawaii and California under EPA
Contract EP-C-16-001 and
(2) Northbridge provided
acceptable deliverables, as
specified in EPA
Contract EP-C-16-001 and the
associated work plans. This
contract provided support
services to states for their
municipal drinking water and
wastewater programs.

This evaluation supports an EPA
mission-related effort:

•	Operating efficiently and
effectively.

This evaluation addresses a top
EPA management challenge:

•	Managing infrastructure funding
and business operations.

Address inquiries to our public
affairs office at (202) 566-2391 or
OIG WEBCOMMENTS@epa.gov.

List of OIG reports.

The EPA Did Not Follow Agency Policies in
Managing the Northbridge Contract and
Potentially Violated Appropriations Law

What We Found

While the EPA paid for charges submitted by
Northbridge for work conducted in Region 9, the
contract-level contracting officer representative
did not properly approve or clearly account for
the funds and used over $1.1 million to
interchangeably pay invoices for the States of
California and Hawaii, as well as other states.
While the interchangeable use of funds did not

Because key accounting
policies were not adhered
to, the EPA cannot ensure
that $6.8 million in
appropriated dollars went
toward their intended
purposes, potentially
violating laws.

violate any specific contracting criteria, the

practice makes it difficult to determine whether funds were properly spent.
Because of the payment issues in Region 9, we expanded our evaluation and
analyzed all contract spending from the Base Period through Option Period Two.

We found that the Agency did not follow estimated split-funding policy when
allocating $6.8 million for the entire contract during the period we analyzed. Staff
did not follow protocols nor obtain proper approvals when paying invoices for the
contract according to the EPA's Administrative Control of Appropriated Funds,
Release 3.2, known as the 2008 Funds Control Manual, and the EPA Acquisition
Guide. These issues occurred because management in the Office of Water and in
the Office of Acquisition Solutions, within the Office of Mission Support, did not
ensure that the EPA's contract staff understood and adhered to EPA accounting
policies. By not following these policies, the staff increased the risk of expending
appropriated funds in ways that were inconsistent with the funds' purposes and
beyond the amounts available, which could have violated 31 U.S.C. § 1301(a),
known as the Purpose Statute, and increased the likelihood of the Agency
violating the Antideficiency Act, 31 U.S.C. § 1341(a)(1)(A).

While we confirmed that Northbridge provided acceptable deliverables in
Region 9, EPA contracting officers did not follow established acquisition
guidance to review and track the completion of these deliverables. Therefore,
prior to our assessment, the EPA had no reasonable assurance that
Northbridge met performance expectations.

Recommendations and Planned Agency Corrective Actions

We recommend that the assistant administrators for Water and for Mission
Support, in coordination with the general counsel and chief financial officer,
(1) assess whether and to what extent EPA staff failed to comply with 31 U.S.C.
§§ 1301(a) and 1341(a)(1)(A); (2) annually train staff on requirements applicable
to funding contract activity using multiple appropriations; (3) review and update
internal controls to ensure the segregation of duties between staff, as well as
the proper review and tracking of the completion of contractor deliverables.

The EPA agreed with our three recommendations, which are resolved with
corrective actions pending.

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