Awards Made by EPA's Office of the Chief Financial Officer Raise Questions

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I® | U.S. ENVIRONMENTAL PROTECTION AGENCY

%%PR0^ OFFICE OF INSPECTOR GENERAL

Hotline Report: Spending Taxpayer Dollars

Awards Made by EPA's
Office of the Chief Financial
Officer Raise Questions

Report No. 16-P-0048

November 30, 2015

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Report Contributors:

Angela Bennett
Darren Schorer

Abbreviations

CFR	Code of Federal Regulations

EPA	U.S. Environmental Protection Agency

OCFO	Office of the Chief Financial Officer

OIG	Office of Inspector General

RTP	Research Triangle Park

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U.S. Environmental Protection Agency
Office of Inspector General

At a Glance

16-P-0048
November 30, 2015

Why We Did This Audit

The U.S. Environmental
Protection Agency (EPA) Office
of Inspector General (OIG)
received a hotline complaint
alleging that the EPA's Office of
the Chief Financial Officer
(OCFO) intended to pay a
$250,000 bonus to a newly
hired employee because it was
unable to provide relocation
expenses for the employee.
The new hire was for the
position of Director, Research
Triangle Park (RTP) Finance
Center, in North Carolina. Our
objective was to determine the
validity of the allegation and
identify the basis for any bonus
payments made to the
employee.

This report addresses the
following EPA goal or
cross-agency strategy:

• Embracing EPA as a high-
performing organization.

Send all inquiries to our public
affairs office at (202) 566-2391
or visit www.epa.gov/oiq.

Listing of OIG reports.

Awards Made by EPA's Office of the Chief Financial
Officer Raise Questions

What We Found

The EPA's OCFO did not pay the alleged
intended $250,000 bonus to the newly hired
Director of the RTP Finance Center.
However, the Director did receive two
individual cash awards of $4,500 each
within 3 months of her start date. OCFO
justified the awards as follows:

OCFO's unprecedented award of
$9,000 in bonuses to a Director
less than 3 months after being
hired raises questions about the
reasonableness of the awards
and how the OCFO uses the
awards process.

•	The justification for the first award, within 6 weeks of the Director's start
date, stated that the Director "...took extraordinary initiative to assist the
Acting Chief Financial Officer in a final decision to transition the EPA to a
fully automated invoice processing system...."

•	The justification for the second award, 6 weeks after the first award, stated
that "Despite delays of the planned OCFO reorganization, [the Director] has
put into place initiatives to reorganize the RTP Finance Center to provide
more efficient operations."

The total award amount of $9,000 represented approximately 25 percent of the
Director's salary for the 3-month time period. Based on discussions with OCFO
management, this was an unprecedented amount by OCFO for such a short
period of time after a person being hired. OCFO had considered a third award,
but indicated that because of the OIG review the award was never processed.

Although the individual awards were compliant with federal regulations and EPA
award policies and procedures, the amounts, justifications and timing raise
questions about the reasonableness of the awards, as well as how OCFO used
the awards process.

Recommendations and Planned Agency Corrective Actions

We recommend that the Deputy Administrator revisit the awards to determine
whether they are reasonable and properly justified and, if needed, take
appropriate action. For future awards, we recommend that the agency establish
and require a proper level of management review for multiple awards that total in
excess of $5,000. The agency concurred with the recommendations. The agency
indicated management officials will be required to take mandatory training related
to recruitment incentives and monetary recognition for employee performance,
and the agency will review the actions of the appropriate management officials in
this matter and propose any corrective or disciplinary action if appropriate. The
agency did not provide completion dates for all the planned corrective actions.

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UNITED STATES ENVIRONMENTAL PROTECTION AGENCY

WASHINGTON, D.C. 20460

THE INSPECTOR GENERAL

November 30, 2015

MEMORANDUM

SUBJECT: Awards Made by EPA's Office of the Chief Financial Officer Raise Questions
Report No. 16-P-0048

FROM: Arthur A. Elkins Jr.

TO:

A. Stanley Meiburg, Acting Deputy Administrator

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 was conducted in response to a hotline
complaint. The report contains findings that describe the problems the OIG has identified and corrective
actions the OIG recommends. This report represents the opinion of the OIG and does not necessarily
represent the final EPA position. Final determinations on matters in this report will be made by EPA
managers in accordance with established audit resolution procedures.

The Office of Financial Services within the EPA's Office of the Chief Financial Officer was the
selecting office for the position of Director, Research Triangle Park Finance Center—the subject of the
hotline complaint. The Office of Financial Services was also responsible for initiating and approving the
employee awards discussed in this report. The Office of Human Resources within the EPA's Office of
Administration and Resources Management is responsible for providing policies and guidance on
recruitment as well as pay and leave administration.

Action Required

In accordance with EPA Manual 2750, you are required to provide a written response to this report
within 60 calendar days. You should include a target completion date for Recommendation 2, which will
be considered unresolved until a target completion date is provided. Your response will be posted on the
OIG's public website, along with our memorandum commenting on your response. Your response
should be provided as an Adobe PDF file that complies with the accessibility requirements of
Section 508 of the Rehabilitation Act of 1973, as amended. The final response should not contain data
that you do not want to be released to the public; if your response contains such data, you should
identify the data for redaction or removal along with corresponding justification.

This report will be available at www.epa.gov/oig.

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Awards Made by EPA's Office of the
Chief Financial Officer Raise Questions

16-P-0048

Table of Contents

Purpose		1

Background		1

Responsible Offices		2

Scope and Methodology		2

Results of Audit		3

Recommendations		4

Agency Comments and OIG Evaluation		5

Status of Recommendations and Potential Monetary Benefits		6

Appendices

A Agency's Response to Discussion Document		7

B Distribution		9

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Purpose

The U.S. Environmental Protection Agency (EPA) Office of Inspector General
(OIG) received a hotline complaint that alleged the EPA's Office of the Chief
Financial Officer (OCFO) intended to pay a $250,000 bonus to a newly hired
employee because OCFO was unable to provide the employee relocation
expenses. Our objective was to determine the validity of the allegation and
identify the basis for any bonus payments made to the employee.

Background

On April 21, 2015, the OIG Hotline Manager received an anonymous telephone
call reporting a potential financial irregularity in OCFO. The caller stated that
OCFO issued a job announcement for the position of Director of the Research
Triangle Park (RTP) Finance Center and, shortly after a Director was hired, the
OCFO requested reimbursement of relocation expenses for the selected new
Director. The complainant stated that OCFO's request was denied on the basis
that the reimbursement of relocation expenses was not advertised in the job
announcement. The complainant alleged that OCFO was subsequently giving the
candidate a $250,000 bonus because it was unable to authorize relocation funds.

The OCFO issued a job announcement in October 2014 for the Director,
RTP Finance Center, in North Carolina. From the applicants, the EPA identified
13 eligible candidates for consideration, including both internal and external
applicants. The selected candidate, an external applicant, asked about
reimbursement of relocation expenses during the initial interview process. At that
time, the OCFO informed the candidate that the announcement stated the EPA
would not pay relocation expenses. The EPA previously determined it was not in
the government's interest to pay relocation expenses because the expenses were
not needed to attract qualified candidates.

The selected candidate agreed to take the position on February 5, 2015, without
reimbursement of relocation expenses. After accepting the position, the selected
candidate again approached OCFO to ask if anything could be done to help with
moving expenses. On February 25, 2015, OCFO contacted the RTP Human
Resource Management Division Shared Service Center to discuss the use of a
"relocation incentive" for the selected candidate.

A "relocation incentive" is not the same as relocation expenses. In accordance
with the Code of Federal Regulations (CFR) under 5 CFR § 575.201:

An agency may pay a relocation incentive to a current employee
who must relocate to accept a position in a different geographic
area under the conditions specified in this subpart provided the
agency determines that the position is likely to be difficult to fill in
the absence of an incentive.

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Title 5 CFR § 575.206(b) states an agency:

.. .may determine a position is likely to be difficult to fill if the
agency is likely to have difficulty recruiting candidates with the
competencies required for the position (or group of positions) in
the absence of the relocation incentive.

On March 9, 2015, OCFO submitted a request for a relocation incentive to the Service
Center for $15,000, representing estimated moving and storage costs. OCFO's
proposed use of the incentive to assist the candidate with relocation expenses is not
consistent with the intent of a relocation incentive as defined by 5 CFR § 575.201 and
§ 575.206(b). OCFO submitted two revised requests for the relocation incentive based
on additional guidance received from the Shared Service Center. However, on April 2,
2015, the Human Resource Management Division determined that the request did not
meet the relocation incentive criteria—specifically, the position is likely to be difficult
to fill in the absence of an incentive. This decision was further supported by the
Assistant Administrator for Administration and Resources Management. As
previously noted, the EPA had identified 13 eligible candidates. The new Director
started with the EPA on April 5, 2015, without receiving reimbursement of relocation
expenses or a relocation incentive.

Responsible Offices

The Office of Financial Services within the EPA's OCFO was the selecting office
for the position of Director, RTP Finance Center. The Office of Financial Services
was also responsible for initiating and approving the employee awards discussed
in this report. The Office of Human Resources within the EPA's Office of
Administration and Resources Management is responsible for providing policies
and guidance on recruitment as well as pay and leave administration.

Scope and Methodology

We conducted this audit from July 7, 2015, to September 22, 2015, in accordance
with generally accepted government auditing standards issued by the Comptroller
General of the United States. Those standards require that we plan and perform
the audit to obtain sufficient, appropriate evidence to provide a reasonable basis
for our findings and conclusions based on our audit objective. We believe that the
evidence obtained provides a reasonable basis for our findings and conclusions
based on our audit objective.

To achieve our objective, we performed the following steps:

• Reviewed documentation related to the hiring of the RTP Finance Center
Director.

• Interviewed the RTP Finance Center Director and EPA staff and/or
managers from the Office of Human Resources, the RTP Shared Service
Center, and OCFO.

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•	Reviewed award data from EPA's accounting system—Compass Data
Warehouse.

•	Reviewed criteria related to relocation expenses and awards.

Results of Audit

We determined that the OCFO did not pay a $250,000 bonus to the recently hired
Director of the RTP Finance Center. However, the Director did receive two
individual cash awards of $4,500 each within 3 months of her April 5, 2015, start
date. The total award amount of $9,000 represents approximately 25 percent of
the Director's salary for that 3-month time period. Based on discussions with
OCFO management, this was an unprecedented amount for OCFO for such a
short period of time after being hired. Although the individual awards were
compliant with federal regulations and the EPA award policies and procedures,
the amounts, justifications and timing raise questions about the reasonableness of
the awards, as well as how OCFO used the awards process.

On May 13, 2015—within 6 weeks after the new Director's start date—OCFO gave
the new Director a $4,500 award. The award justification stated that the Director
".. .took extraordinary initiative to assist the Acting Chief Financial Officer in a
final decision to transition the EPA to a fully automated invoice processing
system...." On June 25, 2015—6 weeks later—OCFO gave the Director a second
award for $4,500. The award justification stated that "Despite delays of the planned
OCFO reorganization, [the Director] has put into place initiatives to reorganize the
RTP Finance Center to provide more efficient operations." During our interview
with OCFO on July 22, 2015, some 4 weeks later, we also learned that OCFO had
considered a third award for the Director, related to the Director's analysis of
metrics for invoicing costs. However, OCFO officials said that, in light of the OIG
review, there would be no award for the metrics analysis.

During our interviews, the EPA staff and management commented on the
outstanding abilities and achievements of the Director. One manager noted that
they were disappointed they were unable to provide the relocation incentive. The
manager said there were internal discussions of potential awards and how
management felt the need to treat the new Director "well." The EPA staff and
managers interviewed believed the new Director's accomplishments supported the
awards and her performance was substantially beyond expectations. However,
several OCFO managers did say that they have never seen such award amounts
given in such a short period of time and within 3 months of being hired. In
addition, while the acting Chief Financial Officer was aware of the first award, he
said he was surprised by the second.

In comparing the number and amount of the new Director's awards with other
OCFO awards, we observed that the Director's awards were not in line with what
other OCFO employees received. During fiscal year 2015, OCFO approved
awards of $4,500 or more for 11 employees, but the RTP Finance Center Director

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was the only employee to receive two awards of $4,500. Three other OCFO
employees—including two managers—received a second award in fiscal year
2015, but the amounts were significantly less, ranging from $750 to $1,000.

Title 5 CFR § 451.104(a)(1) allows agencies to pay a cash award to an employee
for a "superior accomplishment ... that contributes to the efficiency, economy, or
other improvement of Government operations or achieves a significant reduction
in paperwork." EPA's Recognition Policy and Procedures Manual, Chapter 4,
paragraph 5.d., states that:

There is no limit to the total number of monetary awards an
employee may receive in any given period, either as an individual
or as a member of a team, as long as the awards are for different
contributions.

Further, paragraph 6.b. allows that Superior Accomplishment Recognition
Awards with a value up to $5,000 may be awarded for "a one time special act,
service or achievement of a non-recurring nature, and for high quality
performance of assigned duties by an employee." Types of contributions
appropriate for this award include "performance substantially beyond
expectations for a period of time - not less than 30 days or more than one year -
of an employee's assigned duties and responsibilities."

EPA's Recognition Policy and Procedures Manual also states that "all monetary
awards must have a supervisor as the recommending official and a different and
higher level supervisor as the approving official." The authority for "awards up to
$10,000 is redelegated to Assistant Administrators, the General Counsel, the
Chief Financial Officer, Regional Administrators and the Inspector General for
their respective jurisdictions." However, the "authority to approve awards up to
$5,000 may be ... further redelegated to Headquarters and Regional Division
Directors." Awards above $10,000 "must be formally recommended by the
Administrator before forwarding to the Office of Personnel Management for
approval for awards between $10,001 and $25,000."

Recommendations

We recommend that the Deputy Administrator:

1.	Revisit the awards made to the new Director, RTP Finance Center, to
determine whether the awards are reasonable and properly justified and, if
needed, take appropriate action.

2.	For future awards, establish and require a proper level of management
review for multiple awards that total in excess of $5,000 during a fiscal
year to ensure that awards are reasonable and justified in comparison to
other awards.

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Agency Comments and OIG Evaluation

The OIG provided a discussion document to the agency for comment on
September 22, 2015. The OIG received a response from the agency on October 6,
2015. The agency concurred with the recommendations and indicated it is
revisiting the awards in question and implementing additional processes to require
additional reviews when awards for an individual exceed $5,000 per fiscal year.
The agency indicated management officials will be required to take mandatory
training related to recruitment incentives and monetary recognition for employee
performance. The agency further noted that actions of management officials in
this matter will be reviewed and, if appropriate, the agency will propose any
corrective or disciplinary action.

On October 29, 2015, the OIG received a revised response from the agency that
included timeframes for the initiation of certain aspects of the planned corrective
actions. For Recommendation 1, the agency stated it would appoint an appropriate
management official within 30 days of receiving information from the OIG, and
would complete their review of the matter within 5 months of appointment of that
official. The OIG provided the agency with the requested information on
November 9, 2015. The OIG considers Recommendation 1 open with agreed-to
corrective actions pending

The agency did not provide a completion date for the planned actions for
Recommendation 2; therefore, that recommendation remains unresolved.

The agency's October 29, 2015, response to our discussion document is in
Appendix A of this report.

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Status of Recommendations and
Potential Monetary Benefits

POTENTIAL MONETARY
BENEFITS (In $000s)

Claimed Agreed-To
Amount Amount

Finance Center, to determine whether the awards
are reasonable and properly justified and, if
needed, take appropriate action.

2 4 For future awards, establish and require a proper U Deputy Administrator
level of management review for multiple awards
that total in excess of $5,000 during a fiscal year to
ensure that awards are reasonable and justified in
comparison to other awards.

RECOMMENDATIONS

Planned

Rec. Page	Completion

No. No.	Subject	Status1 Action Official	Date

1 4 Revisit the awards made to the new Director, RTP 0 Deputy Administrator 05/31/16

1 0 = Recommendation is open with agreed-to corrective actions pending.
C = Recommendation is closed with all agreed-to actions completed.
U = Recommendation is unresolved with resolution efforts in progress.

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Appendix A

Agency's Response to Discussion Document

The Honorable Arthur A. Elkins Jr.

Inspector General

Office of Inspector General

U.S. Environmental Protection Agency

1200 Pennsylvania Avenue, NW

Washington, D.C. 20460

Dear Mr. Elkins:

I am responding to the Office of Inspector General's September 22, 2015, report, No. OA-FY15-
0026, "Awards Made by EPA's Office of the Chief Financial Officer Raise Questions About
Reasonableness and How the Awards Process Is Used." I would like to thank you for your work
in investigating this matter, for the opportunity to respond to your findings and for your
acknowledgement that the individual awards were compliant with federal regulations and the
U.S. Environmental Protection Agency's award policies. Following are my responses to your
recommendations.

Recommendation 1: Revisit Awards made to Director, OCFO RTP Finance Center.
Determine whether they are reasonable and justified. If needed, take appropriate action.

Based upon the information contained in the OIG report, I have determined that management
officials within the OCFO should receive mandatory training regarding the requirements for and
limitations of recruitment incentives and monetary recognition of an employee's performance.
The mandatory training will be provided to the OCFO management officials by March 31, 2016.

Additionally, I am working with the Office of General Counsel to identify the appropriate
management official(s) to review the actions of individual employees in this matter and propose,
if appropriate, any corrective or disciplinary action. That official or officials will also review the
awards themselves and make recommendations regarding the awards, if appropriate.

In order to select an appropriate management official, the agency needs information regarding
the employees who were interviewed as part of the audit or otherwise potentially involved in this
matter. Having that information will allow the agency to select a single appropriate management
official to review the actions of all involved. The Office of General Counsel has reached out to
the OIG for such information, but has not yet received this information. The agency will appoint
an appropriate management official within 30 days of receiving such information, and complete
the review of this matter within five months of appointment of that official.

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Recommendation 2: Establish and require a proper level of management review for
multiple awards that total in excess of $5,000 during a fiscal year.

I agree that the EPA should implement a process that requires additional review when awards for
an individual employee exceed $5,000 per fiscal year. By November 30, 2015, the Office of
Administration and Resources Management will begin to explore using the human-resources
system to flag cases in which the $5,000 threshold is exceeded in a fiscal year, and require
additional review before such cases can be processed. If the system is unable to identify these
particular cases, we will make a system-change request to the Interior Business Center for
consideration and vote at the February 2016 meeting. Should the capability be available, agency
policy will be modified to require this additional approval by an appropriate official outside the
requesting program office.

If we are unable to have the human-resources system flag those cases in which the award amount
exceeds $5,000 for an employee in a fiscal year, the EPA will develop a process that will require
the appropriate level of authorization on all awards over the threshold amount before they can be
submitted to the Human Resources Shared Service Center. This process would then be
incorporated into EPA policy.

I am confident that the actions I have described will address concerns about this particular matter
as well as the EPA awards process in general. Please know that I appreciate your hard work.

Sincerely,

A. Stanley Meiburg
Acting Deputy Administrator

cc: Karl Brooks

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Appendix B

Distribution

Office of the Administrator
Deputy Administrator

Assistant Administrator for Administration and Resources Management
Chief Financial Officer
Agency Follow-Up Coordinator
General Counsel

Associate Administrator for Congressional and Intergovernmental Relations
Associate Administrator for Public Affairs

Principal Deputy Assistant Administrator for Administration and Resources Management
Assistant Deputy Chief Financial Officer

Director, Office of Financial Services, Office of the Chief Financial Officer
Director, Office of Financial Management, Office of the Chief Financial Officer
Director, Office of Human Resources, Office of Administration and Resources Management
Director, Office of Policy and Resource Management, Office of Administration and

Resources Management
Deputy Director, Office of Policy and Resource Management, Office of Administration and

Resources Management
Audit Follow-Up Coordinator, Office of Administration and Resources Management
Audit Follow-Up Coordinator, Office of the Chief Financial Officer

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