office of research and development: audit of extramural ... · audit of extramural and property...

Office of Inspector GeneralAudit Report

OFFICE OF RESEARCHAND DEVELOPMENT

Audit of Extramural and Property Management

at the Atlantic Ecology Division2000-P-00015

March 29, 2000

Inspector General Division(s) Conducting the Audit

Eastern Audit DivisionBoston, Massachusetts

Program Office(s) Involved Office of Research and Development,National Health & Environmental Effects Research Lab,Atlantic Ecology Division

Photograph: Shannon Nichols, EAD

MEMORANDUM

SUBJECT: Audit of Extramural and Property Management at theAtlantic Ecology DivisionAudit Report No. 2000-P-00015

FROM: Paul D. McKechnieDivisional Inspector GeneralEastern Audit Division

TO: Norine E. Noonan, Ph.D.Assistant Administrator,Office of Research and Development

Attached is our audit report, Audit of Extramural and Property Management atthe Atlantic Ecology Division. This report contains findings and recommendations thatare important to the Atlantic Ecology Division within the Office of Research andDevelopment.

This audit report represents the opinions of the Office of the Inspector General(OIG). Final determinations on recommendations in this audit report will be made byEPA managers in accordance with established EPA audit resolution procedures. Accordingly, the findings contained in this audit report do not necessarily represent thefinal EPA position.

ACTION REQUIRED

In accordance with EPA Order 2750, you as the action official are required toprovide this office a written response to the audit report within 90 days. Your responseshould address all recommendations, and include milestone dates for correctiveactions planned, but not completed.

We have no objection to the release of this report to the public.

Should you or your staff have any questions about this report, please contact meor have your staff contact Linda Fuller, Team Leader at (617) 918-1470.

Attachment

Audit of Extramural andProperty Management at the

Atlantic Ecology Division

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EXECUTIVE SUMMARY

INTRODUCTION On June 16, 1993, the OIG issued its audit report,Management of Extramural Resources at theEnvironmental Research Laboratory, Narragansett,Rhode Island. The Environmental ResearchLaboratory is now the Atlantic Ecology Division(AED). The OIG’s 1993 audit was part of anationwide review of contract management practicesat ORD laboratories. Significant findings werereported which included the: 1) appearance ofincumbent favoritism in the procurement of contracts;2) misuse of EPA research contracts, cooperativeagreements, and interagency agreements; 3)inadequate contract management controls; and 4)other various administrative deficiencies. Due to thesignificance of the findings, the OIG conducted areview to determine if improvements were made inAED’s management of contracts, cooperativeagreements, and interagency agreements. Desiringto improve operations, AED personnel requested thatwe also review property management.

OBJECTIVES The objectives of our review were to determine ifAED:

1. provided adequate oversight ofContractors to assure that work wascompleted in accordance with contractprovisions, the statement of work, andother applicable regulations;



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2. properly used contracts, interagencyagreements, and cooperativeagreements as intended to helpaccomplish the Agency’s researchmission; and

3. adequately accounted for andsafeguarded its property.

RESULTS IN BRIEF Since our 1993 audit, AED made limited progress inimplementing the recommendations in our prior reportto improve the management of contracts, cooperativeagreements and interagency agreements. If AED hadbetter used their Extramural Management Specialist’s(EMS’) Event Cycle Reports, which identified internalcontrol weaknesses, this report would not benecessary. However, the Acting Director wasresponsive to our recommendations and alreadystarted implementing various corrective actions at thetime of our audit. AED recently hired personnel withstronger backgrounds in program administration andcontract management who should help resolve someof the continuing problems. The following summariesprovide further details of our findings.

Senior Management Needs to ImproveAdministrative Controls

AED Senior Management did not adequately overseeadministrative practices in contract and propertymanagement. Both the AED’s Acting Director andAssociate Director for Administrative ProgramOperations (ADPO) need to assure that policies andprocedures are established and implemented so thatcontract and property management effectivelysupported the facility’s science and research mission. The Acting Director’s focus had been on



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science/research. The ADPO is principally

responsible for administrative functions, however,AED was without a permanent ADPO from February1996 until April 1998. Even though AED’s EMSreported on contract and property managementweaknesses in 1996, these issues were notaddressed. As a result, contract and propertyresources were not used effectively. The Operations& Maintenance (O&M) Contractor did not provide allthe services required or expected under the contract. Valuable property was left vulnerable to misuse ortheft.

Limited Improvement in Contract Management

While AED’s management of its ADP contract wasadequate, management of its O&M contractcontinued to be seriously deficient. As a result, theO&M Contractor, not AED, controlled the work. TheContractor did not provide all services according tothe contract. Until recently, the O&M Project Officerslacked either the skills or experience to effectivelymanage the contract.

Improvements Needed in Property Management

Improvements need to be made in AED’s propertymanagement. We found that 1) custodial officerdesignations were out-dated; 2) annual inventorieswere not performed; and 3) the status of loanedequipment was unknown. The Property Officer andthe EMS brought these weaknesses to the attentionof Senior Management who did not take correctiveaction. Improving property management was not apriority. As a result, $6,212,611 of accountableproperty was not safeguarded.



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Improvements Made in Oversight of Cooperative Agreements but Not Interagency Agreements

AED made improvements in its oversight ofcooperative agreements but not interagencyagreements (IAGs). Funding for cooperativeagreements reviewed was for appropriate AEDactivities (pre-doctoral and post-doctoral research). The Project Officer and Local Site Representativediligently monitored grant activities and maintainedadequate documentation to assure that the terms ofthe agreements were met. As a result, thesecooperative agreements helped fulfill AED’s researchmission to support science. Specifically, theseagreements supported training and development ofyoung environmental scientists who conductedenvironmental and ecological research.

The Project Officer for the IAG, however, did notassure that status reports or support for costs werereceived and reviewed. The IAG Project Officeradmitted that he was remiss in carrying out hisresponsibilities. As a result, we could not confirm ifprogress was made in AED’s oversight of IAGs.

RECOMMENDATIONS We recommend that the AED Director:

1. Instruct the ADPO to establish contract andproperty management procedures which willensure that staff, contract, and propertyresources are used effectively and thatproperty is safeguarded. Also, the ADPOshould ensure that the procedures arefollowed and delivering results.

2. Take appropriate action if staff does notperform in accordance with established



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procedures and performance agreements.

3. Develop a formal system to resolveweaknesses identified in Event Cycle Reports. A corrective action plan should be developedwith specific staff identified to carry outactions. Milestones should be set andprogress along with success should bemeasured.

4. Seek out expert assistance from Headquarters,Research Triangle Park, etc.

At the end of each Chapter, specificrecommendations have been included to improve 1)contract monitoring, 2) property management, and 3)IAG monitoring.

AGENCY COMMENTS A teleconference was held with the Office of AND OIG EVALUATION Research and Development (ORD) and the OIG staff

on March 1, 2000 to discuss the draft audit report’sfindings. On March 16, 2000, the AssistantAdministrator (AA) responded to our draft report. TheAA stated that, in general, ORD concurred with thereport’s findings and recommendations. Weincorporated some of ORD’s comments into ourfindings and also included a section summarizingORD’s comments and our evaluations at the end ofeach finding. ORD’s response is attached in itsentirety as Appendix 4.



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TABLE OF CONTENTS

Page

EXECUTIVE SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . i

ABBREVIATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ix

CHAPTER 1 - INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1Scope and Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3Prior Audit Coverage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

CHAPTER 2 - SENIOR MANAGEMENT NEEDS TO IMPROVEADMINISTRATIVE CONTROLS . . . . . . . . . . . . . . . . . . . . . . . . . 7

CHAPTER 3 - LIMITED IMPROVEMENT IN CONTRACT MANAGEMENT . . . . . . . 23

CHAPTER 4 - IMPROVEMENTS NEEDED IN PROPERTY MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . 43

CHAPTER 5 - IMPROVEMENTS MADE IN OVERSIGHT OFCOOPERATIVE AGREEMENTS BUT NOTINTERAGENCY AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . 63

APPENDIX 1 - SCHEDULE OF SAFETY FINDINGS . . . . . . . . . . . . . . . . . . . . . . . . . 73

APPENDIX 2 - SCHEDULE OF CUSTODIAL ACCOUNTS . . . . . . . . . . . . . . . . . . . . 75

APPENDIX 3 - SCHEDULE OF 1999 INVENTORY . . . . . . . . . . . . . . . . . . . . . . . . . . 77

APPENDIX 4 - ORD’S RESPONSE TO OIG DRAFT REPORT . . . . . . . . . . . . . . . . . 79

APPENDIX 5 - DISTRIBUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97



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ABBREVIATIONS

AA Assistant Administrator

ADPO Associate Director for Project Operations

AED Atlantic Ecology Division

CMD Contract Management Division

CO Contracting Officer (or Office)

EAD Eastern Audit Division

EMS Extramural Management Specialist

EPA Environmental Protection Agency

FAIR Facilities Administration and Information Resources

FMFIA Federal Managers’ Financial Integrity Act

IAG Interagency Agreement

IDP Individual Development Plan

IFMS Integrated Financial Management System

NHEERL National Health & Environmental Effects Research Laboratory

NOAA National Oceanic and Atmospheric Administration

NRC National Research Council

OIG Office of the Inspector General



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O&M Operations & Maintenance

ORD Office of Research and Development

PO Project Officer

PPAS Personal Property Accountability System

RLA Revocable License Agreement

RTP Research Triangle Park

SOW Statement of Work

URI University of Rhode Island



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CHAPTER 1INTRODUCTION

PURPOSE The OIG conducts follow-up audits of prior significantreports to determine if auditees have successfullyimplemented recommendations. On June 16, 1993,the OIG issued its audit report, Management ofExtramural Resources at the Environmental ResearchLaboratory [now the Atlantic Ecology Division (AED)],Narragansett, Rhode Island. Significant findingswere reported in contractor selection, contractmanagement, and various administrative practices.

We conducted a limited follow up review of contract,cooperative agreement, and interagency agreementmanagement practices at AED. We also reviewedproperty management upon the request of AED staffwho desired to improve operations.

BACKGROUND The Office of Research and Development (ORD)provides the scientific foundation to support EPA’smission with research and development, technicalsupport, integration of scientific information andanticipatory research. Since our last audit, ORDreorganized in 1995 which changed the Narragansettlaboratory’s organization and mission. It became theAtlantic Ecology Division, one of nine divisions withinORD’s National Health & Environmental EffectsResearch Laboratory (NHEERL) which performs highquality effect-based research to improve the Agency’sability to make decisions about health and ecologicalrisk. AED’s new mission was to study the effects of



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contaminants and other stressors on the coastalwaters and watersheds of the Atlantic seaboard.

Under the supervision of the NHEERL AssociateDirector for Ecology, AED’s Director is supported byan Associate Director for Program Operations and anAssociate Director for Research. The AssociateDirector for Research has been the Acting Directorfor six years. AED is composed of three branches: 1)Ecosystems Analysis and Simulation Branch, 2)Ecological Response Branch, and 3) IndicatorDevelopment Branch. An Extramural ManagementSpecialist (EMS) reports to the AED Director. TheEMS provides guidance on extramural managementand carries out other administrative duties. AEDemploys 82 Federal employees at Narragansett,Rhode Island as well as two employees at itsAnnapolis, Maryland site.

As of Federal Fiscal Year 1999, the followingextramural resources were administered at theNarragansett site. (These figures do not includeresources administered at the Annapolis site.)



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SCOPE AND We performed this audit in accordance withMETHODOLOGY Government Auditing Standards (1994 Revision)

issued by the Comptroller General of the UnitedStates as they apply to performance audits. Ourreview included tests of the program records andother auditing procedures we considered necessary.

We conducted audit work at EPA’s National Healthand Environmental Effects Research Laboratory(NHEERL), AED located in Narragansett, RhodeIsland.

We reviewed AED files containing work orders andinvoices for the Operations and Maintenance (O&M)and Facilities Administration and InformationResources (FAIR) contracts. We determined fromwork orders, invoices and interviews whetherimprovements were made in contract managementsince the 1993 OIG report. We interviewed keypersonnel at AED, including the Acting Director,ADPO, Project Officers, Alternate Project Officers,and EMS. At AED, we interviewed the ContractingOfficer from EPA’s Research Triangle Park, NorthCarolina.

For the O&M contract, we reviewed 100 percent ofthe Fiscal Year 1997 work orders to determine thedesignated priority of the tasks. We reviewed every10th work order to determine if the final work by theContractor was accepted by AED. For Fiscal Year1999, we reviewed all the work orders though May10, 1999 to determine the amount of time it took tocomplete the task and if there was an acceptancesignature from the Project Officer. Finally, wereviewed Fiscal Year 1999 invoices through June 6,1999 to determine if Contractor costs claimed wereallowable.



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For the FAIR contract, we judgmentally sampled 25 of95 (26 percent) work orders issued between January and May 1999 to determine if work was completedtimely. Additionally, we reviewed a judgmentalsample of invoices from Fiscal Years 1998 and 1999to determine if all costs claimed were properlysupported.

We reviewed Fiscal Years 1998 and 1999(September through May) procurement requests todetermine if services and supplies included in theO&M contract were purchased from other sources. The Project Officer assisted us in our review.

We selected two of four cooperative agreements andone of three interagency agreements for review. Agreements with the highest dollar values wereselected. We interviewed Project Officers and theLocal Site Representative. We reviewed progressreports, invoices and other pertinent information todetermine if extramural funds were used for theirintended purposes.

A training report from ORD Management InformationSystem was scanned for employees who had takenmany college courses. We reviewed the form SF-182, Training Request Form, for Fiscal Years 1997through 1999 for those employees with many collegecourses to determine training objectives. Weinterviewed the Acting Director, ADPO, andPersonnel Assistant regarding policies andprocedures for attending training classes atuniversities.

We used the Integrated Financial ManagementSystem (IFMS) to determine when propertyinformation was entered into the system. Specifically,we reviewed all the capital equipment. We alsoreviewed large dollar purchase orders for FiscalYears 1998 and 1999 to determine when the



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equipment was entered into IFMS. We compared the1997 Personal property Accountability System(PPAS) and 1999 IFMS inventory printouts.

With the AED Property Officer, we conducted anunannounced inventory using July 8, 1999 IFMSinventory reports.

We used the 1996 U.S. EPA Safety, Health, &Environmental Review and discussed those findingswith AED’s Safety Officer.

As part of our evaluation, we reviewed AED’s FiscalYears 1996, 1997, and 1998 Federal Managers’Financial Integrity Act (FMFIA) Assurance Letters. InFiscal Years 1996 and 1997, there were no materialweaknesses related to our review. The Fiscal Year1998 letter identified the retirement of the FacilitiesManager as a vulnerability to monitoring contractorperformance. The Fiscal Year 1998 letter alsoreported that AED considered past OIG findingsresolved. Based on our findings and the findingsreported in 1996 by AED’s EMS, these FMFIA reportsdid not adequately identify AED’s internal controlweaknesses. For further details, see Chapters 2through 5.

Our fieldwork was performed from May 17, 1999 toAugust 20, 1999.

PRIOR AUDIT On June 16, 1993, the Eastern Audit Division issuedCOVERAGE Management of Extramural Resources at the

Environmental Research Laboratory, Narragansett,Rhode Island (Audit Report No. E1JBF2-01-0275-3100236). We reported findings of favoritism incontract procurement; inadequate contract, IAG, andcooperative agreement management; as well as other



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poor administrative practices. This audit was part ofa nationwide review of contract management at ORDlaboratories.

NHEERL conducted management reviews of AED,issuing reports dated March 1995 and September 29,1998. The reviews assessed AED’s use of itsresources and compliance with applicable laws,regulations, and Agency policy. The reviews alsoassessed management controls and procedures todetermine whether established controls andprocedures were functioning effectively. In general,NHEERL reported that AED made improvements inextramural management. However, NHEERL alsoprovided recommendations to AED to improve certainaspects of its contract management. No findings orrecommendations were reported on propertymanagement.



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CHAPTER 2SENIOR MANAGEMENT NEEDS TO

IMPROVE ADMINISTRATIVE CONTROLS

AED Senior Management did not adequately overseeadministrative practices in contract and propertymanagement. Both the AED’s Acting Director andAssociate Director for Administrative ProgramOperations (ADPO) did not assure that policies andprocedures were established and implemented sothat contract and property management effectivelysupported the facility’s science and research mission. The Acting Director’s focus had been onscience/research. The ADPO is principallyresponsible for administrative functions, however,AED was without a permanent ADPO from February1996 until April 1998. Even though AED’s ExtramuralManagement Specialist (EMS) reported on contractand property management weaknesses in 1996,these weaknesses were not corrected. As a result,contract and property resources were not usedeffectively. The O&M Contractor did not provide allthe services required or expected under the contract. Valuable property was left vulnerable to misuse ortheft.

According to ORD [Office of Research andDevelopment] Policies and Procedures ManualChapter 4, Section I:

It is ORD policy that all extramural instrumentsare managed in such a manner as to promotethe highest level of scientific and engineering



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excellence while adhering to all applicableFederal and Agency regulations, policies,procedures and guidance.

The Acting Director’s Position Description providesas part of major duties and responsibilities:

Assesses needs, defines goals, developsprogram plans, and establishes organizationalstructure of the Division; delegates authorityand responsibility; establishes overalloperating policies, priorities, and procedures;develops long- and short-range plans andprojects; allocates dollar and manpowerresources within broad budgetary limitations;establishes optimum intramural vs. extramural(contract and grant effort) balance; directs,coordinates and reviews all Division conductedor directed activities; and reviews andevaluates progress and performance of thoseactivities and takes independent correctiveactions, as necessary. Incumbent selects,assigns and provides leadership, direction andguidance to a multi-disciplined staff to achieveassigned program objectives.

The ADPO Position Description states that theincumbent provides:

... service-oriented research and administrativesupport which facilitates high quality science inpursuit of the research mission of the Division.

Additionally, the ADPO is responsible for contract,grant and interagency agreement management;scientific equipment management; procurement,supply and property management among severalother services.



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The ADPO is a key position in assuring that AED hasgood administrative management. This position wasnot filled on a permanent basis from 1996 to 1998.The ORD Assistant Administrator stated, “Thevacancy of this critical administrative supervisoryposition exacerbated the timeliness and effectivenessof AED’s ability to remedy problems in bothextramural and property management.” ORDprovided the following background information:

AED was without a permanent ADPO fromFebruary 1996 until April 1998. This staffinglimitation is critical to understanding the delaysin dealing with all of the issues raised in thisreport. On February 18, 1996 the ADPOtransferred to the AED detachment inAnnapolis, MD. An Acting ADPO was put intoplace; however, he had limited managementexperience and was required to maintain theworkload for his position of record along withserving as the Acting ADPO. AED began therecruitment process to fill the ADPO positionon a permanent basis on April 28, 1997. TheMerit Promotion closed on July 28, 1997 andthe [Office of Personnel Management] OPMVacancy closed on August 15, 1997. Becausethis position is critical to improvingmanagement and operations at AED, theinterview process was extensive and timeconsuming. The position was not filled untilApril 19, 1998.

Progress Since OIG Report In our June 16, 1993 audit report, Management ofExtramural Resources at the Environmental ResearchLaboratory, Narragansett, Rhode Island, we reportedthat contract management controls were inadequate;



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research contracts, cooperative agreements, andinteragency agreements were misused and otheradministrative practices were deficient. As a result ofour review, ORD management issued variousguidance and policy statements to its staff.

On November 16, 1993, the Acting AssistantAdministrator for Research and Development wrote toall ORD employees:

It has been and is the responsibility of theFederal employees who manage these fundsto assure that they are expended inaccordance with the relevant Federal laws andregulations and Agency policies andprocedures. Consequently when EPAscientists become involved with expendingextramural funds they must assume the relatedmanagement responsibility. And just as goodscience requires well documented data, goodmanagement of Federal funds also requiresdocumentation and adherence to establishmanagement procedures and controls.

Our follow-up evaluated progress made in the area ofcontract, cooperative agreement, and interagencyagreement management. Property management wasadded to our review upon request of AED staff whodesired to improve operations in this area.

Contract Management Since our 1993 audit, AED continued to haveproblems in managing its O&M contract. AED tookthe corrective actions that were necessary to closeout the audit findings. Training and guidancematerial on proper contracting procedures wereprovided to Project Officers. Additionally, the EMSposition was



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created to serve as an advisor to the Acting Directoron all extramural management issues, policies andprocedures as they related to the organization’soperations. However, these actions did not resolvethe issue of poor contract management. AEDmanagement did not ensure that corrective actionstaken were successful.

The Acting Director said he had been assured by hismanagers that corrective actions were in place. Also,he stated that science was the principal purpose ofthe lab. It was his opinion that the lab had been wellserviced and maintained by the O&M Contractor withthe PO’s oversight. The lab had “not lost any majorresearch milestones due to any facility systemsfailures.” He believed problems with contractmanagement continued because:

1) the Acting ADPO was not fully qualified;

2) the PO did not possess good contractmanagement skills; and

3) the contract was poorly written.

For approximately two years (from 1996 until April1998), the ADPO position was temporarily filled by anAED employee with a scientific background. According to the Acting Director, this ADPO lackedthe management skills necessary to deal with difficultsituations, such as a PO who lacked good contractmanagement skills. There was no one else at AEDwith the proper background who could replace thePO.

The O&M contract’s Statement of Work was writtenby the ADPO (an individual hired on a permanentbasis prior to the acting ADPO) and the PO. EPA’sContract Specialist from RTP described the contract’s



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Statement of Work as “vague” and “ambiguous”. TheContracting Officer believed that this poorly writtencontract prevented EPA from holding the Contractoraccountable for various activities (See Chapter 3).

The Acting Director believed EPA’s ContractManagement Division did not provide adequateassistance.

AED Senior Management needs to seek outassistance from the appropriate EPA office which canprovide the specialized administrative expertise thatAED lacks. If AED believes such offices are notfulfilling their responsibilities, again, it is up to SeniorManagement to work out issues with theircounterparts or, if appropriate, to elevate issues tohigher management.

AED Senior Management believed they now have anO&M Project Officer with a strong contractbackground.

Cooperative Agreement and Progress was made in management of cooperative Interagency Agreement agreements but not interagency agreements. TheManagement Project Officers responsible for cooperative

agreements monitored their projects, thus assuringthat the projects achieved their intended purpose. Also, AED implemented audit recommendations toabolish funding of ineligible activities such as trainingfor advanced degrees and day-care for non-federalemployee children. However, the IAG Project Officerdid not obtain and review project status reports orsupport for project costs. He believed the progressand costs were reasonable based upon hisknowledge of the project but we could not confirmwithout documentation. (See Chapter 5)



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Corrective Actions Taken The Acting Director was responsive to our findingsand started implementing corrective actions at thetime of our review. Also, prior to our review, AEDhired a new ADPO and contract Project Officer withstrong backgrounds in their respective areas. Webelieve the current AED staff in general is motivated to carry out their responsibilities. However, SeniorManagement needs to be more attentive to staffconcerns in administrative areas. While science maybe Senior Management’s focus, they are alsoresponsible for assuring that Agency resources areeffectively utilized as well as protected from waste,fraud, and mismanagement; and that all Federal lawsand regulations are followed (May 13, 1998 EPAOrder 1000.24 CHG1).

Event Cycle Reports As part of AED’s FMFIA process, the EMS Not Addressed prepared Event Cycle reports which identified

weaknesses in an accountable area and providedrecommendations for improvement. Event Cyclereports were issued for contract management onJune 13, 1996 and property management on April 22,1996. These reports were well documented andpresented. However, weaknesses identified in 1996continued in 1999. AED Senior Management needsto develop a formal resolution process to take fulladvantage of this asset.

Contract Management In the contract management report, the EMSconcluded:

Overall, the Director should feel the need toupdate this area of accountability. The itemsnoted above are repeated from the last Officeof Inspector General report. No correctiveaction appears to have been taken.



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The EMS also wrote, “There were instances of the appearance of fraud, waste or abuse.” The EMS’report was based upon a review of the O&M contract. Several recommendations were made to improve theperformance of the Project Officer. This Project Officer was also responsible for the O&M contractduring the prior OIG audit.

The EMS gave a presentation of her findings to theActing Director and ADPO on June 26, 1996. TheProject Officer responded in writing to the EMS’sfindings and recommendations on August 6, 1996. The EMS was not satisfied with the PO’s writtenresponse. Another meeting was held on October 14,1996. The EMS said there was no formal writtenagreement among the parties on appropriateresolution.

The Acting Director said the ADPO and he met on aweekly basis with the PO to assist him. However, theActing Director also stated that the individual did notpossess good contract management skills, but wasdoing his best.

This individual eventually retired in August 1998. Subsequently, two people who had limited contractmanagement experience were assigned the POduties until a permanent PO was assigned in July1999.

There was no satisfactory resolution to the EMSreport. Poor contractor oversight continued from1996 to 1999 (See Chapter 3).

Property Management The Acting Director said he did not realize that therewere serious problems with property management. He based his opinion on the EMS April 22, 1996Event Cycle report. In our opinion, the EMS’ reportconclusion did not adequately convey the



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seriousness of her findings and may have contributed to the Acting Director’s view. The EMS concluded:

There are multiple instances where specificProperty is not fully in compliance withregulations and the system lacks sufficientsafeguards in place to ensure compliance withregulations. ... The majority of the items notedabove are minor in nature.

We disagree with her conclusion that the issues wereminor in nature based upon what she wrote in thebody of her report. The EMS wrote that while therewere no obvious instances of fraud, waste or abuse,“the potential for such instances is definitely there.” She also wrote, “Written policies and procedures arenot in place for effective property control.”

However, regardless of the tone of the conclusion,the report contained recommendations which neededto be addressed. As of our review in 1999, theserecommendations were still outstanding. Findingswhich had been reported in 1996 continued into1999(See Chapter 4).

NHEERL Management In its September 29,1998 Management Review ofReview AED, NHEERL expressed concern with the amount of

documentation the EMS generated in her reviews. NHEERL wrote:

The review team found an abundance ofevidence in the files documenting the EMS’audit efforts. It is evident that in all cases, theEMS thoroughly researches each situation and



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prepares written documentation describing theresults of her research. This documentationcites federal regulation, policy, rulings, etc. Unfortunately, this review team found the levelof documentation to be somewhatoverwhelming.

NHEERL then recommended that the EMS ensurethat a less paper intensive means of advising AEDstaff with extramural issues is provided. It furtherstated that the EMS should work toward the goal ofevolving into more of an advisory and/or counselingrole. AED responded that EMS did work in thecapacity of an advisor/counselor and preferred tokeep documentation for reference. NHEERL thenstated:

While the EMS may choose to keep thisextensive background documentation in herfiles, we recommend that a more conciserecord of counsel and/or advice be provided toextramural managers.

We are concerned that NHEERL’s comments mayimpair one of AED’s effective means of overseeingextramural management. In our opinion, the EMS dida good job of identifying area weaknesses andproviding recommendations. AED now needs toestablish a formal system to assure that therecommendations are carried out. We would not bewriting this report if the 1996 EMS recommendationshad been resolved.



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CONCLUSION Since the 1993 OIG audit report, AED made progressin cooperative agreement management but limitedprogress in contract management. While the issue ofproperty management had not been reported in theOIG report, it was an outstanding issue back to the1996 EMS report. AED management believed thatrecently hired staff would help to improve operations. However, even the most qualified staff needmanagement support. In our 1993 report, weconcluded that:

... a major contributing cause that permeatesall of the issues at Narragansett is the attitudeexhibited by senior management officials thatcompliance with rules and regulationsinterferes with science and research. Thisattitude must change if Narragansett is toimprove its management of contract activities.

We believe this attitude still exists to the detriment ofadministrative operations. Administrative functionsare not given the attention required to assure thatresources are being effectively used. Goodadministration supports the scientific mission of thelab. AED has staff committed to their duties, but theyalso need senior management’s support.

RECOMMENDATIONS We recommend that the AED Director:

1. Instruct the ADPO to establish contract andproperty management procedures which willensure that staff, contract, and propertyresources are used effectively and thatproperty is safeguarded. Also, the ADPOshould ensure that the procedures arefollowed and delivering results.



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2. Take appropriate action if staff does notperform in accordance with establishedprocedures and performance agreements.

3. Develop a formal system to resolveweaknesses identified in Event Cycle Reports. A corrective action plan should be developedwith specific staff identified to carry outactions. Milestones should be set andprogress along with success should bemeasured.

4. Seek out expert assistance from Headquarters,Research Triangle Park, etc.

ORD RESPONSE ORD’s Assistant Administrator (AA) responded:

ORD considers OIG audits very seriously. Welook upon them as an opportunity to identifyareas of improvement. While “sound science”is our goal as an organization, we stronglybelieve that it must be achieved with qualitymanagement of our resources. For thatreason, we were concerned by the statementsin the draft report attributed to the AED ActingDirector. I assure you that these managementissues are given the highest priority in all ORDorganizations, including NHEERL.

Regarding contracting, the AA wrote:

The contract management vulnerabilitiesdescribed in this report were initially raised bythe AED Extramural Management Specialist(EMS), in June 1996. Also, AED contractualproblems were carefully outlined in a 1997NHEERL Management Review. We are



19 Report No. 2000-P-00015

currently implementing corrective action in thisarea.

Finally, we believe that AED has madeconsiderable improvement in overallextramural management. Largely, theweaknesses discussed in the 1993 OIG audithave not reoccurred. We are concerned thatthe current draft report makes generalconclusions about AED’s contractmanagement progress based on AED’sproblems with a single contract (O&M), whichhad already been identified by both the EMSand an NHEERL Management Review. Moreover, at the time of the OIG audit,significant corrective actions had been madeor were in progress. For example, a newProject Officer was hired and a new contractwas in the solicitation process. Further, as wediscussed in our teleconference, we stronglybelieve that the Contract Management Divisionshares our responsibility for the effectivecontract management.

Regarding property management, the AA reportedthat since the time of the audit, AED made significantprogress in strengthening this area.

For both areas, the AA wrote:

ORD believes it is important that the final auditreport reflect the staffing difficulties that AEDwas experiencing throughout its contractualand property problems. The report shouldshow that AED was without a permanentAssociate Director for program operations fromFebruary 1996 to April 1998. The vacancy ofthis critical administrative supervisory positionexacerbated the timeliness and effectiveness



20 Report No. 2000-P-00015

of AED’s ability to remedy problems in bothextramural and property management.

Additionally, further clarification was provided onNHEERL’s Management Review comments regardingthe EMS reviews:

The NHEERL Management Review report didnot question the EMS’s reviews of extramuralmanagement. That is one of the importantduties of the EMS. What was of concern in thereview was the effectiveness of the extensive documentation that the EMS put in the PO’sfiles as a result of the review. The NHEERLManagement Review recommended that amore concise and effective means ofcommunication (e.g., advising, counseling) beutilized by the EMS to help the AED PO’s insolving their extramural managementproblems.

ORD also provided a Correction Action Plan (SeeAppendix 4) responding to each of the finding’srecommendations.

OIG EVALUATION We are pleased that ORD gives the highest priority tomanagement issues. We encourage ORD tocontinue to emphasize this view to AED. It was ouropinion based not only upon the Acting Director’scomments, but also his actions, that administrativeissues did not receive adequate attention. Forexample, the EMS’ report recommendations were notfully implemented. Also, the Property Manager’sconcerns were not timely acted upon.



21 Report No. 2000-P-00015

The OIG initially reported that AED’s contractmanagement controls were inadequate in 1993. TheEMS reported in 1996 that there appeared to be nocorrective action taken since the 1993 OIG audit andthat contract management was an accountable areawhich needed to be updated. NHEERL managementreviews continued to report on contract managementdeficiencies until 1998. While we reported that AEDmade some improvements in contract management,its management of the O&M contract continued to bedeficient since 1993. In our opinion, this was too longa period of time for continued weaknesses to exist,particularly when NHEERL’s/AED’s staff pointed outthese weaknesses.

While the ADPO position was vacant for over twoyears, the position was filled with a permanentmanager during the time of the OIG audit to 1996. ORD did not explain why it took more than a year tostart the recruitment process for this position. However, while having someone in this position isimportant, AED also needs to assure that goodcontract and property management procedures are inplace which can also help to keep operations runningeffectively.

The audit report already included the information thatthe ADPO position was vacant for two years. However, per request of ORD, we included in thefinding a paragraph prepared by ORD regarding thisissue.

The scope of our audit did not include a review ofContract Management Division (CMD) activities. However, if AED believes CMD is not fulfilling itsresponsibilities, then AED Senior Managementshould deal with this problem at the appropriatemanagement level.



22 Report No. 2000-P-00015

We concur with ORD’s actions to improve propertymanagement.

Regarding the effectiveness of the EMS’documentation of her reviews, we continue to supportthe EMS’ position. We believe documentation isimportant to clearly support recommendations whichmay be proposed.

We generally concur with ORD’s Corrective Actionsfor this Chapter. However, based upon ORD’sresponse, we need to clarify Recommendation 1. This recommendation was not specifically referring toproviding contractors with government property. Rather, we believe, AED needs to have strongprocedures in contract management and propertymanagement which will provide for consistent andeffective operations in these two areas. Points 2 and3 of AED’s response generally addressRecommendation 1 except for not specifically notingthat contract procedures will be reviewed andupdated as appropriate.



23 Report No. 2000-P-00015

CHAPTER 3LIMITED IMPROVEMENT IN CONTRACT MANAGEMENT

AED’s progress in improving contract managementwas limited. While management of the ADP contractwas adequate, management of the Operations &Maintenance (O&M) contract continued to beseriously deficient. The Project Officer did not ensurethat the Contractor provided all contracted servicesand in some cases, separately procured work alreadyincluded in the O&M contract. Until recently, theO&M Project Officers lacked either the skills orexperience necessary to effectively manage thecontract. Senior Management did not ensure thatthese Project Officers had access to the appropriatetechnical expertise needed to properly evaluate aContractor’s performance.

“The Project Officer is the primary representative ofthe Contracting Officer for a contract,” according toEPA’s Contracts Management Manual, Chapter 7,Paragraph 3c. Among other duties, the ProjectOfficer is responsible for monitoring compliance withthe contract and recommending modifications of thecontract to the Contracting Officer as needed.

Prior Audit Findings Our June 16, 1993 audit report, Management ofExtramural Resources at the Environmental ResearchLaboratory, Narragansett, Rhode Island reported thatcontract management controls were inadequate. Project Officers at Narragansett did not properlymanage the work and activities performed by theContractors. The Project Officers: (1) allowed



24 Report No. 2000-P-00015

contract employees to perform inherently governmentfunctions; (2) did not control Contractor costs; and (3)did not monitor Contractor work.

EMS Report Findings In her June 13, 1996 Event Cycle Report on ContractManagement, the EMS reported: “Overall, theaccountable area has many issues to be resolved. There were instances of the appearance of fraud,waste, or abuse.” She concluded: “The items notedabove are repeated from the last Office of InspectorGeneral report. No corrective action appears to havebeen taken.” The EMS report specifically coveredmanagement of the O&M contract. Deficienciesreported included: inadequate management of workorders; EPA approved unallowable expenses;personal services performed by the Contractor; andoutside Contractors tasked with work assignments bythe O&M Contractor rather than by the AED ProjectOfficer.

O&M Contract The O&M Contractor was to provide facilitiesoperation and maintenance support for the entirelaboratory (i.e., dry and wet laboratories, officespace, field equipment, general support services). The contract’s period of performance was October 1,1994 until September 30, 1999 with a total cost of$3,911,901.

Our follow-up review disclosed that three years afterthe EMS report and six years after the OIG reportwere issued, the O&M contract continued to be poorlymanaged. A poorly written Statement of Work (SOW)along with weak oversight by the Project Officerenabled the O&M Contractor to disregard contract



25 Report No. 2000-P-00015

provisions without reprisal. For example, theContractor did not adequately update SideArm, a computer system for tracking maintenance or performall contracted tasks. In response to our 1993 findings,ORD provided Project Officer training to their staffand emphasized that Federal regulations were to befollowed. However, when the EMS report indicatedthat such actions had not been sufficient to addressour concerns, AED Senior Management did not takefurther corrective action. The Acting Director said theProject Officer did not have contract managementskills and there was no one else qualified to take hisplace.

The Acting Director believed EPA’s ContractManagement Division (CMD) also sharedresponsibility for the quality of the SOW. He statedthat CMD did not provide adequate assistance toAED. The EMS contacted CMD several times overthe course of the O&M contract and sent the EventCycle Report on contracting to CMD.

The scope of our audit did not include a review ofCMD so we cannot comment on their operations. However, if the Acting Director was dissatisfied withCMD’s assistance, he should work with hiscounterparts to improve CMD’s and AED’srelationship.

“Vague” & “Ambiguous” According to the Acting Director, the SOW for the Statement of Work O&M contract was written by the retired Project

Officer and the former ADPO. The ContractingOfficer described the SOW as “vague” and“ambiguous”. As a result, the Contracting Officerbelieved that EPA could not seek redress from theO&M Contractor for not fully complying with thecontract terms. For example, the Contractor had notupdated architectural drawings because the contractwas not clear regarding the Contractor’sresponsibility to do so.



26 Report No. 2000-P-00015

The Contractor did not update “SideArm”, amechanized system to account for preventivemaintenance tasks and equipment. This deficiencywas identified in the NHEERL Management Review98-03 dated September 29, 1998. The report statedin part;

Under the scope of the O&M contractsuccessful installation and implementation ofthe SIDEARM software (MMS) is required. Under the O&M SOW, EPA provides this MMSsoftware product for the Contractor to load,and both the Contractor and EPA utilize thiscomputer application system. However, wediscovered that the data is not fully loaded,and the MMS requirement is not implemented. The resulting effect is the Contractor is notperforming according to the scope of thecontract and therefore has breached the termsof the contract.

Additionally, the EPA PO has failed to takeadvantage of a progressive performancemanagement tool that, although not by itself,would assist in addressing some of the criticalcontract issues that have been identified in thismanagement review. EPA has paid for theinstallation of a piece of software, that is notbeing utilized.

The NHEERL review recommended that the ActingDirector ensure that the EPA Project Officer use thesoftware and require the Contractor to use software,as required in terms of the contract. The AEDDirector concurred with this recommendation.

However, the Contractor could not be heldresponsible for breach of contract according to the



27 Report No. 2000-P-00015

Contracting Officer. She stated that the contract wasvague regarding the use of SideArm and the Project Officer did not direct the Contractor to use thesystem. In fact, AED was unaware that theContractor was inputting data into SideArm until May1999, nearly five years after the contract wasexecuted. However, EPA did not have a method toverify the accuracy of the data entered according tothe Contracting Officer.

For the remaining period of the contract, AED and theContracting Office were working with the Contractorto identify/verify and update information in SideArm. The Contracting Officer said the succeeding contractto be executed would have a detailed description ofthe Contractor’s responsibilities regarding use of anycomputerized system to be used.

AED Senior Management and EPA’s ContractingOfficer decided not to make significant modificationsto the existing contract. Rather, they concentrated onstrengthening the upcoming contract.

Project Officer Performance Not only was the contract SOW deficient, but also theretired Project Officer’s monitoring of the O&Mcontract. The Contractor, not the Project Officercontrolled the work orders. The Project Officer didnot ensure that the Contractor performed all thepreventive maintenance required in the contract. Also, the Project Officer procured services which theO&M Contractor could have provided under theexisting contract. Some of the poor contractmanagement practices continued with the interimProject Officers.

Once a work order was issued, the Project Officerabdicated complete control to the Contractor. Thiswas a weakness not only with the retired ProjectOfficer’s administration but with the interim ProjectOfficers as well. AED had no procedures to ensure



28 Report No. 2000-P-00015

that the O&M Contractor completed the work timely orsatisfactorily. Incomplete or untimely work created potential safety hazards in some cases. Forexample, wires remained uncovered and emergencyshowers were not inspected.

EPA’s Contracts Management Manual Chapter 7,Attachment A describes the duties to be performed byProject Officers. Such duties include monitoring,inspection, and acceptance. Paragraph 16 of theaforementioned reference states that Project Officers:

Monitor compliance with the contract. Inspect,accept and/or track deliverables. Identify,document and report potential or actualproblems (including potential conflicts ofinterest, constructive changes) to the CO. Provide technical direction (if permitted inaccordance with the terms of the contract).

Control of Work Orders The O&M Contractor completed and maintained workorder information until the beginning of our audit inMay 1999. The Project Officer stated the Contractor,not AED, entered data from work orders into thestatus program including the start and completiondates. The Contractor also filled-out the portion ofthe work order form dealing with estimated and actualhours to complete the work as well as estimated andactual material costs. The Contractor physicallypossessed all work order documents. In our opinion,such a system was not conducive to good projectmanagement.

Because AED scientists wanted to know the status oftheir work orders, the ADP Contractor was taskedwith developing a system to track work orders. AEDofficials approved this system in March 1998. TheEMS stated that the Project Officer or another EPAemployee was supposed to enter work orderinformation into the system but instead the O&M



29 Report No. 2000-P-00015

Contractor was actually entering the information. AED did have access to the Contractor’s information but there was no evidence of oversight by AED staffto verify the accuracy of the information entered. Additionally, procedures were not in place to ensurethe Project Officer or the requestor signed thecompleted work order certifying that the Contractor’swork performed was timely and acceptable. As aresult, there was no documented evidence that workorders were timely completed to the requesters’satisfaction per the work order request.

The interim Project Officer stated he didn’t know if theContractor completed work orders within prescribedtimes as EPA did not have control of the work orders. He did know, that based on his recent review of workorders, that the Contractor takes longer thannecessary to do routine work such as painting doors. He stated, “for example I believe the computer roomrenovations that [the Contractor] did should havetaken two weeks not six months. Sometimes [theContractor] does work assignments different than thework order requested, and therefore, different thanthe EPA employees needed.” Currently there is alack of EPA management oversight anddocumentation to show the work was satisfactorilycompleted.

On August 20, 1999 the interim Project Officer statedthat now he visually spot checks work orders to makesure the work is being done. He also stated theContractor controls and enters data into thecomputerized work order system. However, no AEDofficial signs off on the work order certifying that thework was satisfactorily completed because AED doesnot have a procedure to determine that the work wasin fact done. The Project Officer said controls overwork orders will be improved under the new contractwhich will be effective October 1, 1999.



30 Report No. 2000-P-00015

Our review of 55 work orders (10 percent) issuedduring FY 97, showed that approximately 93 percent of the work orders were not signed by anyAED employee as accepting the work. Requiring theProject Officer or the requester to sign the work ordercertifying that the work performed was acceptableand timely completed would eliminate this problem. The Project Officer also stated, “Sometimes [theContractor] did assignments based on a verbalrequest of an EPA employee without waiting for awork order which might be written after the fact.” Hestated, “there is an appearance that the Contractor isrunning the place.”

One of the interim Project Officers stated that hebrought his concerns regarding the management ofwork orders and other issues to the attention of theADPO on or about January 1999. He said the ADPOtold him nothing new was to be done regarding theO&M contract because a new Project Officer was tobe hired and a new O&M contract was to be awardedin October 1999.

The ADPO, who arrived at AED in April 1998,explained that he first became aware of problems incontract management when he received the NHEERLdraft management review in August 1998. Theretired Project Officer never informed him of anycontract management problems, therefore, as far ashe knew there weren’t any problems. He stated thathe was a manager, not a subject matter expert. Therefore, he relied on his Project Officers to keephim informed of any and all contract problems. Hebelieved the retired Project Officer tried to do the bestjob he could, but he was limited in his skills toeffectively manage the contract.

The AED Acting Director said most people in thelaboratory were scientists and he didn’t have anyonequalified who could take over the Project Officer



31 Report No. 2000-P-00015

position. He stated that the principal purpose of thelaboratory was science but acknowledged that there was no excuse for poor contract management. Hedidn’t believe the nature of the problems with theO&M contract affected laboratory operations and hewas assured by his managers that corrective actionsresulting from previous audits were taken.

A discussion with the AED Safety Officer showed howthe work order system functioned and how untimelywork orders could affect safety at the lab. He said hedid not see work orders once they were submitted. The only way he could tell if the work was done, wasto walk around the facility and check on it when hecould. Sometimes he did not know for several weeksor months that a job was still pending. He said someof the work orders submitted were marked as“completed” when the work had not been done. Hesaid the O&M Contractor’s Project Manager had beenentering information into the computerized work ordersystem rather than the AED Project Officer. He saidthe intent of the system was to allow the AED ProjectOfficer to review the Contractor’s work and keep theAED staff informed of the status of the work orders. He said the program did not work as intended.

The Safety Officer provided the following examplesas specific instances when laboratory safety wascompromised due to untimely work by the Contractor.

1. Work Order #97-232, dated 2/25/97: TheContractor was instructed to make electricalrepairs in the wet lab. There were uncoveredwires and switch boxes in various places, asafety hazard. Even though the work orderwas marked as completed in the database, thework was never done.



32 Report No. 2000-P-00015

2. Work Order # 99-115, dated January 13,1999: Contractor was instructed to check forelectrical shorts in the oven. Again, the workorder was marked as completed even thoughthere is still a stray voltage problem with thisequipment.

The Safety Officer also identified 15 findings theContractor was responsible for in the July 1996 U.S.EPA Safety, Health, and Environmental Review. Fiveof the 15 findings were classified as “Priority B” whichwas defined as deficiencies that could lead toregulatory enforcement action or to unacceptablesafety, health and environmental risk. (See Appendix1 for details.)

Preventive Maintenance The Contractor did not perform all preventivemaintenance required by the O&M contract. WhileAED was fortunate that no serious accidentsoccurred, the staff and facility were left vulnerable. Itwas the Project Officer’s responsibility to ensure thatthe Contractor met all the terms of the contract.

In response to a memorandum initiated by the AEDProject Officer, the Contracting Officer sent a letterdated September 14, 1999 to the O&M Contractordescribing contractual and performance issuesrequiring corrective action. We believe thesedeficiencies resulted from the lack of adequateoversight by the Project Officer. The ContractingOfficer wrote that the following critical items, systems,and tasks either are not being maintained/tested asspecified in the contract or do not have records toindicate maintenance/testing have been performed.

1. Electrical Systems

2. Water, Drain & Distribution Systems



33 Report No. 2000-P-00015

3. Other Laboratory Support and DistributionSystems

4. Fire Protection System

5. Field equipment

6. No unscheduled “work order” maintenance andrepair had been recorded for any item.

7. Laboratory Lift Trucks

The Contracting Officer’s letter further stated;

In general, the records demonstrate thatservices are not being performed as specified(e.g. the contract requires daily, monthly,quarterly, semi-annual, and annual services on“HVAC and Boiler” but records indicate that,depending on the item, only semi-annual orannual services were performed).

The AED Safety Officer said that not all theemergency showers had been inspected yearly bythe Contractor as required. Again, while no accidentsoccurred, such actions put the safety of the AED staffat risk. Poor contract monitoring not only resulted inhealth and safety concerns, but also wastedresources.

Procurement Requests The former O&M Project Officers purchased $6,587of services already included in the O&M contractduring Fiscal Years 1998 and 1999. For the sametime period, 13 purchase order requests wereprocessed for supplies which should have beencharged on the Contractor invoices. Another 15



34 Report No. 2000-P-00015

items/services procured were questionable but a finaldetermination could not be made because a clearcost breakdown was not available. Not only did AEDunnecessarily expend limited lab funds for services already included in the contract, but additionaladministrative resources were unnecessarily used inprocessing these procurement requests. The currentProject Officer did not know why these purchaseorders were requested.

The following schedule shows services purchasedseparately which were already included in the O&Mcontract.

PONo.

RequestDate

Service Description Cost * Contract Ref.

8N-0100-NNSA

09/25/97 Provide service forFreezer

$ 568 B.5.1.4.

8N-0149-NNSA

10/14/97 Provide service toevaluate trouble withspeed control for thereturn and supply fanon Air Handler

$ 475 B.5.1.1B.5.3.1.

8N-0188-NNSA

11/12/97 Emergency Servicefor UndergroundStorage TankMonitoring Systems

$ 262 B.1.

8N-0189-NNSA

11/20/97 Replace defective firealarm zone module

$ 500 D.6.2.

8N-0232-NNSA

12/23/97 Provide emergencyservices to main seawater filtering system

$ 420 D.4.8.

8N-0233-NNSA

12/18/97 Install weatherstripping on Lobbydoors

$ 285 D.10.



PONo.

RequestDate

Service Description Cost * Contract Ref.

35 Report No. 2000-P-00015

8N-0273-NNSA

01/29/98 Re-set pre-actionvalve in theHazardous StorageBldg.

$ 500 D.6.3.

8N-0342-NNSA

03/20/98 Replace broken glassin the Lobby

$ 368 D.10.

8N-0348-NNSA

03/25/98 Lift Truck Repairs $ 763 B.10.

8N-0395-NNSA

05/08/98 Provide repairs tofiberglass pipesupplying seawater tothe Laboratory

$1,063 D.5.2.

8N-0488-NNSA

06/11/98 Recondition 4stainless steelpropellers

$ 375 D.12.3.

8N-0639-NNSA

09/04/98 Close up boiler #1, setfires, performefficiency test

$ 504 D.1.6.

8N-0641-NNSA

09/04/98 Close up boiler #2, setfires, and performefficiency test

$ 504 D.1.6.

Total * $6,587

* Amounts rounded

In addition to the services described above, a blanketpurchase order was authorized for snow removal. The agreement terms, in part, listed clearing allwalkways for $20 per hour. According to the contract,paragraph D.10, the Contractor shall maintain thegeneral physical plant. The Contractor shall providegeneral facilities maintenance as follows: providesnow removal for sidewalks and pedestrian ramps.

According to Section F.1 of the contract:



36 Report No. 2000-P-00015

The contractor shall provide the necessarysupplies, material, and spare parts for theoperation, maintenance, and repair of theLaboratory facility and systems. The Contractor shall maintain quantity levelsappropriate with their approved maintenanceschedule. Advance approval from the ProjectOfficer is required for any single purchaseorder of $200 or greater. The Contractor shallnot purchase any supplies, material, or partswith a unit cost of $1,000 or greater.

The Contractor was to provide a variety of supplies,materials, and parts for use in carpentry, plumbing,and electrical work as well as maintenance of fieldequipment and vehicles.

Section B.2 (d) of the contract, “Consideration andPayment for Line Items”, provides that costs forsupplies and services were to be “vouchered” everytwo weeks for the actual cost, including mailing andshipping costs, incurred during the preceding twoweeks with no added cost or fee.

Contrary to the above contract provisions, AED’sformer Project Officers submitted purchase orderrequests for supplies which should have beenincluded on the Contractor invoices. These itemsincluded:

P.O. # Date Supplies Purchased Cost *

8N-0181-NNSA

09/18/97 Electric Strike Folger $ 640

8N-0190-NNSA

11/18/97 Fan Shaft (Penn Ventilator) $ 206

8N-0207-NNSA

11/24/97 Flourescent fixtures &electronic ballasts

$ 458



P.O. # Date Supplies Purchased Cost *

37 Report No. 2000-P-00015

8N-0219-NNSA

12/16/97 Aluminum Fan Wheel,Shaft (fan wheel)

$ 840

8N-0367-NNCX

04/08/98 Bandsaw Blade $ 47

8N-0396-NNSA

05/08/98 C.S. Shaft $ 270

8N-0519-NNSA

07/07/98 Air Conditioner $ 784

8N-0548-NNSA

07/27/98 Parts needed for freezer $ 151

8N-0571-NNSA

08/12/98 Door closers, hinges, andshims

$ 472

8N-0601-NNSA

09/16/98 30 gallon barrels $ 1,386

9N-0139-NALX

12/15/98 Fuel conditioner, grease,fog spray, fog oil, sparkplugs, plug installer,gearcase leak check, safetychains, lugnuts, keel roller,roller pin

$ 830

9N-0241-NNSA

03/19/99 Drain plugs, battery, 3"blower mower, electricalpanel

$ 463

9N-0300-NNSA

04/26/99 Filter holder model,pressure regulator/ballvalve/pressure gauge &fittings assembly & manual

$ 620

Total $7,167 *

* Amounts Rounded

In our opinion, the former Project Officers’ submissionof such purchase orders showed their lack offamiliarity with the contract. Discussions with thecurrent Project Officer indicated that he was betteracquainted with the terms of the contract. He alsoquestioned the appropriateness of these requests.



38 Report No. 2000-P-00015

The Acting Director recommended that the EMSreview procurement requests to assure that contractprovisions were met. We concur with hisrecommendation.

ADP Contract The ADP contract was adequately managed butimprovements could be made in tracking work ordersand working with the alternate Project Officer for thiscontract. The ADP Project Officer properlydocumented and reviewed the invoices but could useEPA’s checklist to aid in his review.

Work Order Management The Project Officer effectively managed the workorders except for ensuring Contractor timeliness incompleting work. We judgmentally selected andreviewed 25 of 95 work orders issued during theperiod January through May 1999 to determine ifwork orders were effectively managed. Wedetermined that the Project Officer, not theContractor, maintained control over the work orders. The Project Officer estimated the hours to completethe work and certified that the work performed waswithin the scope of the contract and done to thesatisfaction of the requestor.

Each completed work order was signed by therequester stating that the Contractor satisfactorilycompleted the work requested. The ADP ProjectOfficer developed this work order format. Westrongly recommend that the O&M Project Officeradopt this format.

However, work was not always done on a timelybasis. Twelve of the twenty-five work ordersreviewed were not completed timely. Four of the 12untimely work orders were designated as emergencyactions. Emergency requests were late from four to28 days. The Project Officer stated that he does nothave an effective system to track the timelycompletion of work orders. He agreed to establish a



39 Report No. 2000-P-00015

computerized tracking system to ensure that work iscompleted timely.

No Alternate The alternate Project Officer for the ADP contractProject Officer said that the Project Officer did not allow him to

perform his duties as alternate. Even on vacation,the ADP Project Officer instructed staff to have allcontract business sent to his residence. The ActingDirector said the Project Officer did not haveconfidence in the Alternate’s ability to understand thenature of work. At the time, AED lacked appropriatepersonnel. The Acting Director said he would beassigning another person with the appropriatebackground as Alternate.

Adequate Invoice Contractor invoices for the period October 31,Review 1997 through February 3, 1999 were properly

documented and reviewed by the ADP Project Officerprior to being submitted for payment. All costs wereverified with the Contractor’s monthly progress report.However, the Project Officer was not attaching a copyof the required checklist which was intended as anaid to the Project Officer in reviewing the invoices forreasonableness, allowability, and allocability ofclaimed Contractor costs. The EPA Invoice ReviewGuide, dated November 1, 1995 states, “Copies ofthe checklist should be attached to each invoicebefore it is filed in the PO’s files.”

The ADP Project Officer stated that in the future hewould attach copies of the checklist to each invoicebefore it is filed in his files.

CONCLUSION AED’s retired Project Officer allowed the O&MContractor to control its work without adequate EPA



40 Report No. 2000-P-00015

oversight. Succeeding interim Project Officers couldnot fully correct past poor contract managementpractices. As a result, the Contracting Officerbelieved that the O&M Contractor could not be heldresponsible for its poor performance because EPAwrote a poor SOW and provided inadequate oversight. This was especially distressing since weakcontract management practices had been identifiedby both the OIG in 1993 and AED’s EMS in 1996. While the current Project Officer, who has a strongcontracts background, should improve operations,AED also needs to establish procedures to ensurethat EPA and not the Contractor controls the work. AED also needs to improve communication with theContracting Office and take advantage of theContracting Officer’s expertise when necessary.

RECOMMENDATIONS We recommend that the Acting Director instruct theO&M Project Officer to:

1. Complete estimated hours and costs on workorder forms and maintain work orders.

2. Develop a tracking system to document thatthe Contractor performs all preventivemaintenance and submits deliverables inaccordance with the terms of the contract.

3. Define time frames such as “routine”,“emergency”, etc. given to the Contractor.

4. Develop a tracking system to assure that workwas completed and completed on a timelybasis by Contractor.

5. Use the work order form developed by theADP Project Officer for all contracts so thatrequesters or other appropriate officials can



41 Report No. 2000-P-00015

sign-off as approving completed Contractorwork.

We also recommend that the Acting Director instruct:

6. The ADPO to meet weekly with the ProjectOfficers to review the status of work ordersand take corrective action as necessary.

ORD RESPONSE In response to the Contract Officer’s statement thatthe O&M SOW was “vague” and “ambiguous”, ORDwrote:

The complexity and ambiguities of the SOW ofthis contract were also noted in the 1997NHEERL Management Review. It was theopinion of the two former Contracting Officerson that team that the contract was so complexand ambiguous that it would be difficult foranyone to manage. This is why we stronglyfeel that it is of the utmost importance for theContracting Officer to work with the ProjectOfficer and EMS to ensure the award of aclearly written, sound contract. We believethat contract management is a team effort andthat CMD has shared responsibility in ensuringthat EPA can hold contractors responsible forthe work that they are getting paid to do.

During our exit conference, NHEERL’s ManagementDeputy Director stated that developing an SOW wasa joint responsibility between CMD and AED.



42 Report No. 2000-P-00015


OIG EVALUATION In our opinion, inadequate Project Officer oversightwas a significant factor in the poor management ofthe O&M contract. Even though systems had been

developed to assist the Project Officer in monitoringthe contract, the Project Officer never used thesesystems. The Project Officer did not track Contractorperformance of preventive maintenance or ensurethat work was completed. A “complex” SOW wouldnot have prevented the Project Officer fromperforming such basic monitoring responsibilities.

CMD activities were not included in the scope of ouraudit. Our review was directed at AED activities andresponsibilities. However, ORD does make a goodpoint in noting that CMD shares responsibility. If AEDdid not receive appropriate assistance from CMD,then Senior Management should resolve this issue. We do note that at the time of our audit CMD andAED staff were working together to ensure that thenew O&M contract SOW would be stronger andclearer in stating Contractor responsibilities.

We concur with ORD’s Corrective Actions for thisChapter.



43 Report No. 2000-P-00015

CHAPTER 4IMPROVEMENTS NEEDED IN PROPERTY MANAGEMENT

Improvements need to be made in AED’s propertymanagement. We found that: 1) custodial officerdesignations were out-dated; 2) annual inventorieswere not performed; and 3) the status of loanedequipment was unknown. The Property Officer andthe Extramural Management Specialist (EMS)brought these weaknesses to the attention of SeniorManagement who did not take corrective action. Improving property management was not a priority. As a result, $6,212,611 of accountable property wasnot safeguarded.

The AED Property Officer is an extremelyconscientious individual who brought several propertymanagement concerns to the attention of the OIG inorder to get these matters corrected. We agree thatthese matters are significant requiring SeniorManagement’s attention.

In her April 22, 1996 Event Cycle report on propertymanagement, the EMS identified similar findings withrecommendations. However, three years later, wefound that these weaknesses were not addressed bySenior Management.

According to EPA’s February 12, 1990 PersonalProperty Management Policy Manual, PropertyManagers and Custodial Officers are responsible forensuring the efficient and effective implementationand maintenance of EPA’s personal propertymanagement program. At AED, the ADPO isresponsible for the oversight of all administrative



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functions including property management. TheProperty Officer reports to the ADPO. CustodialOfficers are appointed by Senior Management.

EPA’s Personal Property Policy Manual Chapter 1,Para 5.8, states in part:

Office and Division Directors, Branch Chiefs,or equivalents are directly responsible for theestablishment and continuous enforcement ofadministrative directives and measures for allitems of government property under theircontrol. This includes property items carried inthe Agency Personal Property AccountabilitySystem (PPAS) [information now entered intoIFMS], as well as items not carried in thePPAS. Management of property must ensurethese items are properly acquired, used,maintained and safeguarded.

Supervisory responsibility at all levels requiresthe establishment and continuous enforcementof all administrative measures necessary toensure adequate preservation and use of allGovernment property under their jurisdiction. This includes assigning Custodial Officers andensuring positions are filled at all times, aswell as, ensuring that the Custodial Officer’sposition description is amended to reflectCustodial Officer duties.

Custodial Officer Custodial Officers are key in safeguarding personal Designations property. EPA’s February 12, 1990 Personal

Property Management Policy Manual provides:

Acting under the general direction of anorganizational supervisor and under the



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technical direction of the Property AccountableOfficer or Program Accountable Officer, theCustodial Officer is responsible for the propercare, maintenance, utilization, accountability,and security of personal property assigned tothe Custodial Area, and will be responsible forthe property until formally relieved of his/herduties by the proper authority. Specific dutiesinclude:

• Informing his/her immediate supervisorof changes affecting the status ofpersonal property in the Custodial Areato include: loss, theft, damage,modification, and classification ofexcess and unreparable (sic) property.

• Reporting to the Property AccountableOfficer and preparing documentation forall property transactions in his/herCustodial Area to include: transfer,disposal, adjustment transactions(overage or shortage), and declarationof excess; and obtaining prior approvalfrom the Property Accountable Officerfor plans to convert, alter, modify, ordismantle personal property.

• Conducting physical inventories of thepersonal property within the CustodialArea as required and directed by theProperty Accountable Officer and/or theProgram Accountable Officer. Reconciling the inventories andcertifying the results. Initiating thepaperwork to resolve overages andshortages.

• Establishing and maintaining prescribedcontrol records.



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Without a full complement of properly designatedCustodial Officers, all these activities were not carriedout for all Custodial Areas at AED.

Property accounts lacked official or current CustodialOfficer designations. Sixteen of 32 Custodial Officershad not signed acceptance of their accounts. Fourformer employees were still identified as CustodialOfficers up to a year and a half after they left AED(See Appendix 2). As a result, property valued atapproximately $6,212,611 was not adequatelysafeguarded (See Appendix 3). Senior managementhad not established and implemented adequatecontrols and procedures to ensure that existingCustodial Officers understood their responsibilities ordesignated replacement Custodial Officers on atimely basis.

We interviewed 10 of the 16 Custodial Officers whohad not signed for their property accounts todetermine why they had not accepted responsibilityfor their accounts. Of the ten Custodial Officersinterviewed: five said they hadn’t been asked to signfor their accounts or they did not know why they hadto sign for their property account; three said theyhadn’t signed because the property account inventoryhad not been reconciled; one said she hadn’treceived training so she assumed she was notresponsible for the property; and one CustodialOfficer said he had not gotten around to signing. These responses indicated that Senior Managementhad not instilled a strong and clear sense ofresponsibility among Custodial Officers regardingtheir duties.

For the Custodial Officer who had not gotten aroundto signing for his account, we found anotherprocedural deviation. Contrary to AED’s practice, this



47 Report No. 2000-P-00015

Custodial Officer, rather than the Property Officer,maintained his own account file. However, during ouraudit, the Custodial Officer could not find his file. This Custodial Officer was responsible for $1,337,887of computer equipment according to the July 8, 1999IFMS, “Custodial Account Report Sorted by DecalNumber”. Without the file, we could not determine ifand when an inventory had been taken. Also, thisCustodial Officer could not carry out hisresponsibilities such as conducting inventories,reporting property transactions, or property statuschanges.

The Property Officer recognized two years ago thatAED Custodial Officers needed training. In hisFebruary 5, 1997 memorandum to the Acting ADPO,he wrote, “The need exists for training in the areas ofproperty and records management.” He requestedthat AED fund travel expense for expert assistancefrom EPA Headquarters’ Property ManagementOffice. However, the AED Acting Director said fundswere not available to pay for such a trip. Thisproblem was not addressed and continued.

In a June 24, 1999 memorandum to the OIG, theProperty Officer stated, “I believe that the CustodialOfficers are confused about their duties despite thewritten instructions I have provided”. He said thiswas made clear to him when one Custodial Officerwould not sign for his property account. The PropertyOfficer further stated, “I believe this plan [seekingtraining assistance from Headquarters] must berevisited and the Custodial Officers be trained in theresponsibilities [of Custodial Officers] as well as theSenior Management Team. Their career path is upthrough the technical side and they do notunderstand that they must support not hinder ordiscourage proper and legal internal control propertyprocedure. I believe that their lack of knowledge withrespect to property issues can be found to weave not



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only through in-house property, as well as fieldsampling gear but also extramural property.”

The Property Officer then wrote to the ADPO in aJune 28, 1999 memorandum that AED needed aprovision for dealing with Custodial Officers whoeither do not sign off on their property after aninventory or do not make themselves available in atimely manner to do a proper inventory of materialthey are responsible for. He further stated,“situations of this nature should be correctedimmediately.”

AED also lacked controls to ensure that propertyaccounts were inventoried, reconciled and transferredwhen Custodial Officers left AED employment. Fourformer employees, who had departed AED during thepast 18 months, were still listed as active propertyCustodial Officers. As a result, AED had noassurance that these property accounts weresafeguarded. Senior Management did not designatepermanent replacements prior to the CustodialOfficers leaving. This problem was previouslyreported by the EMS in her April 22, 1996 EventCycle report on property management. The EMSreport stated that a quick run through of the propertyrecords yielded over $200,000 worth of equipmentassigned to 15 people who no longer worked at AED.

In his June 28, 1999 memorandum, the PropertyOfficer stated, “Currently when someone retires orwhen an individual employee is transferred theresponsibility of the property under their control is notinventoried or signed off on, and assigned to a newcustodian at the time the person leaves.” Further,“There is only a verbal assignment that until apermanent person is hired the temporary person ‘willtake care of it’”. The Project Officer did not believehe had the authority to appoint a new custodian. EPAHeadquarters’ Property Officer confirmed that



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authority to designate a Custodial Officer rested withSenior Management. We determined that property inthe amount of $771,382, was still assigned to fourcustodians who left AED as long ago as December1997.

Annual Inventories Not Annual inventories of accountable, government Performed property were not performed as required by EPA

policy. Additionally, 14 of the 32 property accountshad no evidence that an inventory had beenperformed. The Property Officer believed thatinventories were to be conducted every two years,not annually. Also, the absence of properlydesignated Custodial Officers resulted inundocumented inventories. Without annualinventories, $6,212,611 of AED property was notadequately accounted for. Our unannouncedinventories of a sample of accounts disclosed that theIFMS inventory system included items which couldnot be found as well as obsolete equipment. Also,some equipment had not been entered into IFMS. The Property Officer advised us of instances ofidle/unneeded and missing/stolen property which wasstill reported in the IFMS inventory system.

EPA’s Personal Property Policy Manual Chapter 2,Paragraph 6.2.6.1, Accountable Property states:

The Program Accountable Officer, RegionalAdministrators, Laboratory Directors, or theDirectors, Office of Administration andResources Management, RTP and Cincinnatishall certify annually as part of theorganization’s Internal Control review that allCustodial Officers within the organization havebeen appointed and received training and thatannual accountable property inventories havebeen conducted and submitted to the PropertyAccountable Officer.



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The latest inventory of accountable propertyperformed by Custodial Officers was datedFebruary/March 1997. The Property Officerinventoried capital equipment in March 1999 afterbeing advised to do so by Headquarters. Capitalequipment was previously inventoried in 1997. TheProperty Officer believed biennial rather than annualinventories were required. After discussions withHeadquarters Property Management personnel, theAED Property Officer now understands that allaccountable property must be inventoried on anannual basis. It should also be noted that neither theADPO nor the Acting Director knew that allaccountable property was to be inventoried annually.

Along with the Property Officer, we conducted anunannounced inventory of four accounts to determinethe accuracy of the property account records. Weused the then current July 8, 1999 IFMS’ “CustodialAccount Report Sorted by Decal Number”. Basedupon the results of our review, these reports did notreflect the actual state of the inventory. Some itemscould not be found while other items had not beenentered into the system or were in the wrong account. In some cases, obsolete equipment was still carriedon the inventory. See the schedule on the next pagefor details of our review.



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We also identified 16 items that had not been enteredinto PPAS or IFMS on a timely basis. AED convertedfrom the PPAS to IFMS in May 1997. The 16 itemshad acquisition dates from 1987 to 1998. However,these items were not on the 1997 PPAS inventory list. Four of the sixteen items were input to IFMS in 1998and twelve items were input in 1999. The PropertyOfficer said he was unaware that the lab had theseitems until an inventory was taken. See the scheduleon the next page for details.



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Annual Inventories are important to track the status ofvaluable government property. Custodial Officersshould be able to locate the equipment under theircare and note any changes or modifications toequipment.

In addition to annual inventories, an annualevaluation of accountable property should be done todetermine if any equipment is idle or unneeded. Such a review may be done in conjunction with theannual inventory. According to 41 CFR, Chapter 101,Section 25.109-1:

(a) The provisions of this Sec. 101-25.109-1 applyto all Federal laboratories regardless of size.



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(b) Inspection tours of Federal laboratories shallbe conducted on a scheduled basis, annually,if feasible, but no less than every 2 years, forthe purpose of identifying idle and unneededlaboratory and research equipment.

Equipment identified by the inspection team asidle or unneeded shall be reassigned asneeded within the laboratory, placed in anequipment pool, or declared excess and madeavailable to other agencies in accordance withpart 101-43.

The Property Officer recognized that AED needed todevelop procedures to safeguard expensiveequipment as well as to identify idle/unneededequipment. He brought the following examples to ourattention and the ADPO.

1. A $100,000 current meter was found under apile of refuse in the old wet lab and appearedto have been abandoned.

2. A $244,776 Mass Spectrograph purchased in1993 which had never been used to anyone’sknowledge.

3. Two current meters, each worth $8,000, werenowhere to be found. One was believed tohave been lost in Texas.

4. A $6,789 Data Logger was missing.

5. A $1,200 engine which had been stolen in1993 was still listed on the property records.

The Acting Director said that AED was forced to buya spectrograph from the GSA catalog rather than theexact item they wanted from another source. AED



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tried to customize the spectrograph to thelaboratory’s needs. In 1996, the AED staffdetermined that customization would not work. TheActing Director said it took another three years to finda suitable location to ship the spectrograph. Hefurther stated that AED deals with scientificequipment which is “state of the art” and “cuttingedge”. It is difficult to get the exact type of equipmentdesired to do the job. He said that it is not unusualfor equipment to remain idle for three years in aresearch laboratory. A laboratory cannot alwaysanticipate a project’s equipment needs.

In our opinion, six years was an unreasonableamount of time to keep the spectrograph idle. Evenresearch laboratories must plan for their needs.

The Property Officer said AED will now perform a“walk-through” shortly after the annual inventory todetermine if excess or idle equipment exists. Webelieve this procedure will improve AED staff’sknowledge of its property and needs.

Loaned Equipment Loaned Government property of $250,373 had not Not Effectively Managed been returned in accordance with Revocable License

Agreements (RLAs) and EPA requirements. As aresult, the status of $43,690 of equipment wasunknown. The status of the remaining loanedequipment, in the amount of $206,683, was notdocumented as being returned until 1999, up to threeand one-half years after the property was returned. Limited Senior Management oversight and a lack ofinternal controls over loaned property were the directcauses of poor property management.

EPA Property Management Policy permits the loan ofAgency owned personal property, except motor



55 Report No. 2000-P-00015

vehicles, on a temporary basis, with a maximum of five years. To effect the loan, the loan documentmust be signed and dated by the party to which the loan is made. Agency directives require loans ofpersonal property exceeding 45 days be made bymeans of RLAs. RLAs should include: the purposeof the loan, the loan period, and a certification thatthe property involved is under the requesting officialscontrol; and is not excess.

We reviewed eight (100 percent) of the RLAs used toloan Government property. At the time of our review,documentation did not exist to show that theequipment had been returned. For three of theseeight RLAs, the Property Officer advised us that fortypieces of equipment worth $43,690 had not beenreturned to AED as of August 18, 1999 and the statusof this equipment was unknown. He said there wasno record of the equipment ever being returned. Thefollowing schedule shows the three RLAs involved.

In response to our review, the Project Officersresponsible for the remaining five RLAs certified theyhad received the loaned equipment, in some cases,up to three and one-half years after the equipmentwas returned. In two cases, AED officials certifiedthat equipment had been returned but not within theRLA loan prescribed time frame. The followingschedule shows this information in detail.



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Additionally, loan authorization was not obtained ineach case. In three cases, EPA had not signed theRLAs and in another three cases, neither EPA nor thelicensees signed the RLAs.

EPA’s Personal Property Policy Manual Chapter 2,paragraph 6.1.3 states in part:

A memorandum requesting approval to loanthe property must be submitted to the PropertyManagement Officer by the requesting official. The request must include an endorsement ofthe EPA requesting official’s Division Director(or equivalent) and shall address therequirements for short or long-term loans listedbelow.

To effect the loan, the loan document must besigned and dated by the party to whom theloan is made (licensee). The document shallbe returned to the issuing PropertyManagement Officer to transfer accountabilityfrom the Custodial Area initiating the actions toa newly established account assigned to thistransaction. A copy of the loan agreementshall be forwarded to the Custodial Officer whoinitiated the transaction.



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The Property Officer was aware of the need toimprove the management of Government loanedequipment and cited the RLA with the NarragansettBay Project as an example of his concerns. The RLAwas signed by the licensee, Narragansett Bay Projecton March 7, 1989 for a period of 18 monthsauthorizing receipt of thirteen pieces of AEDcomputer equipment valued at $21,839. Thecomputer equipment was not transferred until 1992. Since this project was under the control of EPARegion 1, the Property Officer made several attemptsto transfer property accountability to Region 1. As ofAugust 1999, this transfer did not occur. The EMShad recommended that the property be transferred toRegion 1 in her April 22, 1996 Event Cycle Report. Again, we see problems which have been identifiedbut not resolved over a long period of time. TheADPO needs to establish procedures for resolvingproblems identified either through internal controlreview or his staff.

CONCLUSION The Property Officer was aware that propertymanagement needed to be improved. However, heneeded support from Senior Management toimplement many of the changes needed. SeniorManagement needs to assure that the PropertyOfficer and Custodial Officers are adequately trainedand knowledgeable to carry out their responsibilities. Senior Management also needs to show that itsupports the Property Officer by designatingCustodial Officers on a timely basis and assuring thatannual inventories are conducted. SeniorManagement was responsive to ourrecommendations and already started implementingvarious corrective actions. A Property Managementexpert from Headquarters was scheduled for two tripsto AED to assist the Property Officer in establishing aproperty management system.



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RECOMMENDATIONS We recommend that the Acting AED Director andADPO:

1. Require current Custodial Officers toimmediately accept responsibility of theirproperty accounts by providing writtenacceptance.

2. Establish the practice of designating newCustodial Officers prior to the departure of thecurrent Custodial Officers. Before the currentCustodial Officer leaves, the current and newCustodial Officers along with the PropertyOfficer should inventory the property account. All discrepancies should be resolved and thenew Custodial Officer should sign for theproperty account at the completion of theinventory.

3. Require the Property Officer and CustodialOfficers to receive adequate training inproperty management and up-dates asneeded.

4. Certify annually as part of the organization’sInternal Control review that all CustodialOfficers within the organization have beenappointed and received training and thatannual accountable property inventories havebeen conducted and submitted to the PropertyAccountable Officer.

5. Instruct the Property Officer to evaluate theuse and need of property during annualinventories.

6. Require the Property Officer to routinelycorrect IFMS based upon results of annualinventory.



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7. Establish a system of internal controls todocument and account for all current andfuture loaned Government property.

8. Perform a complete inventory of all returnedequipment (loaned through an RLA)documenting that all property is accuratelyaccounted for and timely entered into IFMS.

ORD RESPONSE The AA wrote:

Since the time of this audit, AED has madesignificant progress in strengthening propertymanagement. Specifically, from August 1-6,1999, an EPA property expert conductedproperty management training at AED. Duringthat period, property accounts were verifiedand property was reconciled. In conjunctionwith that visit, AED property accounts wereadjusted to reflect the new $5,000 reportableproperty threshold. Currently, we are planningthe return of the property expert to conductfollow-on training. The total amount ofaccountable property reflected in the OIG draftreport as $6,212,611 is now at $4,281,243. This reduction is based on deleting items witha value of less than $5,000 and on the newProperty Officer’s efforts to exercise theStevenson Wilder Act, excessing obsoleteproperty.

The AED has also strengthened its securityand accountability measures. For example, onDecember 28, 1999, beneficial occupancy ofthe new boat house was granted. Since that



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area is no longer a construction site, all AEDvessels have been relocated to an area wheresecurity cameras are in use. Once fire safety issues are resolved, the boat house will be thenormal storage site for all vessels. OnJanuary 4, 2000, all locks were re-keyed onboats, and field operations storage areas, andold keys and locks were turned over to theAED Security Representative. Also,specialized locks for trailer tongue latches areon order. These locks will preventunauthorized towing of all AED trailers, orremoval of trailers from a vehicle’s, fixedtowing hitch, on or off site. Additionally, AEDhas made procedural changes which ensurethat the Property Officer has knowledge ofproperty valued at $5,000 or more, when it isordered.

ORD requested that we add to the text of the findingthat since 1997, the Property Officer had not raisedhis concerns to Senior Management until the OIGaudit in 1999.

Additionally, ORD requested that we revise ourstatement that accountable property was notadequately “safeguarded” to “inventoried.”


OIG EVALUATION We concur with AED’s actions to date and with itsCorrective Actions for this Chapter. However, we doneed clarification on Recommendation 2. ORD’sresponse did not specifically indicate if an inventoryand reconciliation would be done when a CustodialOfficer departs.



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We did not change the text of the finding to read thatthe Property Officer had not raised his concerns toSenior Management since his 1997 memorandum.

We believe the Property Officer acted appropriatelyby advising management of his concerns. Management did not act upon those concerns. Whilework is a team effort by both management and staff,management did not accept its share of responsibilityin this matter.

We did not change our use of the word “safeguard” to“inventory” because maintaining an inventory was notour only concern. As already reported in the finding,custodial officer designations were out-dated, loanedequipment was not monitored, and equipmentneed/use was not determined. To safeguard is totake precautionary measures to protect. In ouropinion, AED had not taken adequate precautionarymeasures to protect all its property. We believeORD’s response describing further efforts taken tostrengthen security and accountability support ourstatement.

Also, EPA’s Personal Property Policy Manualexplains that management of property must ensurethat items are “safeguarded.”



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63 Report No. 2000-P-00015

CHAPTER 5IMPROVEMENTS MADE IN OVERSIGHT OF

COOPERATIVE AGREEMENTS BUT NOTINTERAGENCY AGREEMENTS

AED had made improvements in its oversight ofcooperative agreements but not interagencyagreements (IAGs). Funding for cooperativeagreements reviewed was for appropriate AEDactivities (pre-doctoral and post-doctoral research). The Project Officer and Local Site Representativediligently monitored grant activities and maintainedadequate documentation to assure that the terms ofthe agreements were met. As a result, thesecooperative agreements helped fulfill AED’s researchmission to support science. Specifically, theseagreements supported training and development ofyoung environmental scientists who conductenvironmental and ecological research.

The Project Officer for the IAG, however, did notassure that status reports or support for costs werereceived and reviewed. The IAG Project Officeradmitted that he was remiss in carrying out hisresponsibilities. As a result, we could not confirm ifprogress was made in AED’s oversight of IAGs.

Prior Audit Findings In our June 16, 1993 report, Management ofExtramural Resources at the Environmental ResearchLaboratory, Narragansett, Rhode Island, we reportedthat cooperative agreements were improperly used tofund a day care center; IAG’s were inappropriatelyused to fund foreign national travel; and EPA



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education policy was circumvented so that EPA employees could receive advanced degrees. Exceptfor oversight of IAGs, improvements have beenmade.

Cooperative Agreements AED used the appropriate vehicle of a cooperativeagreement to fund projects related to AED’s mission. These sampled cooperative agreements were for pre-doctoral and post-doctoral candidates. From thesecandidates, AED gained information and data fromperipheral research topics to add to in-houseresearch. Additionally, AED Project Officers did agood job monitoring their projects. We sampled twocooperative agreements from a universe of fouractive cooperative agreements.

The Project Officer for the National Research Council(NRC) cooperative agreement is located inWashington DC. The Local Site Representativelocated in Narragansett interacted with the ProjectOfficer but had limited responsibility such aspreparing preliminary cost estimates, opportunityannouncements, and decision memoranda. Inaddition, the Local Site Representative maintainedunofficial fund tracking records. All decisionsregarding candidates, their salaries, benefits, andtravel were made by NRC.

The NRC cooperative agreement (CR826388) was forthe period of February 1, 1998 to January 31, 2001. The total dollar value of the agreement was$7,728,000, however, only $165,000 was allocated toAED. There were three active associates at theLaboratory under the NRC cooperative agreement,however, two other candidates were beingconsidered as well.

The Project Officer for the University of Rhode Island(URI) Cooperative Agreement maintained information



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required under the agreement. Progress reviews andmentor evaluations were completed at 6 months and12 months respectively. The Project Officer alsoinformally followed progress through the monthlyScience Council meeting. The Project Officer did notreceive invoices for expenditures because she wasnot the Certifying Officer. URI submitted invoices toEPA’s Las Vegas office for payment. The ProjectOfficer explained that the process was similar to arevolving fund. The Project Officer was not involvedin that aspect of the cooperative agreement. However, the URI point of contact did provide theProject Officer with financial information whichshowed each student’s expenditures.

The URI cooperative agreement (CT825802) was forthe period August 1, 1997 to July 31, 2000. The totalproject period costs were $367,286. The SeniorResource Official approved the award package withthe understanding that the total funding under thecooperative agreement may exceed $1,000,000 butwill not exceed $5,000,000. The cooperativeagreement was established to provide expandedtraining opportunities and collaborative support forfellowships at the undergraduate, graduate, and post-doctoral levels to increase the effectiveness andnumber of future independent scientists who willconduct environmental and ecological research.

As a result of the monitoring and involvement of theProject Officer and Local Site Representative, thecooperative agreements appeared to be achievingtheir intended purpose.

Day Care Center In response to our prior audit, AED closed the daycare center on March 24, 1992. Since that time, theday care center has remained closed. According to



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the Extramural Management Specialist (EMS), thereare not enough Federal employees with children tojustify opening a day care center.

Training AED generally complied with training regulationsexcept in one case. This occurred because AED’sprior Director allowed, regardless of training policy, the employee to take courses as part of the IndividualDevelopment Plan (IDP). As a result, the employeetook three university courses duringduty hours and the government paid for one of thoseclasses. Another class was paid for by thegovernment, though the class was taken during non-duty hours.

According to Title 5 - Administrative Personnel: AnAgency may not authorize training for an employee toobtain an academic degree. In the IDP, thedevelopment objective was “continue to take coursesat the University of Rhode Island toward a Bachelorof Science in Political Science (PublicAdministration).”

The new ADPO took corrective action immediatelyafter discovering the problem in November 1998. Hecommunicated with the Labor Relations Specialistand the employee. The Labor Relations Specialistwrote, “You cannot grant excused absence unless adetermination has been made that the training isprimarily for the benefit of the government.” As aresult, the ADPO required the employee to take eitherleave without pay or annual leave for courses takenduring duty hours.

According to the EMS, employees can no longer getreimbursed for classes paid in advance. Each coursemust be approved one at a time. Employees will be



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reimbursed only for those courses which will enhancejob performance.

Interagency Agreement The Project Officer for the interagency agreementsampled did not aggressively pursue costbreakdowns or status reports. As a result, the ProjectOfficer may have approved invoices for costs notauthorized in the agreement. Not adhering to therequirements for quarterly reports and breakdown ofcosts could result in EPA paying for work which waseither not performed or not allowable under theagreement.

One of three active interagency agreements wassampled. The National Oceanic and AtmosphericAdministration (NOAA)-EPA IAG (DWI3937902) wasfor the period July 1, 1997 to June 30, 2001. Theamount of the award was $325,000. The objectivesof the IAG were to determine the current condition ofthe harbor using both standard measures ofecological condition and new, innovative, andpotentially sensitive measures of biological response. The IAG also provided an opportunity for EPA tomaintain a collaborative effort with NOAA. Accordingto the IAG’s Statement of Work, the objective was toaddress major components of a competitive RegionalEnvironmental Monitoring Assessment Programproposal and research plan submitted by Region 2 formonitoring the New York/New Jersey harbor.

The terms and conditions of the NOAA IAG specifythat:

1. When requesting payments a breakdown ofthe cost associated when the billings requestmust be provided to the Project Officer. Thisinformation should allow the Project Officer todetermine that costs billed to EPA arereasonable and necessary. If the informationis not provided, the EPA Project Officer will



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notify FMD [Financial Management Division] tosuspend or charge back the payment of theinvoice; and

2. NOAA will provide to the EPA Project Officerquarterly progress reports containing projectname and IAG; summary of work performed forthat quarter; estimate of the percentage ofproject completed; accounting of fundsexpended; summaries of all problems;projected work for the next reporting period.

The Acting Assistant Administrator for Research andDevelopment sent a November 16, 1993 letter to allORD employees regarding Management ofExtramural Resources. Particularly, it states:

It has been and is the responsibility of theFederal employees who manage these fundsto assure that they are expended inaccordance with the relevant Federal laws andregulations and Agency policies andprocedures. Consequently when EPAscientists become involved with expendingextramural funds they must assume the relatedmanagement responsibility. And just as goodscience requires well documented data, goodmanagement of Federal funds also requiresdocumentation and adherence to establishmanagement procedures and controls.

Two invoices were received by the EPA ProjectOfficer, however, there was no supportingdocumentation attached to the invoices. The ProjectOfficer certified the invoices for payment because hedetermined that sufficient progress had been madeby the other agency to support the progress paymentas authorized by the IAG.



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The Cincinnati Finance Office did not have thesupporting documentation for the invoices andassumed the Project Officer had that information. Additionally, the National Oceanic Atmospheric Administration (NOAA) Project Officer did not have the backup documentation available to support theinvoices. The NOAA Project Officer explained thatthe NOAA budget person worked from home a lot andmaintained the backup documentation. The NOAAProject Officer did provide a summary e-mail of howEPA funds were disbursed by FY 1998 end. However,these costs were not broken down to support theinvoices. Since backup documentation was notobtained for the two invoices totaling $78,204.29($39,869.96 & $38,334.33), there was no guaranteethat EPA did not pay for foreign national travel orother expenses not covered under the IAG.

Additionally, the Project Officer admitted that he wasnot receiving quarterly progress reports and that hehad been negligent in not following up with NOAA. He said that quarterly reports should not have beenstipulated in the agreement because there were longperiods of inactivity during the project. The ProjectOfficer added that he did a lot of monitoring throughtelephone conversations.

CONCLUSION The Project Officers for cooperative agreementsimproved oversight by assuring that agreementconditions were met. Weaknesses in IAG oversightcontinued because the Project Officer did not use theagreement as a guideline for monitoring performanceand costs. The 1993 OIG report found that the IAGwas used as a mechanism to circumvent EPAregulations to fund foreign nationals and internationaltravel by non-EPA employees. Since then, ORDdeveloped policies and procedures for internationaltravel and guest workers. However, without the



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supporting documentation required by the agreement,we could not determine the reasonableness of theIAG costs.

RECOMMENDATIONS We recommend that the Acting AED Director instructthe IAG Project Officer to:

1. Obtain and review supporting documentationas required by the IAG for all costs charged todate and in the future.

2. Attach the cost breakdown of the expenses tothe invoice.

3. Review cost breakdowns for allowability andapplicability to the IAG.

4. Maintain the cost breakdown in the records.

5. Obtain quarterly status reports as specified inthe IAG. If there has been no activity a noteshould be written to the file.

ORD RESPONSE ORD disagreed with the general conclusion that noimprovements in IAG oversight were made. ORDbelieved it was unfair to make a broad statementbased on a sample of one IAG.


OIG EVALUATION Although we sampled one IAG, we feel ourjudgmental sample was fair. There were three activeIAGs totaling $391,389 at AED during the time of ourreview. The IAG selected was for $325,000, or 83%of IAG active funds.



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Lack of documentation for IAG costs was a repeatfinding from our 1993 report. Specifically, the 1993report stated:

Narragansett officials were unable to provideus with documentation to support theexpenditure of funds, and stated that NOAAwas responsible. NOAA could not providedocumentation to support the expenditure ofthe funds for this IAG.

Although this is not the same IAG as reported in the1993 audit report, it is the same Federal Agency withwhom EPA entered an agreement. Considering theabove facts, we feel our conclusion was appropriate.

We concur with ORD’s Corrective Actions to thisChapter.



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APPENDIX 1SCHEDULE OF SAFETY FINDINGS

* Priority B is assigned to deficiencies that could lead to regulatory enforcement action or to unacceptablesafety, health and environmental risk.



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* Priority C is assigned to deficiencies that would have a minimal impact on human safety and health and theenvironment, but could result in limited regulatory enforcement action.



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APPENDIX 2SCHEDULE OF CUSTODIAL ACCOUNTS

The following chart identifies the four accounts of the retired/resigned Custodial Officers.



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APPENDIX 3SCHEDULE OF 1999 INVENTORY



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APPENDIX 4ORD’S RESPONSE TO OIG DRAFT REPORT



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the new $5,000 reportable property threshold. Currently, we are planning the return of the property expertto conduct follow-on training. The total amount of accountable property reflected in the OIG draft report as $6,212,611 is now at $4,281,243. This reduction is based on deletingitems with a value of less than $5,000 and on the new Property Officer's efforts to exercise the StevensonWilder Act, excessing obsolete property.

The AED has also strengthened its security and accountability measures. For example, on December 28, 1999, beneficial occupancy of the new boat house was granted. Since that area is nolonger a construction site, all AED vessels have been relocated to an area where security cameras are inuse. Once fire safety issues are resolved, the boat house will be the normal storage site for all vessels. OnJanuary 4, 2000, all locks were re-keyed on boats, and field operations storage areas, and old keys andlocks were turned over to the AED Security Representative. Also, specialized locks for trailer tonguelatches are on order. These locks will prevent unauthorized towing of all AED trailers, or removal oftrailers from a vehicle's fixed towing hitch, on or off site. Additionally, AED has made procedural changeswhich ensure that the Property Officer has knowledge of property valued at $5,000 or more, when it isordered.

The OIG report has also brought to our attention the need to improve timeliness in remedyingknown contract management vulnerabilities. The contract management vulnerabilities described in this report were initially raised by the AED Extramural Management Specialist(EMS), in June 1996. Also, AED contractual problems were carefully outlined in a 1997 NHEERLManagement Review. We are currently implementing corrective action in this area.

However, ORD believes it is important that the final audit report reflect the staffing difficulties thatAED was experiencing throughout its contractual and property problems. The report should show thatAED was without a permanent Associate Director for Program Operations from February 1996 to April1998. The vacancy of this critical administrative supervisory position exacerbated the timeliness andeffectiveness of AED's ability to remedy problems in both extramural and property management.

Finally, we believe that AED has made considerable improvement in overall extramuralmanagement. Largely, the weaknesses discussed in the 1993 OIG audit have not reoccurred. We areconcerned that the current draft report makes general conclusions about AED's contract managementprogress based on AED's problems with a single contract (O&M), which had already been identified byboth the EMS and an NHEERL Management Review. Moreover, at the time of the OIG audit, significantcorrective actions had been made or were in progress. For example, a new Project Officer was hired and anew contract was in the solicitation process. Further, as we discussed in our teleconference, we stronglybelieve that the Contract Management Division shares our responsibility for the effective contractmanagement.

We remain concerned with the OIG's conclusion that improvement in the oversight of IAGs has notbeen made. This conclusion was based on the review of only one IAG. This limited exploration andsweeping conclusion does not represent the progress that AED has made in this area.



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Attached is ORD's consolidated, page-specific comments which we offer for incorporation in thefinal report. We have also included our corrective action plan. Should your staff have questions or requirefurther information, please have them contact Cheryl Varkalis at (202) 564-6688.

Attachments (2)

cc: Paul McKechnie Linda Fuller Cathy Jenson Henry Longest Debbie Dietrich Peter Durant Arnold Bloom Cheryl Varkalis Ann Akland Gilman Veith Patricia Jackson Karen Dean Norman Rubinstein Glenn Moore Carol Ann Sakiewicz

Attachment 1



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Consolidated ORD Comments on

OIG Draft Audit Report #1999-211 NHEERL


1. Title page (back)-Draft Report states:

"Office of Air and Radiation"

RESPONSE: We request the following change to this portion of the draft report:

"Office of Research and Development"

2. On pages ii, and 8, the draft report states:

“...... however, this position was in a state of transition for a period of time."


“...... however, AED was without a permanent ADPO from February 1996 until April 1998.

2-a. On page 9, please add the following text to the final report:

"However, AED was without a permanent ADPO from February 1996 until April 1998. This staffing limitation is critical to understanding the delays in dealing with all of the issues raised in thisreport. On February 18, 1996 the Associate Director for Program Operations (ADPO) transferred to theAED detachment in Annapolis, MD (now located at Fort Meade, MD). An Acting ADPO was put intoplace; however, he had limited management experience and was required to maintain the workload for hisposition of record along with serving as the Acting ADPO. AED began the recruitment process to fill theADPO position on a permanent basis on April 28, 1997. The Merit Promotion closed on July 28, 1997 andthe OPM Vacancy closed on August 15, 1997. Because this position is critical to improving managementand operations at AED, the interview process was extensive and time consuming. The position was notfilled until April 19,1998."

Discussion: This clarifies the staffing situation by providing specific information on what is meant by"transition."



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3. On pages iii, 8, 16, and perhaps other sections, the draft report states:

"In the area of contract management, progress was not made since the June 16, 1993 OIG Report."


"In the area of contract management, there continued to be problems with one of the contracts that wasaudited." Or change to "there was limited progress."

Discussion: This conflicts with other statements in the report that there was "limited improvement" (e.g.title of next section, and chapter).

4. On pages iii, 11, and throughout the body of the draft report, the statement is made that Project Officerson the O&M contract did not have an adequate "background in contract management."

RESPONSE: We request the following change to this portion of the draft report to replace the term"contract management" with "facilities management" and/or "good contract management skills."

Discussion: All individuals tasked as Project Officer were fully trained and therefore had the requiredbackground. The O&M PO did not have adequate background in facilities management. Therefore, it wasdifficult for him to manage the facilities work which was under contract. An alternative re-wording is thatthe PO did not have "good contract management skills."

5. On pages iii, and 36, the statement is made that AED Senior Management "ignored" property concerns.

RESPONSE: Request that in regard to the property management issue, all occurrences of the word"ignored" be changed to "did not take appropriate actions to evaluate the seriousness of these issues."

Discussion: As is explained within the OIG Draft Report, the AED Acting Director was led to believe theproperty management issues were "minor."

6. On page 2, the draft report states "Under the supervision of the Deputy National Director for Ecology..."

RESPONSE: This should be”....... the NHEERL Associate Director for Ecology."



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7. On page 11, the draft report states "l) the former ADPO was not fully qualified.

" RESPONSE: Request to change word "former" to "Acting."

Discussion: "Former" refers to the previous permanent ADPO, which is not the case here.

8. On page 11, the draft report provides the actual performance ratings of the PO. We believe this is subject to Privacy Act concerns and should be removed.

9. On pages 12 and 20, the draft report leaves the impression that AED did not seek the advice or supportof the Contracting Officer (e.g., "AED kept to themselves.")

RESPONSE: We request the following text be included into the text of the draft report:

The O&M Contract was awarded by CMD-Cincinnati and was subsequently moved to CMD- RTP inMarch 1997. The individual that the OIG spoke with was the Contracts Specialist at the time of the audit.Over the course of this contract, AED's EMS contacted at least eight different Contracting Officers andSpecialists about contract management issues related to this specific contract. In fact, the EMS sent a copyof her June 1996 internal review of this contract to CMD- Cincinnati. In addition, some of these issueswere raised again with the CMD-RTP Contracts Specialists who visited AED in 1997. However, AED wasnot successful in obtaining assistance from CMD. The inability to obtain assistance from CMD furtherhindered AED in their management of this contract.

Discussion: We feel strongly that this leaves the reader with a false impression, and that there wereextenuating circumstances surrounding the O&M contract, which made it exceedingly difficult to improvemanagement.

10. On page 16, the draft report states:

"We are concerned that NHEERL's comments may impair one of AED's effective means of overseeingextramural management .... We would not be writing this report if the 1996 EMS recommendations hadbeen resolved."

RESPONSE: The NHEERL Management Review report did not question the EMS's reviews of extramuralmanagement. That is one of the important duties of the EMS. What was of concern in the review was theeffectiveness of the extensive documentation that the EMS put in the PO's files as a result of the review.The NHEERL Management Review recommended that a more concise and effective means ofcommunication (e.g., advising, counseling) be utilized by the EMS to help the AED PO's in solving theirextramural management problems.

11. On page 16, under the Conclusion: As noted in our cover memo, we would like to see some reference tothe fact that the key administrative operations position-that of ADPO, was without a



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permanent, well-qualified person, from February 1996 to April 1998. The absence of a permanent ADPOis critical to understanding why most of these findings were not dealt with in a timely and effective manner.

12. On pages 19 and 20, the draft report refers to a poorly written SOW, which was vague and ambiguous.

RESPONSE: The complexity and ambiguities of the SOW of this contract were also noted in the 1997NHEERL Management Review. It was the opinion of the two former Contracting Officers on that teamthat the contract was so complex and ambiguous that it would be difficult for anyone to manage. This iswhy we strongly feel that it is of the utmost importance for the Contracting Officer to work with the ProjectOfficer and EMS to ensure the award of a clearly written, sound contract. We believe that contractmanagement is a team effort and that CMD has shared responsibility in ensuring that EPA can holdcontractors responsible for the work that they are getting paid to do.


"The Project Officer stated the Contractor, not AED, filled-out on the work order form, the start andcompletion dates, estimated and actual hours to complete the work, as well as estimated and actual materialcosts. The Contractor physically possessed all work order documents."


"The Project Officer stated that the Contractor, not AED, entered data from Work Orders into the statusprogram including the start and completion dates. The Contractor also filled-out the portion of the WorkOrder form dealing with estimated and actual hours to complete the work as well as estimated and actualmaterial costs."

Discussion: AED believes that there was a misunderstanding on this issue. An AED employee alwaysoriginates work order forms. While the Project Officer did not complete the estimates or dates on the forms,the Project Officer did have a log of all Work Orders submitted to the Contractor which indicated the dateeach was forwarded to the Contractor for action. The confusion may be in that the Contractor was the onlyone who entered information into the status log.


"The AED Acting Director also stated that the principal purpose of the laboratory was science and although he realized there was no excuse for poor contract management. However, he stated he didn'tbelieve the nature of the problems with the O&M contract management affected laboratory operations andhe was assured by his managers that corrective actions from previous audits were in place."




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"The AED Acting Director also stated that the principal purpose of the laboratory was science and,although he realized there was no excuse for poor contract management, he didn't believe the nature of theproblems with the O&M contract affected laboratory operations. He also stated that he was assured by hismanagers that corrective actions from previous audits were in place."

Discussion: Correct sentence fragment in first sentence.


"On September 14, 1999, the Contracting Officer sent a letter ......

RESPONSE: We request the following change to the sentence:

"In response to. a memo initiated by the AED PO, on September, 14, 1999, the Contracting Officer sent a letter ......

Discussion: This documents the fact that the PO initiated the letter written by the CO.

16. On page 36 and throughout this chapter, the draft report states:

"As a result ..... not adequately safeguarded."


Change word "safeguarded" to "inventoried."

Discussion: There are other important ways to "safeguard" property. Inventories are only one.


"Without properly designated Custodial Officers, all these activities were not carried out at AED."


"Without a full complement of properly designated Custodial Officers, all these activities were not carried out for all Custodial Areas at AED."

18. On pages 39-40, the draft report states that in 1997 the Property Officer sent a memo to the ActingADPO, requesting training for custodial officers.

RESPONSE: We request the following sentence be added to the text:



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"There was no further evidence that the Property Officer raised this concern again with either the ActingAED Director or the permanent ADPO until the time of the OIG's visit."

Comment: We would like the report to reflect that Property Officer did not bring this issue to the attentionto anyone else again, including the AED Acting Director or the permanent ADPO, who was appointed inApril 1998.

19. On page 54, and throughout this chapter, as noted in our cover memo, we do not believe the generalconclusion that there had been no improvement in the management of IAGs is a fair statement, based on asample of one IAG.



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APPENDIX 5DISTRIBUTION

Office of Inspector General

Inspector General (2410)Office of Inspector General - Headquarters (2421)Executive Assistant to Inspector General (2410)Assistant Inspector General for Audit (2421)Deputy Assistant Inspector General for External Audits (2421)Deputy Assistant Inspector General for Internal Audits (2421)Assistant Inspector General for Planning, Analysis, and Results (2421)Divisional Inspectors General for Audit

Headquarters

Assistant Administrator for Research and Development (8101R)Associate Director Office of Resource Management and Administration (8102R)Audit Liaison (8102R)Agency Audit Follow-up Coordinator (2724)Agency Audit Follow-up Official (2710)Associate Administrator for Congressional and Legislative Affairs (1301)Associate Administrator for Communications, Education, and Public Affairs (1701)EPA Library (3403)

Research Triangle Park, North Carolina

Director National Health and Environmental Effects Research Laboratory (MD-51)Management Deputy Director National Health and Environmental Effects Research

Laboratory (MD-51)Director National Accountability and Resources Management Staff (MD-85)Audit Follow-up Coordinator (MD-85)Associate Director for Ecology (MD-87)Director Contracts Management Division (MD-33)



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Acting DirectorAssociate Director Program OperationsExtramural Management Specialist

Other

General Accounting Office

office of research and development: audit of extramural ... · audit of extramural and property...

Documents