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Semiannual Report to Congress April 1-September 30, 1996
EPA Office of Inspector General
Semiannual Report to Congress
April 1-September 30, 1996
Section 4 -- Fraud Prevention And Management Improvements
This section describes several activities of the Office of Inspector General to promote economy and efficiency and to prevent and detect fraud, waste, and abuse in the administration of EPA programs and operations. This section includes information required by statute, recommended by Senate report, or deemed appropriate by the Inspector General.
Review of Legislation and Regulations
Section 4(a)(2) of the Inspector General Act of 1978, as amended, directs the Office of Inspector General to review existing and proposed legislation and regulations relating to Agency programs and operations to determine their effect on economy and efficiency and the prevention and detection of fraud and abuse. During this semiannual period, we reviewed seven legislative and 37 regulatory items. The most significant items reviewed are summarized below.
H.R. 3307 - Regulatory Fair Warning Act
We expressed concern that certain of the bill’s provisions would restrict auditors from questioning any costs previously "approved" by Federal or state officials. In its statement before the House Judiciary Committee’s Commercial and Administrative Law Subcommittee, the Agency addressed our concern in more inclusive terms. The Agency stated that the bill would bar civil or criminal sanctions where the defendant committed a violation in "reasonable reliance upon a written statement by an authorized Federal or State official" and that the bill would invite defendants to seek the most lenient interpretation of a regulation.
H.R. 3864 - General Accounting Office (GAO) Management Reform Act
We recommended that the bill be revised to require that GAO’s Inspector General be appointed with the "advice and consent of the Senate," a provision applicable to theInspectors General of Executive Branch agencies. We also recommended deletion of the clause preventing GAO’s Inspector General from reviewing the methodology GAO used in preparing a report. Such a restriction would severely hamper the effectiveness of GAO’s Inspector General.
Proposed Order - Safety Health, and Environmental Employment Program
We expressed concern that the provision delegating authority for "direction and oversight of EPA contractors" inferred that EPA employees should direct the work of contractor employees. The Order was revised to address our concern.
Response to GAO Report-Water Pollution: Many Violations Have Not Received Appropriate Enforcement Attention
We did not concur in the Agency’s proposed response because it did not directly respond to GAO’s recommendation. The draft response largely discussed penalty flexibility, rather than penalty equity for comparable violations. Also, the draft response referred to an Agency workgroup which would address options for providing equity, but contained no timeframe for completing this work.
The response was revised to reflect our concerns.
Suspension and Debarment Activities
EPA's policy is to do business only with contractors and assistance recipients who are honest and responsible. EPA enforces this policy by suspending or debarring contractors, assistance recipients, or individuals within those organizations, from further EPA contracts or assistance if there has been a conviction of, or civil judgment for, specific offenses, including the commission of any offense indicating a lack of business integrity or business honesty that seriously and directly affects the present responsibility of an entity or individual.
An entity or individual may also be debarred for any other cause of so serious or compelling a nature that it affects its present responsibility. Thus, an entity or individual need not have committed fraud or been convicted of an offense to warrant being debarred. Debarments are to be for a period commensurate with the cause, but generally do not exceed 3 years.
The EPA Suspension and Debarment (S&D) Division in the Office of Grants and Debarment operates the S&D program at EPA. The OIG assists the EPA S&D program by providing information from audits, investigations, and engineering studies; and obtaining documents and evidence used in determining whether there is a cause for suspension or debarment. During this period, cases with direct OIG involvement led to two debarments, one compliance agreement, and one notice of proposed debarment.
The actions are summarized below:
· On June 10, 1996, EPA debarred Scott R. Rippey, a CommissionedOfficer of the U.S. Public Health Service, and William Burkhardt, a Food and Drug Administration employee, for knowingly filing false confidential statements of employment and financial interest. Both failed to disclose their ownership and employment interest in Biosearch Limited, New England Scientific, and Biological Analytical Laboratories (BAL). EPA contracted with BAL for work on the Narragansett Bay project. Our March 31, 1996, semiannual report discussed their suspensions.
· On July 24, 1996, EPA entered into a compliance agreement with National Environmental Testing, Inc., Santa Rosa Division (NET SR). Our March 31, 1996, semiannual report discussed NET SR’s suspension pending the outcome of an investigation involving the propriety of laboratory practices.
EPA agreed to terminate NET SR’s suspension and any further debarment proceeding provided that NET SR (1) implements a corporate compliance program to review complaints of employee violations of law and NET SR’s laboratory protocols, Quality Assurance Plan, or Code of Ethics, (2) conducts ethics training, (3)implements an annual certification program for all analytical/technical employees in appropriate test methods and procedures, (4) institutes controls, including improvements to operating procedures and conducting internal audits, to ensure the quality of the work product, and (5) terminates from working on federal government contracts any employee found to have committed an improper act. Prior to the agreement, NET SR had taken various remedial actions, including terminating or suspending all employees who falsified analytical data.
· On May 23, 1996, EPA issued a notice of proposed debarment to Revet Environmental & Analytical Laboratory, Inc.; its president, Dr. Virginia Taylor; and Edward Taylor, laboratory director, for unsatisfactory performance under the Contract Laboratory Program. Revet’s work did not meet EPA standards for quality and timeliness. Revet had also misrepresented work conducted by a subcontractor as its own to the State of Massachusetts.
OIG Management Initiatives
The OIG participates as a full partner in implementing EPA’s National Environmental Performance Partnership System (NEPPS) to ensure the success of the program. We participated in Agency workgroups to rewrite federal regulations that affect performance partnership grants and we identified OIG divisional staff members to work directly with regional staff on NEPPS issues. Also, we reviewed two demonstration grants to identify lessons learned from these early endeavors. EPA awarded two OIG auditors a Certificate of Exceptional Achievement, signed by the Deputy Administrator, for their outstanding personal contribution to the success of the EPA/State Performance Partnership Program.
In addition, OIG staff participated as panel members at EPA’s National Grants Management Conference, and the EPA’s All States Conference .
Two members of the Office of Audit have taken on a leadership role in helping Agency staff better manage assistance agreements and contracts. Specifically, staff gave presentations at the Assistant Agreement Project Officer Training courses sponsored by the Agency’s program offices. EPA has mandated that all project officers must successfully complete this course and be certified by October 1, 1996. EPA has invited our staff toseveral of these courses to discuss the deficiencies highlighted in our audit reports. The presentations make these new certified project officers aware of past problems and of proper procedures that they must follow. The presentations also allow the participants to ask questions about topics of concern to them.
Tiered Oversight for Corrective Action: an OIG/OECA Cooperative Review
At the request of the Office of Enforcement and Compliance Assurance (OECA), Office of Site Remediation Enforcement, Policy and Program Evaluation Division, we reviewed the "tiered oversight" concept for corrective action under the Resource Conservation and Recovery Act (RCRA). This was a special limited-scope review, to find out if tiered oversight was working in RCRA, to assess regional consistency with the tiered oversight guidance, and to see if the concept had applications to the Superfund program.
Corrective action addresses hazardous waste releases at RCRA facilities through permits and enforcement to help keep the sites clean and risk free. It is similar to cleanups in the Superfund program. Oversight is the process of EPA monitoring corrective action activities at a site or facility. Tiered oversight is the concept of varying the levels of EPA oversight to better allocate resources based on risk, public concern, and need.
We reported back to OECA that the guidance issued by Headquarters in 1992 apparently formalized the concept of tiered oversight that was already being applied by the regions. Regional officials agreed with the need to consider all factors for determining the level of oversight listed in the guidance including other factors such as the National Corrective Action Priority System (NCAPS) ranking of a site.
This review will contribute to managing future RCRA corrective action oversight activities, and promulgating oversight guidance for the Superfund program.
Joint Review - Contract Audit Report Process
The OIG and Office of Acquisition Management (OAM) jointly reviewed EPA’s contract audit process to identify any deficiencies.
Specifically, the review addressed whether EPA contracting officers use financial contract audit reports to effectively manage EPA contracts, and whether the audit reports provide EPA contracting officials with sufficient timely data to negotiate contract awards and final rates, close out contracts, and resolve audit findings disputed by contractors.
The review disclosed that increased communication between the OIG and OAM is necessary to improve the contract audit process and help eliminate issues which are barriers to a more efficient, effective process. Joint action on improving the process should result in higher quality work products which will further protect the government’s interests.
Customer Survey on Audit Contribution
In July 1996, the OIG’s Office of Audit (OA) surveyed 32 EPA program managers who had been closely involved with responding to important reports issued during the last year, and congressional staff members from five committees and subcommittees. The survey’s objectives were to provide information on OA’s contributions to EPA, help us measure organizational performance and achievements, and identify (from a customer perspective) areas for improvement in OA’s operations and products.
The survey covered the most significant reports issued in final and highlighted in the OIG’s Semiannual Reports to the Congress between April 1, 1995, and March 31, 1996. The survey sent to Agency managers consisted of 13 questions about audit field work, the final report, and other assistance provided by OA staff. The survey conducted with congressional staff addressed the final report, testimony, and responses to congressional correspondence. Survey respondents were asked to assess the importance of each issue to their work and how well our office performed the functions.
All congressional staff responses indicated that our audit reports, testimony, and correspondence were of high importance to them in carrying out their work. Further, in almost every instance, they accorded the highest marks to the quality of our work.
Seventy-eight percent of the EPA program managers surveyed responded, and 80 percent agreed that OA does a better than average job of communicating with the auditees. Overall, OA was given high marks on its final products. Respondents believed our final reports were clear, easily understood, logically arranged, and that report presentations were balanced, fair, neutral, gave credit to Agency efforts, were factually accurate, complete, timely, and contained practical recommendations with workable solutions. The survey also showed that in instances where Agency managers were familiar with our advice and assistance, we received high marks.
In summary, the results suggest that OA is performing work which is of importance to Agency managers and congressional staff managers. Overall, OA is performing at a high level in the field work phase and, with few exceptions, the final report phase which has four areas in need of review for possible improvement. The results also indicated that OA needs to provide better information on its availability to assist Agency managers in improving their operations and programs.
Committee on Integrity and Management Improvement
The Committee on Integrity and Management Improvement (CIMI) was established in 1984 by EPA Order 1130.1 to coordinate the Agency's effort to minimize the opportunities for fraud, waste, and mismanagement in EPA programs and activities. CIMI strives to continually increase employee awareness and understanding of various Agency policies and procedures. The Committee is composed of senior EPA program and regional officials and is chaired by the Inspector General.
Monitoring Contract Work
EPA awards and administers a large number of contracts each year. With millions of dollars being expended, close monitoring of the contractors’ work is essential. Effective contract administration is a substantial challenge that requires a coordinated effort by all EPA employees. For EPA to get what it pays for in a timely manner, Agency employees must clearly define the scope of work and closely monitor each project, identify inadequate performance, take appropriate action to enforce contract requirements, and be alert for indicators of fraud. At the same time, EPA employees must avoid common pitfalls, such as directing contractors to perform "inherently governmental" functions or interacting with contractor personnel in such a manner that a "personal service" relationship develops.
CIMI developed an awareness document to highlight the importance of effective contract administration and to emphasize key requirements and Agency policies.
Public Service Recognition Week
To show appreciation for EPA employees and to acknowledge their significant contributions to the Agency’s mission and excellence in government, CIMI sponsored a series of events during the tenth annual observance of Public Service Recognition Week. A special ceremony was held to honor the 57 recipients of the EPA Employee Recognition Award for outstanding community service. Inspector General John Martin was master of ceremonies and Administrator Carol Browner presented the awards. I.J. Hudson, a news anchor at a local television station, gave the keynote address, which focused on the importance of personal commitment and community service. Following the ceremony, the Administrator and the Inspector General hosted a reception for the award winners.
Personnel Security
The Personnel Security Program is one of the Agency's first-line defenses against fraud. The program uses background investigations and National Agency Checks and Inquiries to review the integrity of EPA employees and contractors.
During this semiannual reporting period, the Personnel Security Staff reviewed and adjudicated 218 investigations. The following administrative actions were taken as a result of investigative findings:
· Two employees resigned prior to being terminated for material falsification of their SF-171s by claiming educational degrees that were not awarded.
· Three contractor employees were terminated by their employer for falsifying the security questionnaire, one by failing to list prior convictions and a 19-year incarceration for murder, the second for continuous and current drug usage, and the third for a recent termination, 3 judgements, delinquent accounts, and unpaid collection accounts.
· An employee received a written reprimand for failure to provide complete information on the security questionnaire regarding the circumstances of a previous termination and conviction for driving while intoxicated.