Summary

In response to a congressional request, GAO obtained information on the Milwaukee Metropolitan Sewerage District's Water Pollution Abatement Program, specifically: (1) whether the district meets federal criteria for an eligible grantee and how it safeguards federal funds; (2) how the district funds its projects; (3) the extent of competitive bidding for architect and engineering work; (4) why the job site rule limiting allowable overhead billings was not applied to the prime contractor responsible for the program's management oversight and technical integrity; (5) the federal role in the district's decision to use rock removed from a project site to build a recreation island; and (6) approaches for measuring the reasonableness of architect and engineering costs.

GAO found that: (1) the district meets the federal criteria for an eligible grantee since it has jurisdiction over sewage disposal in its service area; (2) the district monitors the grant funds through pre-contract award reviews and through post-contract billing audits; (3) the federal and state governments fund the wastewater projects through an EPA-approved, Wisconsin project priority system; (4) architect and engineering contracts are competitively negotiated and do not require advertised competitive bidding; (5) the job site rule did not apply to the prime contractor because the contractor performed over 30 percent of the work at other corporate locations and was, therefore, allowed to use corporate overhead rates; (6) the district did not use federal funds to remove rocks from the project site to build a recreation island; and (7) neither EPA nor private sector guidelines offered complete criteria for the reasonable assessment of architect and engineering costs.