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EPA'S Controls Over Assistance Agreements
Executive Summary
#5100513
PURPOSE
The purpose of the audit was to determine whether EPA properly awarded assistance agreements, whether grants specialists and project officers effectively reviewed applications, administered awards and amendments, and closed projects in accordance with all established guidelines.
BACKGROUND
In addition to its work force of almost 18,000 people, EPA uses contracts and assistance agreements to accomplish its mission. Assistance agreements are awarded to states, non-profit organizations, universities and other entities. These agreements are awarded through Grants Management Offices (GMOs) whose fundamental role is to complement the technical knowledge of project officers.
The GMOs are responsible for all business management aspects associated with the review, negotiation, award and administration of assistance agreements including audit resolution and final close out. The GMOs are located in the EPA regions and Headquarters. Within each GMO, there are grants specialists that are primarily responsible for the administration of the assistance agreements from the application phase to close out.
In EPA Headquarters, the Grants Administration Division (GAD) performed the GMO functions. In GAD, 11 grants specialists were responsible for processing over 2,900 awards and amendments each year. The total value of these actions was over $380 million each year. The GMO in Region 3 had four grants specialists, five grants assistants, and three Senior Environmental Employment Program grants specialists. The Region 3 GMO was responsible for over 640 awards and amendments in each of the last two fiscal years. Associated funds in Region 3 were also more than $300 million each year.
The grants specialists were responsible for developing and maintaining the official file, which has three parts; administrative, financial and technical. This file is to serve as a composite collection of documents that provide programmatic and fiscal information on the purpose, performance and history of an agreement. The grants specialists should work closely with the project officers to ensure successful completion of the projects.
The EPA project officers are also critical to the successful completion of work done under assistance agreements. They have the basic charge to manage and monitor the recipient's performance under the terms of the assistance agreement. There is basically no difference between the responsibilities of regional and Headquarters project officers.
On-going communication between the project officers, grants specialists and the recipients regarding all aspects of the agreement is essential. The Agency established the Assistance Administration Manual to provide consistent administrative policies and procedures for grants specialists and project officers to use for monitoring recipient performance. This manual provides highly detailed policies and procedures for managing administrative aspects of assistance programs. These policies and procedures encompass every stage of the grant process from solicitation, pre-application, review and award through performance monitoring, project administration, close out and records retention.
PREAMBLE
The Office of the Inspector General (OIG) has performed literally hundreds of audits on EPA assistance agreements. These audits have shown that the recipients of assistance agreements have at times misspent and wasted millions of dollars. Occasionally, these recipients even defrauded EPA. A number of these OIG audit reports revealed serious conditions that occurred, in part, because the project officer and grants specialists usually did not perform site visits, review payment requests, obtain audit reports, or ensure compliance with the terms of the assistance agreements. These conditions still adversely affect assistance agreements.
PRINCIPAL FINDINGS
GAD ADMINISTERED ASSISTANCE AGREEMENTS INCONSISTENTLY
Administration procedures for EPA's assistance agreements were not performed consistently. Extensive differences existed between the functions performed by the GAD and Region 3 personnel who managed assistance agreements. GAD personnel did not comply with EPA policies and procedures when administering assistance agreements. While both organizations administered the same types of assistance agreements, GAD did not perform various functions performed by the Region 3 GMO. Personnel in GAD stated this situation occurred because there was a shortage of grants specialists in Headquarters.
PROJECT OFFICERS MANAGED ASSISTANCE AGREEMENTS INADEQUATELY
The Agency's project officers need to improve their management of assistance agreements. The projects we examined in EPA Headquarters showed that project officers did not follow EPA's requirements. Similar to GAD, the project officers' files contained limited documentation to show they performed required reviews and evaluations of planned events and costs. As a result, it was not apparent if the Agency's assistance agreements were being managed.
Most project officers did not visit or correspond with recipients, review financial matters and audit reports, as well as notify GAD when the projects were completed. In some cases, the project officers destroyed or lost the Agency's records, instead of safeguarding and preserving the sparse Agency records that they did have. Without these documents, we could neither determine whether project officers monitored recipient activities and progress, nor substantiate that EPA received what it paid for under these agreements.
COMPLETED ASSISTANCE AGREEMENTS NOT CLOSED
GAD and Region 3 need to close 5,000 assistance agreements that were shown on EPA's Grants Information and Control System as inactive. By closing these assistance agreements that provided almost $700 million to recipients, we estimated that $33 million of unused funds may have been utilized to pay for current Superfund projects, as well as other Government programs or EPA initiatives. Moreover, by not closing these agreements, the Agency bypassed the control process, by which EPA should have ensured that all required technical work and administrative requirements were completed.
GAD DID NOT COMPLY WITH THE INTEGRITY ACT
GAD did not comply with the Federal Managers' Financial Integrity Act (Integrity Act) by not identifying and reporting its weaknesses. During the past seven years, GAD failed to report that it did not comply with Agency administration policies and procedures for assistance agreements. Accurate reporting would have been the early warning mechanism for the conditions discussed in this report. It is also essential to properly safeguard Agency resources, such as assistance monies, against fraud, waste and abuse.
RECOMMENDATIONS
GAD should comply with established procedures and controls for the oversight and management of assistance agreements. The Agency also needs to emphasize to project officers the necessity to comply with policies and directives concerning the management of assistance agreements. Moreover, GAD and Region 3 EPA should develop a systematic plan to close out assistance agreements. The Agency also needs to ensure that the Office of Grants and Debarment uses the Integrity Act process to identify and report all weaknesses.
OARM RESPONSE AND OIG EVALUATION
The Agency agreed with one of the nine recommendations in this report and partially agreed with a second. The response indicated a disagreement with two other recommendations, and did not address the remaining five. Moreover, OARM's response recommended several changes to our report. These are:
The findings are consistent with the findings in previous reports. Basically, no new issues are identified.
We recommend that the report more clearly recognize the resource constraints that have made it difficult for us to resolve the issues that are cited in the report and have been cited in previous reports. Currently the report just cites GAD's own contention that resources are scarce.
It would be helpful to us if the recommendation on tiered management were more specific.
There are some places where we recommend changes in the tone of the report.
The report would be more helpful to us if it included examples of how GAD can make better use of limited resources.
We believe placing additional attention on the MOU with FMC would make the tone of the report more positive than it currently is. The MOU shows that the Agency recognized a weakness in its assistance program and took steps to resolve it.
More detailed Agency comments are provided in Appendix B of this report.
We agree that this report presents findings previously discussed in other reports. However, we performed this review because conditions had not improved. Moreover, this review went to greater depth, and contrary to the Agency's response, does provide recommendations so that GAD could better provide post award managment for assistance agreements.
Created November 20, 1996