GMPO's Planning, Organizing and Funding of the 1995 Gulf of Mexico Symposium

Executive Summary

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PURPOSE

In fiscal 1995, the Office of Inspector General (OIG) performed an audit of the planning, implementation, and funding for the 1995 Gulf of Mexico Program (GMP) Symposium held in Corpus Christi, Texas. The primary purpose of the audit was to determine whether the planning, implementation, funding of the 1995 Symposium was consistent with applicable laws, regulations and Agency policies concerning Federally sponsored conferences.

BACKGROUND

The GMP, established in 1988, is an EPA managed, regionally focused program established to facilitate the cooperation and coordination of various Federal, state, and local agencies, academia, and private industry groups which share in and have significant interests in the coastal and marine resources of the Gulf. The Gulf of Mexico Program Office (GMPO), through its Policy Review Board (PRB) and related subcommittees (a Federal advisory committee structure), provide the organizational structure for the GMP. The GMPO is principally an EPA office; however, 18 percent of the workforce are from other Federal agencies.

The Assistant Administrator for Water serves as the National Program Manager for the GMP; however, the GMPO Director currently reports directly to the Region 4 Deputy Administrator. A memorandum of understanding dated April 17, 1994 between the Office of Water and Regions 4 and 6 rotates management responsibility for the GMP between Regions 4 and 6 every two years. Region 4 currently has responsibility for the program.

As a part of its public education and outreach program, the GMPO has conducted "Status-of-the-Gulf" symposiums on a biennial basis. Three symposiums have been conducted - 1990 in New Orleans, Louisiana; 1992 in Tarpon Springs, Florida, and March 29 through April 1, 1995, in Corpus Christi, Texas. Federal appropriations provided the majority of the funding for all three symposiums. Additional resources were generated by charging registration and exhibitor fees and soliciting private donations. The 1995 registration and exhibitor fees were collected by a GMPO contractor and transferred to a cooperator for payment of symposium costs that could not be paid from Federal funds. The donations were generated and made available to pay symposium costs through an informal arrangement between GMPO, Texas General Land Office (TGLO), and the Gulf Of Mexico Foundation (GMF)(footnote 1).

RESULTS IN BRIEF

The methods which GMPO devised to fund both the allowable and unallowable costs associated with the 1995 Symposium were inconsistent with appropriation law, regulations and policies related to Federally sponsored conferences, and the Federal Grant and Cooperative Agreement Act (FGCAA). Specifically, the collection and use of registration and exhibitor fees and private donations to pay symposium costs incurred by the GMPO and its contractor may have created an improper augmentation of EPA's appropriations. Also, GMPO's use of a cooperative agreement to do what it could not do directly under a contract, i.e., use registration/exhibitor fees to pay symposium costs unallowable for Federal funding, was inconsistent with the FGCAA and General Accounting Office (GAO) guidance on appropriation law. GMPO did not consider Office of Management and Budget (OMB) and Agency guidance concerning the cost-effectiveness of conferences, directed subcontracting, and the unallowability of certain costs when planning the 1995 Symposium. Further, the close association of GMPO officials with the GMF may represent a conflict of interest situation and may have created an EPA liability for the donations solicited by GMF on behalf of the GMPO symposium.

Agency Actions

Our concerns with conference planning and funding were conveyed to GMPO officials and the Region 4 Deputy Regional Administrator during audit fieldwork. GMPO officials, in consultation with the Grants Administration Division (GAD), took action to address perceived problems with the collection and use of registration, exhibitor fees and private donations by its on-site contractor. However, GMPO's subsequent modification of a cooperative agreement for the collection and use of these fees resulted in procurement of services not assistance and, therefore, was inconsistent with the FGCAA. Also, the modification placed the recipient in violation of State procurement laws and regulations because the modification required the recipient to pay for services it had not approved or contracted for. Finally, because (1) the modification represented a procurement not assistance, (2) GMPO's contractor was physically in receipt of the fees before forwarding them to the recipient, and (3) the fees and donations were primarily used to pay obligations incurred by the GMPO through its contractor, we continued to conclude that an unauthorized augmentation of EPA's appropriations had occurred and that unallowable conference costs had been paid using Federal funds, gifts, and receipts.

GMPO's attempts to use the fees and donations for symposium costs and at the same time avoid Federal restrictions on conference costs and appropriation augmentation has placed GMPO and its contractor in a difficult situation. Because the amount of donations and fees collected were substantially below the planned amount and because the cooperative agreement recipient can not pay certain symposium costs it did not approve or contract for, the GMPO may be forced to use Federal appropriated funds to pay unallowable costs such as invitational travel expenses of invited guests. As late as four months after the symposium, GMPO was trying to find a way to pay for unallowable costs incurred by its contractor without using Federal funds. At the conclusion of our fieldwork (July 31, 1995), two hotels, a travel agency, and individual invitational travelers had not been paid over $95,000 in costs arranged or contracted for by GMPO's on-site contractor.

PRINCIPAL FINDINGS

POTENTIAL IMPROPER AUGMENTATION OF FEDERAL APPROPRIATIONS

GMPO's control over symposium planning/implementation and the collection and use of fees and donations through intermediaries (contractor, cooperator, and a nonprofit foundation) to pay obligations it incurred in implementing the 1995 GMP Symposium may have created an improper augmentation of EPA appropriations. The costs paid from these fees and donations were contracted for and incurred by GMPO's contractor and, thus, represented a legal obligation and liability of the Agency. Therefore, we concluded that the fees and donations used to pay GMPO's financial obligations, whether through a contractor, cooperator or a foundation, represented miscellaneous receipts as defined under Federal appropriations law.

COOPERATIVE AGREEMENT MODIFICATION WAS PROCUREMENT NOT ASSISTANCE

The GMPO modified a cooperative agreement to obtain services and pay costs it could not legally obtain under a contract; specifically, the accumulation of registration/exhibitor fees that would represent an improper augmentation of EPA appropriations and the payment of symposium costs that were unallowable for Federal funding. Because (1) the modification was narrow in scope and provided for no independent action by the recipient, (2) the services provided were directed by the GMPO through its contractor for the direct benefit of GMPO, and

(3) the fees were to be used primarily to pay costs incurred by GMPO and its contractor, we concluded that TGLO acted as an intermediary for the GMPO in accumulating these fees and paying specific symposium costs. Therefore, the cooperative agreement modification was for the procurement of services not assistance.

AGENCY GUIDANCE NOT FOLLOWED

GMPO actions in the 1995 GMP Symposium planning process conflicted with certain OMB and EPA guidelines concerning Federally sponsored conferences. Specifically, GMPO (1) did not document the rationale or cost effectiveness of the symposium site selected, (2) directed the GMPO contractors to subcontract with specific firms and violated privity of contract between the prime contract and subcontractor, and (3) paid unallowable or unreasonable costs from Federal receipts or gifts.

ASSOCIATION WITH GMF CREATED A POTENTIAL COI AND EPA LIABILITY

The relationship between GMF principal officers and GMPO staff and committees created the appearance of a conflict of interest (COI). Some current and former members of GMPO's advisory committees were officers of GMF and the GMPO director was listed as a GMF ex-officio director. Since the GMPO and its advisory committees made decisions concerning the organization and funding of symposiums, including the use of GMF solicited donations, a potential conflict existed between GMPO and GMF. Also, GMPO had no written agreement with GMF related to donations solicited for GMP symposiums. GMPO was not aware of how the donations were solicited or what all of the donations were used for. GMPO and its contractor, through TGLO, also instructed GMF as to what 1995 Symposium costs would be paid from donations. In our opinion, the close relationship between GMF and GMPO and GMPO's indirect use of the donations to pay symposium costs incurred by its on-site contractor represented a inherent approval of GMF operations and actions. Without a written agreement, this inherent approval created a potential liability for EPA as to any misrepresentations in GMF's solicitations or GMF's use of the donations.

RECOMMENDATIONS

GMPO, in consultation with OGC, needs to re-evaluate its planning and funding process for the biennial GMP symposiums to ensure compliance with appropriate laws and regulations. Unless the event can be funded entirely through Federal appropriations, GMPO should consider allowing states or other appropriate organizations to plan and implement future symposiums to preclude any improper use of assistance agreements or augmentations of EPA appropriations. In addition, GMPO needs to establish an arms-length relationship with GMF and obtain a written agreement for use of private donations in funding any future symposiums primarily sponsored by GMPO. GAD needs to clarify guidance on use of procurement versus assistance as it relates to significant modifications to existing assistance agreements.

AGENCY RESPONSE

On August 10, 1995, we issued a draft report to the Office of Water (OW), and Office of Administration and Resources Management (OARM) for comment. OW provided a proposed draft response with an attachment from GMPO on September 21, 1995. OARM provided a proposed draft response on September 27, 1995. We made some changes to the report based on the proposed responses and, in separate documents, evaluated the proposed responses. However, neither OW nor OARM provided formal responses in sufficient time to be incorporated into this final report. Therefore, we are issuing this final report without OW's, or OARM's responses. The (draft) responses with our evaluation are available upon request.

Footnotes

1 Gulf of Mexico Foundation (GMF) is a nonprofit, tax exempt organization founded by a former chairman of the GMPO Citizens Advisory Committee (CAC). The Foundation promotes environmental quality, resource management, public health, and economic, education, and cultural development in the Gulf region.

Created November 21, 1996

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