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EPA Should Improve

Oversight and Assure the 

Environmental Results 

of Puget Sound 

Cooperative Agreements

Report No. 14-P-0317 July 15, 2014

 U.S. ENVIRONMENTAL PROTECTION 

AGENCY

 OFFICE OF INSPECTOR GENERAL
Report Contributors: Eileen Collins

Kimberly Crilly

Janet Kasper

Madeline Mullen

LaTanya Scott

Abbreviations

CCMP Comprehensive Conservation and Management Plan

CFR Code of Federal Regulations

EPA U.S. Environmental Protection Agency

FEATS Financial and Ecosystem Accounting Tracking System

GMO Grants Management Office

OGD Office of Grants and Debarment

OIG Office of Inspector General

OMB Office of Management and Budget

QAPP Quality Assurance Project Plan

Cover photos: Images of the state of Washington’s Puget Sound (top) and the Duwamish River

that flows into Puget Sound (bottom left). A pollution-warning sign posted by 

the Duwamish River (bottom right). (EPA OIG photos)

Hotline Suggestions for Audits or Evaluations

To report fraud, waste or abuse, contact 

us through one of the following methods:

To make suggestions for audits or evaluations, 

contact us through one of the following methods:

email:

phone:

fax:

online:

write:

OIG_Hotline@epa.gov

1-888-546-8740

1-202-566-2599

http://www.epa.gov/oig/hotline.htm

EPA Inspector General Hotline 

1200 Pennsylvania Avenue, NW

Mailcode 2431T

Washington, DC 20460

email:

phone:

fax:

online:

write:

OIG_WEBCOMMENTS@epa.gov

1-202-566-2391

1-202-566-2599

http://www.epa.gov/oig/contact.html#Full_Info

EPA Inspector General Hotline 

1200 Pennsylvania Avenue, NW

Mailcode 2431T

Washington, DC 20460
14-P-0317

July 15, 2014

Why We Did This Review

The U.S. Environmental 

Protection Agency (EPA),

Office of Inspector General

(OIG), conducted this audit to 

answer the following questions: 

 Does the EPA ensure that 

grantees are effectively 

administering Puget Sound 

grants throughout the life of 

the grants?

 Does the EPA monitor 

project progress and 

collect data or indicators to 

determine whether proposed 

project outputs and 

outcomes are achieved?

The Greater Puget Sound Basin 

is defined as all watersheds 

draining into the United States

waters of Puget Sound,

including the southern Georgia 

Basin and the Strait of Juan de 

Fuca. The Puget Sound is one 

of the most ecologically diverse 

ecosystems in North America.

This report addresses the 

following EPA goals or 

cross-agency strategies:

 Protecting America’s waters.

 Embracing EPA as a 

high-performing organization.

For further information, 

contact our public affairs office 

at (202) 566-2391.

The full report is at:

www.epa.gov/oig/reports/2014/ 

20140715-14-P-0317.pdf

EPA Should Improve Oversight and Assure 

the Environmental Results of Puget Sound 

Cooperative Agreements 

 What We Found

Overall, the OIG found that EPA Region 10 is effectively 

administering cooperative agreements and monitoring 

project progress to determine whether proposed outputs 

and outcomes were achieved. However, we noted that 

improvements should be made in both the administration 

and monitoring of recipient activities. We found that 

Region 10:

 Documented activities conducted but did not consistently ensure that Puget 

Sound cooperative agreements met administrative requirements.

 Was aware of subaward monitoring activities conducted by recipients, but 

should improve oversight of subaward monitoring policies and activities,

and lead organization oversight of subawards. 

 Recommendations and Planned Corrective Actions

We recommend that the Region 10 Administrator meet with project officers and 

grant specialists to discuss the results of this review and reinforce compliance with 

agency policies for documenting, following up and resolving oversight activities. 

We recommend that the Region 10 Administrator ensure that grant specialists and 

project officers receive training on their responsibilities for subawards, collaborate 

to periodically review subaward monitoring policies, and lead organizations’ 

monitoring activity records to protect federal funds. We also recommend that 

Region 10 provide training to recipients regarding subaward monitoring 

responsibilities, as well as evaluating Puget Sound resource allocations.

In addition, we recommend that the Assistant Administrator for the Office of 

Administration and Resources Management (OARM) review existing grants 

policies to determine whether policies need to be updated to clarify project officer 

and grant specialist subaward responsibilities, and recipient responsibilities for 

subaward monitoring.

The EPA agreed with all of the recommendations and provided corrective action 

plans and completion dates to address all of the draft report’s recommendations.

 Noteworthy Achievements 

Region 10 developed the Financial and Ecosystem Accounting Tracking System 

report for the Puget Sound program. The reports enable project officers to more 

easily determine the status of outputs and deliverables for tasks and subtasks, as 

well as determine actions taken by the recipients. The reports also help to ensure 

that negotiated work plan tasks are being accomplished and funds are being spent 

in a timely manner and within the approved budget. 

U.S. Environmental Protection Agency

Office of Inspector General

At a Glance

EPA should 

improve the

administration and 

monitoring of Puget 

Sound cooperative 

agreements.
July 15, 2014

MEMORANDUM

SUBJECT: EPA Should Improve Oversight and Assure the Environmental Results of

Puget Sound Cooperative Agreements

Report No. 14-P-0317

FROM: Arthur A. Elkins Jr.

TO: Dennis McLerran, Regional Administrator

Region 10

Craig E. Hooks, Assistant Administrator

Office of Administration and Resources Management

This is our report on the subject audit conducted by the Office of Inspector General (OIG) of the 

U.S. Environmental Protection Agency (EPA). This report contains findings that describe the problems 

the OIG has identified and corrective actions the OIG recommends. This report represents the opinion of 

the OIG and does not necessarily represent the final EPA position. Final determinations on matters in 

this report will be made by EPA managers in accordance with established audit-resolution procedures.

EPA Region 10 offices responsible for implementing most of the recommendations are the Office of 

Water and Watersheds, and the Office of Management Programs. The headquarters Office of Grants and 

Debarment, within the Office of Administration and Resources Management, is responsible for 

implementing one of the recommendations. 

Action Required

In response to the draft report, the agency provided a corrective action plan that addresses the 

recommendations and establishes milestone dates. Therefore, a response to the final report is not 

required. The agency should track corrective actions not implemented in the Management Audit 

Tracking System. 

This report will be available at http://www.epa.gov/oig. 

THE INSPECTOR GENERAL

UNITED STATES ENVIRONMENTAL PROTECTION AGENCY

WASHINGTON, D.C. 20460
EPA Should Improve Oversight and Assure 14-P-0317

the Environmental Results of Puget Sound 

Cooperative Agreements 

Table of Contents

Chapters

1 Introduction ....................................................................................................... 1

Purpose ..................................................................................................... 1

Background................................................................................................ 1

Responsible Offices ................................................................................... 2

Noteworthy Achievements ......................................................................... 2

Scope and Methodology ............................................................................ 2

2 File Documentation Should Be Improved....................................................... 4

Documentation of Monitoring and Review Activities Is Required................ 4

Some Monitoring and Review Activities Are Not Complete ........................ 5

Documentation and Follow-Up Are Not Emphasized.................................. 6

Information Is Not Complete ..................................................................... 6

Recommendation....................................................................................... 7

Agency Comments and OIG Evaluation..................................................... 7

3 Oversight of Subawards Should Be Improved ............................................... 8

Agreements Must Comply With Federal and EPA Requirements............... 8

Subaward Monitoring Policies Did Not Address All Required Elements ..... 9

Project Officers Should Increase Awareness of Subaward Monitoring ....... 11

Recipients Should Improve Subaward Oversight ....................................... 11

Issues With Regional Resources Affect Oversight ..................................... 12

Lack of Systematic Oversight of Subawards Increases Risk ...................... 13

Recommendations..................................................................................... 14

Agency Comments and OIG Evaluation .................................................... 14

Status of Recommendations and Potential Monetary Benefits ............................. 16

Appendices

A Puget Sound Cooperative Agreements Reviewed by the EPA OIG .............. 17

B Agency Response to Draft Report................................................................... 18

C Distribution ....................................................................................................... 23
14-P-0317 1

Chapter 1

Introduction

Purpose

The U.S. Environmental Protection Agency (EPA), Office of Inspector General

(OIG), conducted this audit in part due to the significant amount of federal funds 

that EPA Region 10 has awarded for Puget Sound. Specifically, our audit 

objectives were to answer the following questions: 

 Does the EPA ensure that grantees are effectively administering Puget 

Sound grants throughout the life of the grants?

 Does the EPA monitor project progress and collect data or indicators to 

determine whether proposed project outputs and outcomes are achieved?

Background

According to Region 10, Puget Sound was given priority status in the 1987 

amendments to the Clean Water Act and was included as one of the original 

programs in the National Estuary Program. The goal of an estuary program is to 

develop and implement a management plan, known as a Comprehensive 

Conservation and Management Plan (CCMP), for the designated area. For Puget 

Sound, the CCMP is called the Puget Sound Action Agenda (Action Agenda),

which was approved by the EPA in 2009. The Action Agenda describes actions 

and priorities to restore and protect the Puget Sound by 2020, and it was updated

in 2012. 

Since 2010, federal funds totaling approximately $110 million have been

specifically appropriated for Puget Sound and for the implementation of the 

CCMP. Region 10 shifted to the lead organization model in 2010 due to the large 

influx of appropriated funds for Puget Sound. Region 10 awarded federal funds to 

seven lead organizations. The lead organizations implement targeted strategies 

mainly through the issuance of subawards. The lead organizations focus on seven

areas: 

 Toxics and nutrients reduction and prevention.

 Protection of at-risk watersheds.

 Pathogen reduction and prevention.

 Marine and nearshore habitat restoration and protection.

 Recovery and actions of high tribal priority.

 Overseeing the implementation of the 2020 Action Agenda for Puget 

Sound recovery. 

 Outreach, education and stewardship. 
14-P-0317 2

Responsible Offices

Region 10 offices responsible for implementing four of the recommendations are 

the Office of Water and Watersheds, and the Office of Management Programs. 

The headquarters Office of Grants and Debarment (OGD), within the Office of 

Administration and Resources Management, is responsible for implementing one 

recommendation. 

Noteworthy Achievements

Region 10 developed the Financial and Ecosystem Accounting Tracking System 

(FEATS) report. The EPA and the cooperative agreement recipients are 

responsible for completing specific areas of information in the FEATS reports. 

Specifically, recipients complete information related to:

 Funds spent to date.

 Funds drawn down from EPA.

 Issues or questions where response from the EPA is needed.

 Budget discrepancies.

 Date, status and remarks for tasks and subtasks.

 Challenges and solutions.

 Highlights, lessons learned and reflections.

The FEATS reports enable project officers to more easily determine the status of 

outputs and deliverables for tasks and subtasks, as well as actions taken by the 

recipient. The FEATS reports help to ensure that tasks in the negotiated work plan 

are being accomplished and that funds are being spent in a timely manner and 

within the approved budget. 

Scope and Methodology

We conducted our performance audit from July 2013 through May 2014, in 

accordance with generally accepted government auditing standards issued by the 

Comptroller General of the United States. Those standards require that we plan 

and perform the audit to obtain sufficient, appropriate evidence to provide a 

reasonable basis for our findings and conclusions based on our audit objectives. 

We believe that the evidence obtained provides a reasonable basis for our findings 

and conclusions based on our audit objectives.

As of July 2013, Region 10 had 69 open Puget Sound awards totaling more than 

$125 million.1 We initially selected a sample of four Puget Sound awards, 

randomly selecting two with obligations of $1 million or more, and two from the 

remainder of the universe. During field work we focused on subaward monitoring 

by the seven lead organizations. One of the seven lead organizations had been 

 

1 The EPA awarded some grants using funds appropriated for the National Estuary Program.
14-P-0317 3

included in the initial sample selection. As a result, the total number of Puget 

Sound awards we reviewed was 10 (appendix A). 

To answer our audit objectives, we reviewed the project and Grants Management 

Office (GMO) files maintained by project officers and grant specialists. Our 

review included documentation of the FEATS reviews, FEATS feedback to the 

recipient, and baseline and advanced monitoring reports. 

2

We interviewed project officers and grant specialists to obtain an understanding 

of the activities they conducted to: (1) ensure grantees are effectively 

administering Puget Sound grants; and (2) monitor project progress and collect 

data to ascertain whether project outputs and outcomes were achieved. 

We also followed up on discrepancies or concerns noted during our review of the 

project and GMO files. We interviewed project officers to determine their 

knowledge of recipients’ subaward monitoring activities and to determine if they

reviewed recipients’ documentation for subaward monitoring activities.

We interviewed recipients to determine their interaction with Region 10 and to 

determine whether subaward monitoring activities were conducted. In our sample 

of 10 awards, one recipient did not have any subawards. We obtained and 

reviewed the recipient subaward monitoring policies to determine if the policies 

complied with the award’s administrative condition for subawards, and with Title

40 of the Code of Federal Regulations (CFR) Parts 30 and 31. Then we reviewed 

the semiannual FEATS reports for the period April 1 through September 30, 

2013, to determine if recipients reported tasks, subtasks, outputs or deliverables as 

being behind schedule, specifically those related to subawards. 

We also met with Office of Grants and Debarment staff to discuss the EPA’s

management expectations for: (1) recipients’ subrecipient monitoring activities;

and (2) staff responsibilities for ensuring subrecipient monitoring.

There are no prior OIG or U.S. Government Accountability Office audits 

impacting the objectives of this assignment.

 

2 Baseline monitoring is the minimum basic monitoring that ensures award terms and conditions are satisfied. 

Advanced monitoring validates recipients’ compliance with programmatic and financial statutes, regulations, 

conditions and policies.
14-P-0317 4

Chapter 2

File Documentation Should Be Improved

Region 10’s project officers and grant specialists generally documented activities 

conducted but did not consistently follow up, resolve, or document issues or 

concerns identified during baseline monitoring reviews. In addition, project 

officers did not always document review of recipients’ progress reports. The 

assistance agreement files should include documentation so that a third party can 

easily follow the sequence of events regarding the project, which includes the 

project officers review of recipient progress reports. Region 10 management is not 

emphasizing follow-up and documentation of activities conducted. The lack of 

documentation results in incomplete information regarding decisions made and 

instructions given to recipients during the life of the cooperative agreements.

Documentation of Monitoring and Review Activities Is Required

The EPA’s Project Officer Manual states that the project officer is responsible for 

maintaining the official technical project file and documenting all communication. 

Monitoring activities, baseline and advanced, must be documented in the project 

file. The assistance agreement files should include documentation so that a third 

party can easily follow the sequence of events regarding the project. The grant 

specialist is responsible for the development and maintenance of the official EPA 

GMO file. Both the project and GMO files serve as collections of documents and 

or items that provide programmatic and/or fiscal information on the purpose, 

performance and history of an award to a specific recipient.

EPA Order 5700.7, Environmental Results under EPA Assistance Agreements, 

Section 9, states project officers must review performance reports and document 

this review in the official project file. The EPA Project Officer Manual goes a 

step further and requires the project officer to provide comments to the recipient 

regarding the progress report, even if everything looks satisfactory.

EPA Order 5700.6A2, Policy on Compliance Review and Monitoring, Section 10, 

states that both the project officers and grant specialists are responsible for 

maintaining appropriate file documentation. In addition, monitoring reports are to 

be recorded in appropriate databases, such as the Post Award or Grantee 

Compliance databases within the Integrated Grants Management System. 
14-P-0317 5

Some Monitoring and Review Activities Are Not Complete

Region 10’s project officers and grant specialists generally documented activities 

conducted for Puget Sound cooperative agreements.3 However, we found that 

grant specialists did not consistently follow up, resolve, or document actions 

taken regarding issues or potential issues identified during baseline monitoring or 

other contacts. In addition, all four of the project officers did not consistently 

document their review of the semiannual FEATS reports or inform the recipient 

that the reports were acceptable or needed improvements. One project officer did 

not document oral approval of a sole-source contract, even though a Region 10

manager said documentation should be retained in the files for such approvals.

Although individually, these were minor issues, when viewed together, they 

indicate that monitoring and review documentation should be improved.

We found the following unaddressed issues and concerns in the administrative 

baseline monitoring reports conducted by the grant specialists for the four awards 

reviewed:

 One grant specialist noted that two recipients had delinquent

Disadvantaged Business Enterprise reports. The recipients were notified 

but resolution was not documented.

 Two grant specialists noted the EPA-related Office of Management and 

Budget (OMB) Circular A-133 findings for two recipients. One grant 

specialist initiated action but did not complete any follow-up actions, and 

the other grant specialist did not document any action.

 One grant specialist noted concern about the small amount of Federal 

Funding Accountability and Transparency Act Subaward Reporting 

System reporting. Follow-up action was initiated but not completed. 

We found the following issues with project officer monitoring activities:

 One project officer did not document phone calls with the recipient.

 Two project officers each had one baseline monitoring report that was 

6 months late.

We found the following issues regarding project officer documentation for

FEATS progress reports:

 Project officers did not always document their review of recipients’

FEATS reports.

 

3 This section refers to the four cooperative agreements we reviewed during the preliminary research phase.
14-P-0317 6

o One project officer received five semiannual FEATS reports. We 

found documentation that only one of the FEATS reports was 

reviewed. 

o Two project officers each received five semiannual FEATS reports. 

We found documentation that only three reports were reviewed.

o One project officer received four semiannual FEATS reports. We 

found documentation that only three reports were reviewed. 

 Project officers did not consistently discuss the FEATS reports with the 

recipients. Each of the four project officers documented some 

communication with recipients for at least one submitted FEATS report. 

Documentation and Follow-Up Are Not Emphasized

Region 10 staff does not consistently pay attention to the details of grant 

administration by documenting actions that have been taken and following up 

where needed. A grant specialist explained that there was no system for ensuring 

follow-up would occur. A Region 10 manager stated that due to loss of staff, the

region has not been able to conduct follow-up. As a result, administrative 

requirements not associated with the possible recovery of funds were 

deemphasized. 

In addition, Region 10 management is not emphasizing the requirement for 

project officers to document the review of progress reports. One Region 10

manager stated that if the report was added to the FEATS share drive, this was 

good enough for documenting the report had been reviewed. Another 

Region 10 manager agreed that project officers should document that they 

reviewed the submissions and that the submissions are acceptable. However, 

due to time constraints, not everyone documents their reviews.

Information Is Not Complete

The lack of documentation results in incomplete information regarding decisions 

made and instructions given to recipients during the life of cooperative 

agreements. Documenting the reviews is important because project officers 

frequently change during the life of the cooperative agreement. In addition, the 

lack of follow-up can result in ongoing issues with recipients and potentially puts 

federal funds at risk.
14-P-0317 7

Recommendation

We recommend that the Regional Administrator for Region 10: 

1. Meet with project officers and grant specialists to discuss the results of 

this review and reinforce compliance with agency policies for 

documenting, following up and resolving oversight activities. 

Agency Comments and OIG Evaluation

In response, Region 10 agreed with our recommendation. The Puget Sound 

Program will commit staff time to develop in-house training and refresher materials 

for project officers. After a meeting with the Region 10 Administrator, the Grants 

and Interagency Agreements Unit will commit to providing a mandatory refresher 

session for all grants specialists on baseline monitoring, including procedures for 

following up on issues discovered when monitoring and documenting files. These 

actions will be completed by December 31, 2014. When implemented, agency 

actions should address the recommendation. 
14-P-0317 8

Chapter 3

Oversight of Subawards Should Be Improved

Region 10 is generally aware of subaward monitoring activities conducted by 

recipients, but project officers did not monitor oversight and activities for Puget 

Sound cooperative agreements in a manner consistent with EPA policy and 

guidance. In addition, project officers did not ensure that recipients were aware of 

subaward monitoring expectations and did not review grant recipients’ monitoring 

records.

Puget Sound cooperative agreement recipients are responsible for the overall 

management of subawardees and ensuring subawardees comply with applicable 

federal and EPA requirements. Project officers emphasized overall progress rather 

than compliance with specific subaward requirements. This emphasis on overall 

progress increased the risk that project officers would not detect issues needing 

corrective action that might impact the project meeting its goals. 

Agreements Must Comply With Federal and EPA Requirements 

Title 40 CFR Parts 30 and 31 provide requirements for subaward monitoring for 

institutions of higher education, nonprofits, and governments and local entities. 

 Title 40 CFR § 30.51 (institutions of higher education and nonprofits) 

states that recipients are responsible for managing and monitoring each 

project, program, subaward, function or activity supported by the award. 

Recipients shall monitor subawards to ensure subrecipients have met the 

audit requirements as delineated in 40 CFR §30.26.

 Title 40 CFR §§ 31.26(1)-(2) (governments and local entities) states that 

state or local governments that provide federal awards to subgrantees that 

expend $500,000 or more of federal funds in a fiscal year shall determine 

whether:

o State or local subgrantees have met audit requirements and 

whether subgrantees covered by OMB A-110 have met audit 

requirements.

o Subgrantees spent federal assistance funds provided in accordance 

with applicable laws and regulations. 

 Title 40 CFR § 31.40 states that grantees are responsible for managing 

day-to-day operations of grant and subgrant supported activities. Grantees 

must monitor grant and subgrant activities to ensure compliance with 

applicable federal requirements, and ensure that performance goals are 
14-P-0317 9

being achieved. Grantee monitoring must cover each program, function or 

activity. 

The EPA directs compliance requirements by attaching an administrative 

National Term and Condition for Subawards, which states the recipient agrees to:

 Maintain primary responsibility for ensuring successful completion of the 

EPA-approved project. (This responsibility cannot be delegated or 

transferred to a subrecipient.)

 Ensure that any subawards comply with OMB Circular A-133, Sections 

210 (a)–(d). 

 Monitor the performance of subrecipients and ensure that they comply 

with all applicable regulations, statutes, and terms and conditions which 

flow down in the subaward.

Subaward Monitoring Policies Did Not Address All Required Elements

Although Region 10 is aware of recipients’ progress through regular FEATS 

reports, the region is not ensuring that recipients are aware of subaward 

monitoring expectations. We found that for eight of the nine cooperative 

agreements with subawards, recipients had subaward monitoring policies or 

informal procedures. One recipient had no policy at all. None of the policies or 

informal procedures addressed all of the elements from the CFR and the 

administrative National Term and Condition for Subawards, as shown in table 1.
14-P-0317 10

Table 1: Cooperative agreement subaward monitoring policy or memo review

Subaward requirements 1 2 3 4 5 6 7 8 9

1. Require OMB Circular A-133 

audits for subrecipients 

expending $500,000 or more in 

federal awards during the fiscal 

year. Require additional 

monitoring activities (e.g., review 

an audit of the subgrantee to

ensure that appropriate corrective 

action is taken; consider whether 

the audit of the subgrantee 

necessitates an adjustment of the 

grantee’s own records; and 

require each subgrantee to permit 

independent auditors to have 

access to records and financial 

statements).

No 

Policy

X X X X X X

2. Monitor the performance of 

recipients and ensure they 

comply with all applicable 

regulations, statutes, and terms 

and conditions.

X X X X X X X X

3. Obtain the EPA’s consent 

before making a subaward to a 

foreign or international 

organization, and before making 

a subaward to be performed in a 

foreign country. 

4. Ensure subawards to 501(c)(4) 

organizations do not involve 

lobbying activities.

X X X

5. Ensure subawards are 

awarded to eligible subrecipients;

and that costs are necessary, 

reasonable and allocable.

X X X X X

6. Maintain primary responsibility 

for ensuring the successful 

completion of the EPA-approved 

project.

X X

7. Ensure that any subawards 

comply with the standards in 

Sections 210 (a)-(d) of OMB 

Circular A-133, and that the 

subawards are not used to 

acquire commercial goods or 

services for the recipient.

X X

Source: OIG analysis of policies or memos provided by recipients regarding subaward monitoring.

Note: Shaded area represents a missing requirement.
14-P-0317 11

Project Officers Should Increase Awareness of Subaward Monitoring 

Region 10 project officers are generally aware of recipients’ subaward monitoring 

activities, but improvements can be made. During our interviews, we found that 

project officers were generally aware of, or had knowledge of, the types of 

subaward monitoring activities for seven of the nine cooperative agreements.

However, project officers had not reviewed recipients’ monitoring records. 

Although such a review is not required, it would be reasonable for Region 10 to 

review such records on a periodic basis to ensure compliance with subaward 

terms and conditions. This is especially important because Region 10’s approach 

is to have lead organizations implement strategies largely through subawards, and 

the number of subawards could exceed 50.

We also found through our interviews with project officers that their knowledge 

of subaward monitoring activities varied widely. Project officers for five of the 

nine cooperative agreements stated that recipients were monitoring their 

subawards through FEATS reports. Project officers for six of the nine cooperative 

agreements identified additional monitoring activities that included meetings, 

telephone calls or site visits. Two project officers were unsure of subaward 

monitoring activities. Table 2 describes the results of our interviews dealing with

subaward oversight. 

Table 2: Summary of project officer knowledge of subaward oversight 

Cooperative 

agreement 

recipient

Project officer knowledge of some 

subaward monitoring activities *

Project officer review of subaward 

monitoring documentation

1 Yes No

2 No No

3 Yes No

4 Yes No

5 Yes No

6 Yes No

7 Yes No

8 Yes No

9 Yes No

 

 Source: OIG interviews with project officers.

 *

Activities identified by project officers included communication, site visits, review of FEATS reports, 

 and Web postings.

Recipients Should Improve Subaward Oversight

Cooperative agreement recipients rely on telephone calls, site visits, FEATS 

reports, and reviews of deliverables and invoices for subaward monitoring. 

We found that recipients were not consistently documenting monitoring activities,

such as site visits, external audit reviews, etc. Two managers for one lead 

organization had two different practices for documenting subaward monitoring. 

One manager filled out an outline and put it in the database, but the other did not. 

One lead organization stated that a list of site visits was not retained. Another lead
14-P-0317 12

organization told us monitoring activities such as site visits were not being 

documented, but the organization did say it was creating a form to document

whether monitoring had occurred and that the form would be used going forward. 

Table 3 shows monitoring practices and tracking for subawards varied.

Table 3: Summary of recipient subaward oversight interviews

Cooperative 

agreement 

recipient Subaward monitoring activities described

Document

some activities

1 FEATS reports, team meetings and check-ins. Yes

2 Correspondence, emails, telephone calls, periodic check-ins and

review of external audits. 

No

3 Site visits (including photos), invoices, verbal communication, 

spreadsheet tracking, and Quality Assurance Project Plan (QAPP)

reviews.

Yes

4 Review quarterly progress and QAPP reports, monthly 

communication, emails, meeting attendance and notes taken, and 

tracking spreadsheet.

Yes

5 Site visits in standardized format, review of deliverables, QAPPs, 

technical reports and external audits.

Yes

6 Review of FEATS reports and deliverables, verbal and email 

communications, and check-ins as needed.

Yes

7 Communication via email, telephone, and in person; tracking 

spreadsheet; review of FEATS; QAPPs; deliverables; invoices; 

A-133 audits; and documented site visits.

Yes

8 Site visits, review of progress reports, invoices and meetings on 

deliverables.

No

9 Site visits, review of progress reports, invoices and meetings on 

deliverables. i

No

Source: OIG interviews with cooperative agreements recipients.

i Based on an interview with the recipient for cooperative agreement 8. The recipient did not have additional

information to provide regarding oversight activities for cooperative agreement 9.

In their FEATS reports to Region 10, we found that not all lead organizations are 

reporting on subaward monitoring activities or when a subaward is behind 

schedule. For example, we found: 

 Only four of seven lead organizations’ FEATS reports described activities 

related to subaward monitoring such as meetings attended or sites visited. 

 Although most subrecipients provided project updates through FEATS 

reporting, only three of seven recipients reported on the status of individual 

subawards within the lead organization FEATS reports. 

 Three of seven lead organizations reported subawards that are behind 

schedule, but we found four had subawards behind schedule.

Issues With Regional Resources Affect Oversight

Region 10 relies heavily on recipients, specifically lead organizations, to monitor 

subawards and ensure project completion. Regional staffing resources have not 

been sufficient to manage the large influx of Puget Sound funds. In 2010, funds 
14-P-0317 13

totaling $50 million were appropriated for Puget Sound. However, according to 

Region 10, staffing resources were not increased. 

Also, Region 10 staff was not aware of an ongoing requirement to address 

compliance with subaward monitoring, other than during advanced monitoring. 

Because the region relies on lead organizations, ensuring compliance with 

subaward terms and conditions should not be limited to advanced monitoring. 

Since Region 10 was not emphasizing subaward monitoring expectations, such as 

documenting subaward monitoring activities, lead organizations were not aware 

of the importance of conducting and documenting such activities. During our 

discussions with Region 10, staff stated that the Puget Sound team could provide 

additional guidance for subawards.

Lack of Systematic Oversight of Subawards Increases Risk

A lack of systematic oversight of activities for cooperative agreements with 

subawards (specifically lead organizations) potentially puts federal funds at risk 

and could result in avoidable, no-cost time extension requests to complete 

projects. These delays could result in environmental goals not being achieved. 

When subaward reports received by recipients are not summarized accurately for 

the region, projects that are behind schedule may not be addressed. We found that 

a number of subaward tasks were either characterized inaccurately or actually 

behind schedule.

 One recipient provided a spreadsheet showing subaward details reporting 

the status of individual tasks as complete. However, additional remarks 

were inconsistent with the completed status. For example: 

o On-site sewage denitrification verification subaward stated that three 

tasks had not been started. 

o Pesticide use survey subaward showed three tasks were less than 100

percent complete. 

o Outreach and workshops for preventing automobile leaks showed that 

two tasks were making progress but were reported as complete. 

 Another recipient’s subaward involved recruiting local businesses and 

providing technical advice. The subawardee was still recruiting businesses 

and assessing technical needs, but the recipient did not report it as behind 

schedule.

These difficulties result from challenges that lead organizations have managing a 

large number of subawards and the need to summarize information for Region 10. 

It is possible that subaward tasks that are behind schedule could be reduced if 

recipients with subawards were providing more focused oversight and tracking. 
14-P-0317 14

Recommendations

We recommend that the Regional Administrator for Region 10:

2. Ensure that grant specialists and project officers receive training on their 

responsibilities for subawards and collaborate to periodically review:

a. Recipients’ subaward monitoring policies for compliance with 

terms and conditions.

b. Lead organizations’ monitoring activity records to ensure that 

sufficient subaward monitoring is conducted to protect federal 

funds.

3. Provide training to recipients regarding subaward monitoring 

responsibilities and periodically check on the execution of those 

responsibilities. 

4. Evaluate whether the resources allocated to overseeing Puget Sound 

cooperative agreements are sufficient to effectively achieve the Puget 

Sound Program’s needed environmental results. 

We recommend that the Assistant Administrator for Administration and 

Resources Management: 

5. Review existing grants policies to determine whether policies need to be 

updated to clarify project officer and grant specialist responsibilities with 

subawards, as well as recipient responsibilities for subaward monitoring. 

Agency Comments and OIG Evaluation

In response to recommendation 2, Region 10 agreed with the recommendation.

Region 10 plans to conduct meetings or training to review requirements for 

recipient subaward monitoring and what requirements need to be communicated 

to lead organizations. The Puget Sound Program will commit staff time to 

develop in-house training and refresher materials for project officers to use at a 

training session. Grants specialists will be included in the meetings/trainings. 

Puget Sound project officers will include a semiannual review of lead 

organization subrecipient monitoring as part of their FEATS report review. This 

additional aspect of the FEATS review for lead organizations will begin with the 

reporting period ending September 30, 2014. These actions will be completed by 

December 31, 2014. When implemented, agency actions should address the

recommendation.

In response to recommendation 3, Region 10 agreed with the recommendation

and will conduct training on subaward monitoring responsibilities for the 
14-P-0317 15

Puget Sound Program’s lead organizations. This will be completed by December 

31, 2014. When implemented, the agency actions should address the 

recommendation.

In response to recommendation 4, Region 10 agreed with the recommendation. 

The Grants Streamlining Workgroup is finalizing and phasing in streamlined 

grants processes. This will include making sure available resources are adequately 

utilized to provide effective grant management and monitoring. These actions will 

be completed by March 31, 2015. When implemented, agency actions should 

address the recommendation.

In response to recommendation 5, the OGD agreed with the recommendation. 

The OGD plans to review existing policies, guidance and regulations to 

determine if further clarification is needed. This review will be completed by 

September 30, 2014. If needed, the OGD will work with the grants management 

community to provide policy updates or guidance, as appropriate, to both EPA 

grants management staff and recipients concerning their respective 

responsibilities regarding subawards. The OGD will ensure policy updates or 

guidance are included in training for project officers and grants specialists. These 

actions will be completed by September 30, 2015. When implemented, agency 

actions should address the recommendation.
14-P-0317 16

Status of Recommendations and 

Potential Monetary Benefits

RECOMMENDATIONS

POTENTIAL MONETARY 

BENEFITS (in $000s)

Rec. 

No.

Page 

No. Subject Status1 Action Official

Planned 

Completion 

Date

Claimed 

Amount

Agreed-To 

Amount

1 7 Meet with project officers and grant specialists 

to discuss the results of this review and 

reinforce compliance with agency policies for 

documenting, following up and resolving 

oversight activities.

O Regional Administrator, 

Region 10

12/31/14

2 14 Ensure that grant specialists and project 

officers receive training on their responsibilities 

for subawards and collaborate to periodically 

review:

a. Recipients’ subaward monitoring policies 

for compliance with terms and 

conditions.

b. Lead organizations’ monitoring activity 

records to ensure that sufficient 

subaward monitoring is conducted to 

protect federal funds.

O Regional Administrator, 

Region 10 

12/31/14

3 14 Provide training to recipients regarding 

subaward monitoring responsibilities and 

periodically check on the execution of those 

responsibilities.

O Regional Administrator, 

Region 10

12/31/14

4 14 Evaluate whether the resources allocated to 

overseeing Puget Sound cooperative 

agreements are sufficient to effectively achieve 

the Puget Sound Program’s needed 

environmental results. 

O Regional Administrator, 

Region 10

03/31/15

5 14 Review existing grants policies to determine 

whether policies need to be updated to clarify 

project officer and grant specialist 

responsibilities with subawards, as well as 

recipient responsibilities for subaward 

monitoring.

O Assistant Administrator for

Administration and 

Resources Management

09/30/15

1 O = Recommendation is open with agreed-to corrective actions pending.

C = Recommendation is closed with all agreed-to actions completed.

U = Recommendation is unresolved with resolution efforts in progress.
14-P-0417 17

Appendix A

Puget Sound Cooperative Agreements Reviewed by the EPA OIG

Cooperative 

agreement 

number Project period EPA funding

Randomly

selected

Project and 

GMO files 

reviewed

Project 

officer and 

grant 

specialist 

interviewed

Subaward 

monitoring 

policy 

reviewed

Lead 

organization a

Number of 

subawards b

00J15001 05/01/10–

04/30/14

$600,000 X X X No policy 3

00J30301 10/01/10–

09/30/15

$4,359,784 X X X X 4

00J20101 02/01/11–

06/30/17

$15,584,834 X X X 29

00J27601 02/01/11–

06/30/17

$18,662,237 X X X 52

00J32601 02/01/11–

01/31/17

$15,487,586 X X X 45

00J29801 02/01/11–

01/31/17

$15,489,806 X X X 29

00J32201 01/01/11–

09/30/15

$15,700,581 X X X 21

00J32101 07/01/11–

06/30/17

$12,269,999 X X X X X 26

00J17601 07/01/10–

06/30/15

$6,000,000 X X X 52

00J13801 06/30/10–

06/30/13

$581,257 X X X N/A 0

Total $104,736,084 4 4 10 8 7 261

 

 Source: OIG review of EPA and cooperative agreement recipient documents.

a The lead organizations and grant numbers were confirmed by Region 10. 

b The number of subawards provided by lead organizations does not include contracts or internal awards. 
14-P-0317 18

Appendix B

Agency Response to Draft Report

MEMORANDUM

SUBJECT: Response to Office of Inspector General Draft Report No. OA-FY13-0341 “EPA 

Needs to Improve Oversight and Assure Environmental Results of Puget Sound 

Cooperative Agreements” dated May 6, 2014

FROM: Dennis J. McLerran, 

Regional Administrator

TO: Janet Kasper, Director

Contact and Assistance Agreements Audits

Thank you for the opportunity to respond to the issues and recommendations in the subject audit 

report. Following is a summary of the agency’s overall position, along with its position on each 

of the report recommendations. For those report recommendations with which the agency agrees, 

we have provided either high-level intended corrective actions and estimated completion dates to 

the extent we can or reasons why we are unable to provide high-level intended corrective actions 

and estimated completion dates at this time. For those report recommendations with which the 

agency does not agree, we have explained our position.

AGENCY’S OVERALL POSITION

We concur with the recommendations contained in this report and have already taken steps to 

improve oversight and assure the environmental results of Puget Sound Cooperative Agreements. 

However, we do not concur with all of the findings. For example, we do not concur with the 

generalization that all areas need improvements to be made. We note and agree with the finding 

presented in the opening statement of the “At a Glance” summary (page iii) where the first 

paragraph starts with “Overall, the OIG found that EPA Region 10 is effectively administering 

cooperative agreements monitoring project progress to determine whether proposed outputs and 

outcomes were achieved.” We believe that this finding warrants a rephrasing of the observation 

that improvements need to be made. We think a more accurate observation would be that 

improvements can be made.

Similarly the characterization of file documentation, consistency of monitoring activities, and 

EPA Project Officer’s awareness as characterized in the headings for the associated findings and 

recommendations are overstated as being noteworthy deficiencies. We address each of these 

statements separately in our responses. Finally, Region 10 does not concur with the final finding 

in the report that states that funds are at risk. This finding is not supported by the text in this 

report.
14-P-0317 19

OARM, Office of Grants and Debarment, agrees with the OIG recommendation that OARM 

review existing grants policies to determine whether policies need to be updated to clarify project 

officer and grant specialist responsibilities regarding subawards, as well as recipient 

responsibilities for subaward monitoring. Prior to the Puget Sound audit, this was already 

identified as an area to review as part of OGD’s larger goal of improving assistance agreement 

policies and updating EPA policies to be consistent with the newly published OMB Uniform 

Guidance available at 2 CFR Part 200.

However, OGD would like to clarify that project officers and grant specialists do not monitor 

subawards as suggested by the OIG’s recommendation to Region 10 to “...ensure grant 

specialists and project officers receive training on their responsibilities to monitor subawards...” 

As described in 40 CFR Parts 30, 31 and the newly published Uniform Guidance, progress under 

an assistance agreement award is the prime recipient’s responsibility. The recipient is responsible 

for monitoring award activities, compliance and summarizing subrecipient progress for EPA 

review. Furthermore, EPA does not have a fiduciary relationship or privity with subrecipients.

To that end, OGD will review existing policies, guidance and regulations to determine if further 

clarification is needed and will provide such policy updates or guidance as appropriate to both 

EPA grants management staff and recipients on their respective responsibilities regarding 

subawards under EPA grants. OGD will also ensure the subject is included in its national training 

program.

AGENCY’S RESPONSE TO REPORT RECOMMENDATIONS

No. Recommendation High-Level Intended Corrective

Action(s)

Estimated 

Completion by 

Quarter and FY

1. The Region 10 

Administrator meet with 

project officers and 

grants specialists to 

discuss the results of this 

review and reinforce 

compliance with agency 

policies for documenting, 

following up and 

resolving oversight 

activities.

Region 10 Response: Region 10 

concurs with this recommendation. 

The Puget Sound Program will 

commit staff time to develop inhouse training and refresher 

materials for project officers to use at 

a training session. After a meeting 

with the Region 10 Administrator, 

the Grants and Interagency 

Agreements Unit will commit to 

providing a mandatory refresher 

session for all grants specialists on 

baseline monitoring, including 

procedures for following up on 

issues discovered in the monitoring 

and documenting the files. 

1

st Quarter FY 2015
14-P-0317 20

2. The Region 10 

Administrator ensure that 

grants specialists and 

project officers receive 

training on their 

responsibilities to 

monitor subawards and 

collaborate to 

periodically review: 

(a) Recipients 

subaward 

monitoring polices 

for compliance with 

terms and 

conditions.

(b) Lead organizations 

monitoring activity 

records to ensure 

that sufficient 

subaward 

monitoring is 

conducted to protect 

federal funds.

Region 10 Response: Region 10 

concurs with this recommendation 

and plans meetings/trainings to 

review requirements for recipient 

subaward monitoring and what 

requirements need to be 

communicated to Lead 

Organizations. The Puget Sound 

Program will commit staff time to 

develop in-house training and 

refresher materials for project 

officers to use at a training session. 

Grants specialists will be included in 

the meetings/trainings. Puget Sound 

project officers will include review 

of Lead organization subrecipient 

monitoring semi-annually, as part of 

the semi-annual FEATS report and 

review conducted for each Lead 

Organization. This additional aspect 

of the FEATS review for Lead 

Organizations will begin with the 

reporting period ending September 

30, 2014, and continue thereafter for 

the project period for Puget Sound 

Lead Organization assistance 

agreements. 

1

st Quarter FY 2015

3. The Region 10 

Administrator provide 

training to recipients 

regarding subaward 

monitoring 

responsibilities and 

periodically check on the 

execution of those

responsibilities.

Region 10 Response: The Puget 

Sound Program will conduct a 

specific training to Puget Sound 

Program Lead Organization 

assistance agreement recipients on 

subaward monitoring 

responsibilities. 

Additionally, Puget Sound Program 

project officers will include review 

of Lead organization sub-recipient 

monitoring semi-annually, as part of 

the semi-annual FEATS report and 

review conducted for each Lead 

Organization. This additional aspect 

of the FEATS review for Lead 

Organizations will begin with the 

reporting period ending September 

30, 2014, and continue thereafter for 

1

st Quarter FY 2015
14-P-0317 21

the project period of Puget Sound 

Lead Organization assistance 

agreements.

4. The Region 10 

Administrator evaluate 

whether the resources 

allocated to overseeing 

Puget Sound cooperative 

agreements are sufficient 

to effectively achieve the 

Puget Sound Program’s 

needed environmental 

results.

Region 10 Response: Region 10

concurs and the region’s Grants 

Streamlining Workgroup is 

finalizing and phasing in streamlined 

grants processes. This will include 

making sure available resources are 

adequately utilized to provide 

effective grant management and 

monitoring. 

2

nd Quarter FY 2015

5. Review existing grants 

policies to determine 

whether policies need to 

be updated to clarify 

project officer and grants 

specialist responsibilities 

with subawards, as well 

as recipient 

responsibilities for 

subaward monitoring.

1.1 OGD Response: Review 

existing policies, guidance and 

regulations to determine if 

further clarification is needed.

_____________________________

1.2 If needed, work with the grants 

management community to 

provide policy updates or 

guidance as appropriate to both 

EPA grants management staff 

and recipients on their respective 

responsibilities regarding 

subawards.

______________________________

1.3 Ensure policy updates or 

guidance is included in nation 

training for project officers and 

grants specialists.

4

th Quarter FY 2014

_________________

4

th Quarter FY 2015

_________________

4

th Quarter 2015
14-P-0317 22

DISAGREEMENTS WITH FINDINGS

Finding Agency Response

File Documentation Improvements are 

Needed

Region 10 does not concur with the 

generalized all inclusive statement of 

“improvements are needed.” Region 10 

agrees that file documentation can and 

should be improved.

Monitoring and Review Activities are Not 

Consistent

Region 10 does not concur with the 

implied condition that (all) monitoring and 

review activities are not consistent. Rather, 

some monitoring and review activities are 

not complete.

Project Officers Need to Increase 

Awareness of Subaward Monitoring

Region 10 does not concur with this 

generalization. As noted in the report, 

Region 10 project officers are generally 

aware of subaward monitoring activities 

conducted by recipients. Only two 

exceptions are noted in the report, where 

two project officers were unsure of 

subaward monitoring activities. The two 

project officers should improve awareness 

of Subaward Monitoring.

Lack of Guidance and Oversight Puts Funds 

At Risk

Region 10 does not concur. The statement 

that implies funds are at risk is not 

supported by the text in this report, nor are 

there any amount of funds at risk indicated 

on the “Status of Recommendations and 

Potential Monetary Benefits” table on page 

15 of this report. Based on the findings 

contained in this report, it is inaccurate to 

conclude that the conditions noted put 

funds at risk.

If you have any questions about this response, please contact Rick Parkin, Puget Sound Program 

Manager at 206-553-8574, Russell Harmon, Acting Manager, Region 10 Grants and Interagency 

Agreements Unit regarding grants issues at 206-553-1793, Jennifer Hublar, Program Analyst, 

OGD at 202-564-5294, or JoAnne Brendle, Acting Region 10 Audit Follow-up Coordinator at 

206-553-6385.
14-P-0317 23

Appendix C

Distribution

Office of the Administrator 

Assistant Administrator for Administration and Resources Management

Regional Administrator, Region 10

Agency Follow-Up Official (the CFO)

Agency Follow-Up Coordinator 

General Counsel

Associate Administrator for Congressional and Intergovernmental Relations

Associate Administrator for External Affairs and Environmental Education 

Director, Grants and Interagency Agreements Management Division, 

 Office of Administration and Resources Management

Director, Office of Policy and Resource Management, 

Office of Administration and Resources Management

Deputy Director, Office of Policy and Resource Management, 

Office of Administration and Resources Management

Deputy Regional Administrator, Region 10

Audit Follow-Up Coordinator, Office of Administration and Resources Management

Audit Follow-Up Coordinator, Office of Grants and Debarment,

Office of Administration and Resources Management

Audit Follow-Up Coordinator, Region 10