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Recipient Subawards to 

Fellows Did Not Comply With 

Federal Requirements and 

EPA’s Involvement in Fellow 

Selection Process Creates the 

Appearance EPA Could Be 

Circumventing the Hiring Process 

Report No. 14-P-0357 September 17, 2014

U.S. ENVIRONMENTAL PROTECTION AGENCY

OFFICE OF INSPECTOR GENERAL
Report Contributors: Jean Bloom

Safiya Chambers

Abbreviations

ASPH Association of Schools of Public Health

CA Cooperative Agreement

CFR Code of Federal Regulations 

EPA U.S. Environmental Protection Agency

OIG Office of Inspector General

ORD Office of Research and Development

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 14-P-0357

September 17, 2014

Why We Did This Review

The U.S. Environmental 

Protection Agency (EPA),

Office of Inspector General 

(OIG), conducted an audit of 

Cooperative Agreement (CA) 

No. 83388101 awarded to the 

Association of Schools of

Public Health (ASPH). The

EPA’s Office of Research and 

Development awarded the CA 

to ASPH on July 29, 2008.The 

purpose of the CA was to place 

recent graduates into 1- or 

2-year fellowships at the EPA, 

during which the fellows would 

be mentored by EPA experts.

We sought to determine 

whether the federal funds were 

used for their intended purpose

and in accordance with the CA 

terms and conditions and

applicable government 

regulations. In addition, we 

sought to determine whether 

the CA’s objectives were met.

This report addresses the 

following EPA goal or 

cross-agency strategy:

 Working toward a 

sustainable future.

Send all inquiries to our public 

affairs office at (202) 566-2391

or visit www.epa.gov/oig. 

The full report is at:

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

20140917-14-P-0357.pdf

 

Recipient Subawards to Fellows Did Not Comply 

With Federal Requirements and EPA’s Involvement in 

Fellow Selection Process Creates the Appearance 

EPA Could Be Circumventing the Hiring Process

 What We Found

Our audit did not disclose anything that would 

indicate that ASPH improperly used federal 

funds or that the objectives of the CA were not 

met. However, we did identify two areas under 

the CA that require improvement by the EPA.

ASPH’s subawards to fellows made under the 

CA are contrary to federal requirements. Per 

the agreement between ASPH and the fellows, 

ASPH considers the fellows as subgrantees, 

but individuals are ineligible as subgrantees 

under the Code of Federal Regulations. As a result, a different award vehicle is 

needed for the ASPH fellowship program.

Also, the EPA’s involvement in the selection process for fellowship candidates 

creates the appearance that the agency could be circumventing the hiring 

process and recruiting fellows in place of permanent employees. EPA Order 

5700.1 states that substantial involvement is anticipated where a project is 

expected to entail agency involvement in the selection of key recipient personnel. 

 Recommendations and Planned Corrective Actions

We recommend that the Director of the EPA Office of Grants and Debarment 

determine the proper vehicle to be used under the CA and take the necessary 

actions to ensure subawards comply with applicable federal regulations. We also 

recommend that the Director obtain an Office of General Counsel opinion on how 

the EPA should be involved in the selection of fellows and, as needed, reduce 

the appearance that the fellowship program is circumventing the hiring and 

recruiting process.

The agency agreed with our recommendations and provided corrective actions 

with estimated completion dates.

U.S. Environmental Protection Agency

Office of Inspector General

At a Glance

ASPH’s subawards to 

fellows made under the CA 

are contrary to federal 

requirements because 

individuals are ineligible as 

subgrantees and agency 

involvement in selection of 

fellows creates an 

appearance that the EPA 

could be circumventing the 

hiring process. 
September 17, 2014

MEMORANDUM

SUBJECT: Recipient Subawards to Fellows Did Not Comply With Federal Requirements

and EPA’s Involvement in Fellow Selection Process Creates the Appearance 

EPA Could Be Circumventing the Hiring Process

Report No. 14-P-0357

FROM: Arthur A. Elkins Jr. 

TO: Howard F. Corcoran, Director

Office of Grants and Debarment

Office of Administration and Resources Management

This is our report on a cooperative agreement to the Association of Schools of Public Health conducted 

by the Office of Inspector General (OIG) of the U.S. Environmental Protection Agency (EPA). This 

report contains findings that describes 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. 

The Office of Grants and Debarment, within the Office of Administration and Resources Management, 

is responsible for grants management of cooperative agreements issued by EPA headquarters program 

offices. The Office of Research and Development is the office that issued the cooperative agreement 

reviewed.

Action Required

In accordance with EPA Manual 2750, the agency provided a corrective action plan for addressing the 

recommendations with estimated milestone dates. Therefore, a response to the final report is not 

required. The agency should track corrective actions in the Management Audit Tracking System until all 

corrective actions have been completed.

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

UNITED STATES ENVIRONMENTAL PROTECTION AGENCY

WASHINGTON, D.C. 20460

THE INSPECTOR GENERAL
Recipient Subawards to Fellows Did Not Comply With 14-P-0357

Federal Requirements and EPA’s Involvement in 

Fellow Selection Process Creates the Appearance 

EPA Could Be Circumventing the Hiring Process

Table of Contents

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

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

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

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

Results of Review ..................................................................................................... 2

Subawards Issued Under CA Contrary to Federal Requirements ....................... 3

Agency Involvement in Selection Process Creates the Appearance of 

Circumventing the Hiring Process....................................................................... 3

Recommendations .................................................................................................... 4

Agency Comments and OIG Evaluation .................................................................. 5

Status of Recommendations and Potential Monetary Benefits ............................. 6

Appendices

A Agency Response to Draft Report................................................................... 7

B Distribution ....................................................................................................... 10
14-P-0357 1

Purpose

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

(OIG), initiated an audit of Cooperative Agreement (CA) No. 83388101 awarded 

to the Association of Schools of Public Health (ASPH). We sought to determine 

whether the federal funds were used for their intended purpose and in accordance 

with the CA terms and conditions and applicable government regulations. In 

addition, we sought to determine whether the CA’s objectives were met.

Background

The Clean Air Act, Section 103, and Clean Water Act, Section 104, authorize the 

EPA to establish and maintain research fellowships in the EPA and at public or 

nonprofit private educational institutions or research organizations. The applicable 

regulatory provision for the CA is in the Code of Federal Regulations (CFR) at 

40 CFR Part 30. 

The EPA Office of Research and Development (ORD) awarded CA No. 83388101 

to the ASPH on July 29, 2008. The purpose of the CA was to place recent 

graduates of schools of public health in 1- to 2-year fellowships at the EPA.

Fellows were to gain practice-based training experiences and perform activities 

under the mentorship of EPA experts in environmental health. ASPH expected to 

place a minimum of 12 fellows per year during the performance period 

September 1, 2008, to August 31, 2013. 

Under the CA, the EPA agreed to cost share 100 percent of all approved budget 

period costs incurred up to $4,284,350. The CA was closed on September 2, 2014,

with total federal expenditures of $4,043,436. In 2013, ASPH expanded 

membership to include Council on Education for Public Health-Accredited 

Programs of Public Health, and subsequently changed its name to the Association

of Schools & Programs of Public Health. The fellowship program is intended to 

fulfill a public purpose and the EPA was not the primary or intended beneficiary 

of the program. 

According to ASPH, fellowships are awarded competitively, involving a 

two-phase review process. In the first stage, the applications are reviewed by 

two faculty members from schools of public health (other than the applicant’s 

institution) on the following criteria: quality of essay, strength of credentials, 

previous professional experience, and letters of recommendation. Applicants 

approved by the faculty review are invited to Washington, D.C., to interview for 

the fellowship. The interview results, along with the faculty review comments, are 

used to assess which candidates applying for individual projects are most suited 

for the fellowship. Fellows receive a training stipend for living expenses during 

the fellowship period. In addition, fellows have access to a general expense 

allowance to cover health insurance premiums (including medical, dental and 

vision premiums), travel and appropriate professional development expenses. To 
14-P-0357 2

be eligible for a fellowship, candidates must have attained a masters or doctoral 

degree within the last 5 years from an ASPH-member, accredited school of public 

health. Applicants must also be U.S. citizens or hold visas permitting permanent 

residence in the United States. 

Responsible Offices

The Office of Grants and Debarment, within the Office of Administration and 

Resources Management, is responsible for grants management of CAs issued by 

EPA headquarters program offices. ORD is the office that issued CA No. 

83388101. For CA No. 83388101, the Grant Specialist is in the Office of Grants 

and Debarment and the Project Officer is in ORD. 

Scope and Methodology

We conducted this audit from December 19, 2013, to June 13, 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.

To answer our objectives, we completed the following steps:

 Reviewed information in files provided by the Project Officer and Grant 

Specialist. 

 Conducted interviews with the EPA Project Officer and Grant Specialist to 

obtain an understanding of their roles and responsibilities under the CA. 

 Reviewed the limited scope review of ASPH conducted by a contractor in 

2012 to identify issues that may have an impact on our audit. The review 

was requested by the EPA as part of its oversight of administrative and 

financial practices for grant recipients.

 Conducted interviews with ASPH personnel, current and past ASPH/EPA 

fellows, and an ASPH/EPA mentor to gain an understanding of the 

fellowship program’s functionality and operations. 

 Reviewed available Single Audit reports and ASPH annual reports for each 

year under the CA. 

Results of Review 

Our audit did not identify anything that would indicate federal funds were being 

used inappropriately by ASPH or that the objectives of the CA were not being 

met. However, we did identify two areas under the CA that require improvement 

by the EPA:
14-P-0357 3

 ASPH’s subawards to fellows made under the CA are contrary to federal 

requirements in that ASPH considers the fellows as subgrantees. This 

occurred because of ASPH’s interpretation of the federal regulations. 

A different award vehicle is needed for the ASPH fellowship program to 

protect the agency’s interests and ensure performance accountability. 

 The EPA’s involvement in the selection process for fellowship candidates 

creates the appearance that the agency could be circumventing the hiring 

process and recruiting fellows in place of permanent employees.

Subawards Issued Under CA Contrary to Federal Requirements

ASPH’s subawards to fellows made under the CA are contrary to federal 

requirements under 40 CFR Part 30.5. Fellows receive a training stipend from the 

ASPH for living expenses. Per the agreements between ASPH and the fellows, the 

ASPH considers the fellows as subgrantees. Specifically, the agreement states:

For the purposes of this Agreement, the Fellow is considered a 

sub-grantee, not an employee of ASPH. 

However, 40 CFR Part 30.5, in connection with Office of Management and 

Budget Circular A-110, states:

Unless sections of Circular A-110 specifically exclude 

subrecipients from coverage, the provision of Circular A-110 shall 

be applied to subrecipients performing work under awards if such 

subrecipients are institutions for higher education, hospitals or 

other non-profit organizations.

Per the regulations cited, fellows are ineligible as a subgrantee because they are 

not an institution for higher education, a hospital or a non-profit organization. 

Therefore, a different award vehicle is needed for the ASPH fellowship program.

If a different award vehicle is not identified and used, subawards under the CA

would not comply with applicable federal regulations. The proper award vehicle 

must be determined to ensure that all parties are aware of and follow the 

applicable regulations. Further, determination of the proper vehicle will protect 

the agency’s interest and ensure performance accountability.

Agency Involvement in Selection Process Creates the Appearance of 

Circumventing the Hiring Process

The EPA’s involvement in the selection process for fellowship candidates creates 

the appearance that the agency could be circumventing the hiring process and 

recruiting fellows in place of permanent employees for the direct benefit of the 

EPA. EPA Order 5700.1 states that substantial involvement is anticipated where a 
14-P-0357 4

project is expected to entail agency involvement in the selection of key recipient 

personnel. The fellows are considered key recipient personnel. 

The ASPH Director of Graduate Training verbally informed us that the EPA is 

involved at two points during the fellowship candidate selection process:

 At the beginning of the process, the EPA Project Officer works with 

ASPH to agree on the language to be included in the fellowship 

announcement.

 After potential candidates have been vetted through the ASPH recruiting 

process, the EPA host offices conduct phone interviews and make a 

recommendation to the ASPH for fellowship placement. 

The ASPH considers the EPA’s recommendations when making final selections 

and fellowship placement, although the final decision for placement of fellows is 

ASPH’s responsibility. ASPH does not maintain records of the recommendations 

from the agency and the final placement of the fellow. 

The purpose of the CA was to place recent graduates of ASPH member schools in 

the EPA for 1 or 2 years, to fulfill a public purpose and provide mentorship. The 

EPA was not the primary or intended beneficiary of the program. However, the 

agency being directly involved in the selection process creates the appearance that 

the EPA could be circumventing the hiring process and recruiting fellows in place 

of permanent employees. 

Although there is nothing that prohibits the agency from being involved in the 

selection process, the agency must exercise care in appearance issues created by 

its involvement. The EPA’s Office of General Counsel is the chief legal adviser to 

the EPA, providing legal support for agency rules and policies, case-by-case 

decisions, and legislation. An Office of General Counsel opinion is necessary to 

determine the extent to which the EPA should be involved in the selection of 

fellows.

Recommendations

We recommend that the Director, EPA Office of Grants and Debarment:

1. Determine the proper vehicle to be used under CA No. 83388101 between 

ASPH and the fellows and take the necessary action to ensure subawards 

comply with applicable federal regulations.

2. Obtain an Office of General Counsel opinion on how the EPA should be 

involved in the selection of fellows and, as needed, reduce the appearance 

that the fellowship program is circumventing the hiring and recruiting 

process.
14-P-0357 5

Agency Comments and OIG Evaluation

The OIG received comments from the Office of Grants and Debarment on

July 18, 2014, and those comments are included in appendix A. The Office of 

Grants and Debarment agreed with the recommendations and provided a 

corrective action plan with estimated completion dates. 

For recommendation 1, the Office of Grants and Debarment indicated it will work 

with ORD and ASPH to clarify the correct type of agreement between ASPH and 

the fellows. In addition, the Office of Grants and Debarment indicated it will 

work with ASPH to clarify the agreement terminology.

For recommendation 2, the Office of Grants and Debarment obtained an Office of 

General Counsel opinion and indicated it plans to issue a memorandum to the 

agency’s Senior Resource Officials on the agency’s role in selecting interns and 

fellows under assistance agreements.

We held an exit conference with the agency on August 7, 2014, to discuss its

response to the draft report. We agree with the proposed actions and consider the 

recommendations resolved and open with corrective actions ongoing.
14-P-0357 6

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 4 Determine the proper vehicle to be used under 

CA No. 83388101 between ASPH and the fellows 

and take the necessary action to ensure 

subawards comply with applicable federal 

regulations.

O Director, EPA Office of 

Grants and Debarment

12/31/14

2 4 Obtain an Office of General Counsel opinion on 

how the EPA should be involved in the selection of 

fellows and, as needed, reduce the appearance 

that the fellowship program is circumventing the 

hiring and recruiting process.

O Director, EPA Office of 

Grants and Debarment

12/31/14

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-0357 7

Appendix A

Agency Response to Draft Report

July 18, 2014

MEMORANDUM

SUBJECT: Response to Office of Inspector General Draft Quick Reaction Report: Use of 

 Subawards and Agency Involvement in the Selection Process Under Fellowship 

 Cooperative Agreements Impacts Compliance with Federal Requirements

 (Project No. OA-FY14-0084, June 13, 2014)

FROM: Howard F. Corcoran /s/ Howard F. Corcoran 

Director, Office of Grants and Debarment

TO: Robert Adachi 

Director of Forensic Audits 

Office of Inspector General

The Office of Grants and Debarment (OGD) thanks you for the opportunity to respond to the 

issues and recommendations in the subject Office of Inspector General (OIG) Draft Quick 

Reaction Report (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 highlevel intended corrective actions and estimated completion dates at this time. 

AGENCY’S OVERALL POSITION 

As describe below, OGD generally agrees with the OIG’s findings and recommendations. 

The Report finds that the Association of Schools of Public Health (ASPH) mischaracterized 

fellows receiving research training under Cooperative Agreement 83388101 as subawardees 

because individuals are ineligible as subawardees under 40 C.F.R. 30.5. We agree with this 

finding albeit for a different reason.

Consistent with Grants Policy Issuance 07-02 and EPA’s Subaward Policy, ASPH fellows 

should have been classified as “program participants” receiving stipends and other financial 

assistance under the “participant support cost” provision of 2 C.F.R. Part 230 (OMB Circular 

A-122), Appendix B, Item 33. The Agency’s position is also supported by the definition of 

“subrecipient” in 2 CFR 200.93 of the new OMB Super Circular, which provides that program 

beneficiaries are not subrecipients. 
14-P-0357 8

It should be noted, however, that the Agency has authority to award research and demonstration 

grants and cooperative agreements directly to individuals under statutes such as section 104 of 

the Clean Water Act, section 103 of the Clean Air Act, and section 8001 of the Solid Waste 

Disposal Act. That authority may, in a proper case, support a subaward to an individual 

provided the terms of the subaward require the individual to comply with regulations applicable 

to subawards. See Office of General Counsel Legal Opinion, Subgrantees under EPA Assistance 

Agreements (Attachment A). For example, a nonprofit organization that receives a grant from 

EPA to conduct projects to conduct research and demonstrate innovative methods of preventing 

water pollution may make a subawards to individual inventors to support technology 

demonstration projects. 

EPA’s Subaward Policy expressly allows subawards to individuals provided the subaward is not 

for a fellowship. This is because under 40 CFR 30.1, EPA’s statutory authority to award grants 

and cooperative agreements to individuals provides an exception to the exclusion of payments to 

individuals in the definition of “award” at 40 CFR 30.2(e) and 40 CFR 30.2(ff). In this regard, 

and as noted above, the exclusion of individuals from the definition of subrecipients at 2 CFR 

200.93 is limited to program beneficiaries.

OGD will work with the Office of Research and Development (ORD) to determine the correct 

type of agreement to be used between the cooperative agreement recipient, ASPH, and the 

fellows. OGD and ORD will then work with ASPH to insure that it documents the process in all 

of their internal policies and procedures.

The Report also found that EPA’s involvement in the selection process for fellowship candidates 

creates the appearance of circumventing the hiring process. OGD consulted with the Office of 

General Counsel (OGC) to obtain an opinion on this issue. The award under review is a 

cooperative agreement and, as such, it is expected that the EPA would have substantial 

involvement, as opposed to the Agency’s more limited involvement as it relates to a grant. 

As noted in Attachment B, OGC concluded that, consistent with EPA Order 5700.1, there could 

be a role for EPA to make recommendations on fellowship candidates as part of the substantial 

involvement under a cooperative agreement. OGC suggested, however, that a better process 

might be for the EPA office involved to provide more general recommendations such as 

parameters or basic qualifications for potentially successful fellowship candidates. This 

suggestion reaffirms the advice provided in the joint OGC-OGD memorandum, dated January 

17, 2001, Interns Funded Under Cooperative Agreements, which states that EPA’s role in the 

placement of interns is limited to advising the recipient on the “fit” between a intern’s interest 

and qualifications and the training and research opportunities available in the program or 

laboratory. Final decisions on intern selection must be made by the cooperative agreement 

recipient. The January 17 memo makes clear that a greater EPA role would inadvertently create 

the appearance that an intern/fellowship program is being used to circumvent personnel 

ceilings. OGD agrees with the OIG of the importance of avoiding such an appearance, and will 

issue updated guidance to the Agency’s Senior Resource Officials on the limitations on EPA’s 

role in selecting interns.
14-P-0357 9

AGENCY’S RESPONSE TO REPORT RECOMMENDATIONS

No. Recommendation High-Level Intended 

Corrective Action(s)

Estimated Completion 

by Quarter and FY

1

Determine the proper vehicle 

to be used under CA No. 

83388101 between the ASPH 

and the fellows and take the 

necessary action to ensure 

sub-awards comply with 

applicable federal 

regulations.

1.1 OGD will work with 

ORD and ASPH to clarify 

the correct type of

agreement used between 

ASPH and the fellows. We 

will then work with ASPH 

to insure they clarify the 

agreement terminology in 

their internal guidance.

1

st Quarter FY 2015

2

Obtain an Office of General 

Counsel opinion on how the 

EPA should be involved in 

the selection of fellows and, 

as needed, reduce the 

appearance that the 

fellowship program is 

circumventing the hiring and 

recruiting.

2.1 OGD consulted with 

OGC and received an 

opinion that has been 

incorporated into this 

response.

Completed. Also, in the 

1

st quarter FY 2015, 

OGD will issue a 

memorandum to the 

Agency’s Senior 

Resource Officials 

concerning the 

limitations on EPA’s 

Role in selecting 

Interns and Fellows 

under assistance 

agreements.

CONTACT INFORMATION

If you have any questions regarding this response, please contact me at (202) 564-1903.

Attachments

cc: Denise Polk

 Jill Young

 LaShaun Phillips

 Wendel Askew

 Jennifer Hublar

 Tracy Bryant

 Amy Battaglia
14-P-0357 10

Appendix B

Distribution

Assistant Administrator for Administration and Resources Management

Director, Office of Grants and Debarment, Office of Administration and Resources Management

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

Principal Deputy Assistant Administrator for Research and Development

Chief, Grants Management, Office of Research and Development

Grant Specialist, Office of Grants and Debarment, Office of Administration and 

Resources Management (CA No. 83388101)

Project Officer, Office of Research and Development (CA No. 83388101)

Audit Follow-Up Coordinator, Office of Research and Development 

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