OFFICE OF INSPECTOR GENERAL 

Catalyst for Improving the Environment 

Audit Report 

Existing Contracts Enabled EPA to 

Quickly Respond to Hurricane Katrina; 

Future Improvement Opportunities Exist 

 Report No. 2006-P-00038 

 September 27, 2006 
Report Contributors: Michael Petscavage 

 Andres Calderon 

 Lorraine Fleury

 Dana Short 

 Jean Bloom

 Patricia Taylor 

Abbreviations 

EPA U.S. Environmental Protection Agency 

ERRS Emergency Rapid Response Services 

FAS Fixed Assets System 

FEMA Federal Emergency Management Agency 

OARM Office of Administration and Resources Management 

OIG Office of Inspector General 

OSWER Office of Solid Waste and Emergency Response 

START Superfund Technical Assessment and Response Team 

Cover photo: Trailers contracted for by EPA to temporarily house employees in 

Metairie, Louisiana (EPA OIG photo). 
U.S. Environmental Protection Agency 2006-P-00038

Office of Inspector General September 27, 2006

At a Glance 

Catalyst for Improving the Environment 

Why We Did This Review 

We sought to determine 

whether the U.S. 

Environmental Protection 

Agency (EPA), in its response 

efforts related to Hurricane 

Katrina, adequately designed 

and effectively implemented 

controls for expenditures, 

paid a reasonable price for 

products and services 

obtained, and adequately 

safeguarded purchased assets. 

Background 

On August 29, 2005, 

Hurricane Katrina devastated 

parts of Louisiana, 

Mississippi, and Alabama. 

EPA had existing emergency 

response contracts in place at 

the time Hurricane Katrina hit, 

and used these contracts 

extensively to support its 

response efforts. The 

response efforts involved 

sending numerous personnel 

to the area and purchasing 

equipment and services to 

support them. 

For further information, 

contact our Office of 

Congressional and Public 

Liaison at (202) 566-2391. 

To view the full report, 

click on the following link: 

www.epa.gov/oig/reports/2006/ 

20060927-2006-P-00038.pdf 

Existing Contracts Enabled EPA to Quickly Respond to 

Hurricane Katrina; Future Improvement Opportunities Exist 

What We Found 

EPA’s existing contracts awarded for responding to natural disasters worked as 

intended and allowed EPA to quickly respond to Hurricane Katrina. While 

opportunities for future improvement exist, EPA’s ability to operate under 

catastrophic conditions was commendable. Almost immediately after Katrina, 

EPA officials were in affected areas, assessing damage and formulating action 

plans. As a result, EPA quickly began protecting human health and the 

environment. Further, existing contracts limited cost risks, because EPA did not 

have to quickly award a large number of noncompetitive sole source contracts. 

EPA still needed to award some noncompetitive contracts valued at about 

$9 million during its Katrina response efforts, and we noted areas where EPA can 

make improvements for future disasters. Contracts need to be flexible, provide 

sufficient detail on what is being obtained, avoid unnecessarily long periods of 

performance, adequately support price reasonableness determinations, and ensure 

procurements are used to address the disaster. 

EPA needed to improve its review of contractor invoices to help prevent payment 

of duplicate, unallowable, and/or unreasonable costs. Our review of a limited 

number of invoices found that contractors overcharged EPA $18,298 in duplicate 

payments, $54,734 by using inappropriate indirect cost and labor rates, and 

$110,843 in inappropriate boat rental costs. During the course of our audit, EPA 

initiated actions to have contractors repay those amounts. At our urging, EPA 

placed greater emphasis on reviewing invoices, and its prompt actions eliminated 

our concerns in this area. 

EPA needs to improve plans for property management during catastrophic 

emergencies. Almost 4 months after Katrina, EPA had in most cases not properly 

placed decals on equipment and/or recorded equipment in its property system. 

While this understandably happened because of the emergency situation, EPA 

should attempt to improve controls for handling future disasters. 

What We Recommend 

Recognizing that EPA has begun a process to improve its response efforts for 

future catastrophic events based on its Katrina experience, we made various 

recommendations to help it prepare for such future events. EPA agreed to take 

sufficient actions on all recommendations. 
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY 

WASHINGTON, D.C. 20460 

OFFICE OF 

INSPECTOR GENERAL

September 27, 2006 

MEMORANDUM 

SUBJECT: Existing Contracts Enabled EPA to Quickly Respond to 

Hurricane Katrina; Future Improvement Opportunities Exist 

 Report No. 2006-P-00038 

TO: Susan Parker Bodine 

Assistant Administrator for Solid Waste and Emergency Response 

Luis A. Luna 

Assistant Administrator for Administration and Resources Management 

James I. Palmer, Jr. 

Regional Administrator, Region 4 

 Richard E. Greene 

 Regional Administrator, Region 6 

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 improvement opportunities 

that OIG and EPA personnel have identified and recommendations that EPA should consider 

when responding to future disasters. 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 estimated cost of this report – calculated by multiplying the project’s staff days by the 

applicable daily full cost billing rates in effect at the time – is $462,870. 

Action Required 

Your response to the draft report adequately addresses the recommendations in this report. 

Therefore, we will close this report upon issuance and no further response to this report is 

necessary. We have no objection to the further release of this report to the public. This report 

will be available at http://www.epa.gov/oig. 
If you or your staff have any questions regarding this report, please contact me at 202-566-0847 

or roderick.bill@epa.gov, or Carl Jannetti, the Product Line Director for Contract Audits, at 

215-814-5800 or jannetti.carl@epa.gov. 

 Sincerely,

 Bill A. Roderick

 Acting Inspector General 
Existing Contracts Enabled EPA to Quickly Respond to Hurricane Katrina;

Future Improvement Opportunities Exist 

Table of Contents 

Chapters 

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

Purpose .......................................................................................................... 

Background .................................................................................................... 

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

Internal Control Structure ...............................................................................

1 

1 

 3 

 4 

2 EPA Katrina Response Efforts Commendable; 

Opportunities for Improvement Noted for Future Disasters ............................. 5 

Contract Agreements Needed More Flexibility...............................................

Contract Requirements Needed More Detail..................................................

Contract Performance Periods Longer than Necessary.................................

Price Reasonableness Determinations Inadequate .......................................

Non-Katrina Items Purchased Using Relaxed Authority.................................

Procurements Often Rushed and Contracting Personnel Not Available ........

EPA Initiated Corrective Actions Promptly .....................................................

 Recommendations ......................................................................................... 

 5 

 6 

 7 

 7 

 7 

 8 

 8 

9 

Agency Response and OIG Comment ........................................................... 9 

3 EPA Can Improve Reviews of Contractor Invoices............................................ 11 

EPA Contracting Personnel Did Not Perform Sufficient Reviews................... 

Duplicate Charges and Billing Errors Occurred.............................................. 

EPA Overcharged for Contractor-Owned Boats............................................. 

EPA Needs Increased Review of Invoices during Catastrophes.................... 

 Recommendations ......................................................................................... 

11 

11 

12 

13 

14 

Agency Response and OIG Comment ........................................................... 14 

4 Property Management during a Disaster Challenging....................................... 16 

Katrina Caused Problems in Property Management ...................................... 

Steps Taken to Safeguard Equipment during Katrina Response................... 

 Recommendation ........................................................................................... 

16 

18 

18 

Agency Response and OIG Comment ........................................................... 19 

Status of Recommendations and Potential Monetary Benefits................................. 21 

Appendices 

A Full Text of Agency Response............................................................................. 22 

B Distribution ............................................................................................................ 30
Chapter 1

Introduction 

Purpose 

On August 29, 2005, Hurricane Katrina made landfall in southeast Louisiana, 

causing catastrophic damage along the coastlines of Louisiana, Mississippi, and 

Alabama. The U.S. Environmental Protection Agency (EPA) quickly deployed 

emergency response personnel who, with the Federal Emergency Management 

Agency (FEMA) and others, assessed the damage and initiated cleanup 

operations. EPA largely used existing emergency response contracts for the 

cleanup, and made other emergency purchases with purchase cards and/or 

purchase orders. Our audit objectives were to determine whether EPA: 

• Adequately designed and effectively implemented controls for 

authorizing, awarding, documenting, and approving expenditures. 

• Paid a reasonable price for goods and services obtained. 

• Adequately safeguarded purchased assets. 

Background 

After Hurricane Katrina struck, EPA responded to protect public health and the 

environment. EPA dispatched first responders to Louisiana, Mississippi, and 

Alabama, many of whom initially performed rescue operations. Subsequently, 

first responders assessed damage; sampled the environment to ensure the public’s 

safety; and began cleaning up the hurricane debris, including hazardous materials. 

The magnitude of the disaster required EPA to quickly supplement the first 

responders with additional EPA personnel from across the Nation. Employees 

from various regional offices volunteered to assist and went to the affected areas 

for 2-3 week rotations. While the number of EPA employees fluctuated, the 

temporary living arrangements that EPA established could accommodate as many 

as 130 people. Residence logs indicated between 80 to 130 EPA employees used 

these accommodations during each 2-3 week period. Additionally, EPA contracts 

provided for about 1,000 contractor personnel for the relief efforts. 

EPA’s Region 4 office, which is headquartered in Atlanta, Georgia, and is 

responsible for Alabama and Mississippi, established an Incident Command 

Center in Biloxi, Mississippi. EPA Region 6, which is headquartered in Dallas, 

Texas, and is responsible for Louisiana, established its Incident Command Center 

in Metairie, Louisiana, on the grounds of the Louisiana Technical College. The 

Metairie center utilized several of the college’s buildings and surrounding 

grounds, as well as 78 trailers for housing up to 130 EPA personnel. 

1
FEMA provided EPA approximately $750 million for response work needed as a 

result of Hurricane Katrina and the subsequent Hurricane Rita. FEMA authorized 

EPA to provide technical assistance and to recover, remove, and dispose of debris 

and hazardous wastes. EPA also received $3.5 million from the U.S. Army Corps 

of Engineers for similar work. EPA’s financial system indicated that as of June 

2006 it obligated about $530 million of the $750 million. EPA was responsible 

for leading work performed by the U.S. Coast Guard, and the $530 million 

included $107 million that EPA provided directly to the Coast Guard. 

EPA’s mission requires it to respond to disasters; each region has a cadre of 

personnel specializing in this type of work. However, the magnitude of the 2006 

hurricane response required EPA to purchase and receive significant amounts of 

equipment and material under catastrophic conditions. The majority of the 

purchases were made by Region 6 for Louisiana and Region 4 for Alabama and 

Mississippi. 

On September 9, 2005, EPA issued a Class Justification authorizing other-thanfull-and-open competition for Hurricane Katrina response requirements. 

Although used in relatively few circumstances, the justification enabled EPA to 

obtain contractor support on an urgent, compelling, and noncompetitive basis. 

Although the justification enabled EPA contracting personnel to expedite the 

contracting process, it contained several requirements. For example, the 

contracting officers were required to determine whether the anticipated cost to the 

Government would be fair and reasonable for each contract action. 

Purchase card spending limits (micro-purchase authority) were also increased to 

expedite hurricane relief. The Second Emergency Supplemental Appropriations 

Act to Meet Immediate Needs Arising from the Consequences of Hurricane 

Katrina (Public Law 109-62) raised the micro-purchase threshold from $2,500 to 

$250,000 for procurements of property or services needed for Hurricane Katrina 

rescue and relief operations. However, EPA only increased purchase card 

holders’ single purchase limits to $15,000. 

On September 26, 2005, EPA submitted a Stewardship Plan for significant 

acquisitions related to Hurricane Katrina rescue, recovery, and reconstruction 

operations, to ensure the prudent use of taxpayer funds. The plan applied to all 

EPA offices, including acquisition, finance, and program offices. It established a 

Control Board comprised of Office of Acquisition Management Division 

Directors (i.e., Chiefs of Contracting Offices), and a representative from the 

Office of General Counsel, the Office of the Chief Financial Officer, and the 

Office of the Chief Information Officer. The Office of Inspector General (OIG) 

participated as a nonvoting member of the group. 

2
The plan required the Board to review “significant acquisitions” related to 

Hurricane Katrina. Significant acquisitions were defined as: 

• Acquisitions in excess of $5,000,000. 

• Micro-purchases between $15,000 and $250,000. 

• Simplified acquisitions between $100,000 and $250,000. 

• Purchases of sensitive property, defined as nonexpendable items (such as 

laptop computers, Blackberries, and cell phones) that may be converted to 

private use or have a high potential for theft. 

The EPA Control Board appointed a representative to review significant 

transactions. The OIG reviewed many of these transactions collaboratively with 

the Board’s representative, as well as many transactions not covered by the 

stewardship plan. The results of both reviews were reported to the Board, which 

took corrective action in a timely manner. Many of the issues discussed in this 

report resulted from this collaborative effort. 

Scope and Methodology 

We performed this audit from September 2005 to April 2006 in accordance with 

Government Auditing Standards, issued by the Comptroller General of the United 

States. We visited EPA Headquarters in Washington, DC; EPA regional offices 

in Atlanta, Georgia (Region 4) and Dallas, Texas (Region 6); and the EPA 

Incident Command Center in Metairie, Louisiana. 

At the headquarters, regional, and field level locations, we interviewed EPA 

officials in the Office of Solid Waste and Emergency Response (OSWER), Office 

of Administration and Resources Management (OARM), and Regions 4 and 6. 

We analyzed procurements to determine how they could be improved in the 

future, and also reviewed documentation related to the following: 

Contracts: EPA Regions 4 and 6 used existing Emergency Rapid Response 

Services (ERRS) and Superfund Technical Assessment and Response Team 

(START) contracts to perform hurricane relief, and we focused our review on 

these contracts. We reviewed contractor invoices paid from October 2005 

through March 2006 to determine whether the costs billed were allowable, 

allocable, and reasonable, in accordance with the Federal Acquisition Regulations 

and contract terms. 

Purchase Orders: We reviewed documentation through February 2006 to ensure 

that EPA procured products and/or services using appropriate acquisition methods 

(such as sole source, full and open competition, and simplified acquisition 

procedures), and that the prices paid were reasonable. In some cases, it was 

difficult to determine the reasonableness of the price paid due to the unstable 

market environment created by Hurricane Katrina. 

3
Purchase Cards: We reviewed a judgmental sample of purchase card 

transactions initiated from August 29, 2005, when Katrina struck, through 

October 2005. Specifically, we sampled purchase card transactions: 

• Greater than $10,000. 

• For purchases of sensitive items. 

• Possibly split to avoid purchase authority limitations. 

• For a large number of purchases by one person or to the same vendor. 

• For even dollar amounts. 

Equipment Recording and Tracking: We reviewed all purchase order 

transactions for equipment in EPA’s consolidated reports as of January 6, 2006. 

We also examined purchase card transactions made in September and October 

2005 in support of Hurricane Katrina to identify equipment and property 

purchased. We then compared this purchased equipment and property to the 

information recorded in EPA’s Fixed Assets System. 

Internal Control Structure 

In planning and performing our audit, we reviewed management controls related 

to our objectives. We examined the Agency’s Stewardship Plan issued on 

September 26, 2005. This plan outlined EPA’s controls and monitoring 

procedures that would be used to review its costs incurred related to Hurricane 

Katrina. We examined the Fiscal Year 2005 Federal Managers’ Financial 

Integrity Act Annual Assurance Letters issued to the EPA Administrator by 

OARM. 

4
Chapter 2

EPA Katrina Response Efforts Commendable; 

Opportunities for Improvement Noted for Future Disasters 

EPA accomplished the majority of its Katrina response work using preexisting 

contracts, although it did award a limited number of noncompetitive contracts, 

valued at about $9 million. EPA made most of these procurements under 

emergency conditions, and was often rushed because of the need to obtain 

products and services quickly. While there were several opportunities for 

improvement, EPA’s ability to operate under catastrophic conditions was 

commendable. Recognizing that EPA may have done things differently under 

normal circumstances, Agency personnel now have experience to enable them to 

better anticipate needs for future disaster responses. These experiences can also 

be applied to other Federal agencies. For example, for future emergency 

situations, EPA should attempt to ensure that: 

• Contract terms are flexible and adaptable to changing requirements. 

• Contracts provide sufficient detail on what is being bought and at what cost. 

• Periods of performance are not unnecessarily long. 

• Price reasonableness determinations are adequately supported. 

• Procurements made are actually used to address the disaster. 

EPA personnel told us that having more contracting personnel in the disaster area 

sooner might have mitigated these conditions; negotiations were often performed 

by facility or response personnel without contracting officer involvement. In any 

event, EPA took prompt action during the Katrina response to resolve the issues 

that the Control Board and the OIG identified. 

Contract Agreements Needed More Flexibility 

Several contracts needed more flexible contract terms so that EPA could adapt 

more easily to unforeseen circumstances and changing requirements. Given the 

uncertainties surrounding an emergency response of this size, flexible contracts 

are important to help protect the Government from obtaining unneeded services. 

For example, EPA awarded a food service contract to provide meals to its 

personnel in New Orleans. The contract stipulated, for a total of almost $750,000, 

that the contractor would provide 3 meals a day to a minimum of 150 employees, 

or a total of 450 meals each day. While the contract contained a provision for the 

contractor to provide meals to more people, at an extra cost, it did not provide for 

feeding fewer people. Had the contractor provided 3 meals each day to 150 

people, the cost per person would be less than the allowable Government per 

5
diem. Our review of EPA’s meal logs from October 13, 2005, through November 

14, 2005, showed the average number of meals provided each day was 96 for 

breakfast, 43 for lunch, and 66 for dinner. Ideally, in response to future disasters, 

it would be advantageous to have a more flexible contract. With a more flexible 

contract, EPA may have been able to reduce the number of meals provided by the 

contractor and reduce costs. 

EPA’s contract to obtain 66 trailers and related services, valued at over 

$4.5 million, also needed more flexibility. While EPA had the option to terminate 

this 6-month contract for convenience, it had no flexibility to reduce the number 

of trailers should the occupancy rates warrant a reduction, or if other 

accommodations (such as hotels, motels, and apartments) became available. With 

a more flexible contract, EPA could have perhaps saved money on housing and 

related services by reducing the number of trailers or taking a less expensive 

option if it became available. In the latter part of the 6-month period, the trailers 

were not at full occupancy. During the 3-month period ended March 2006, the 

occupancy rate for the trailers averaged about 63 percent. In March 2006, EPA 

awarded a new contract for trailers that did include more flexible options. 

Contract Requirements Needed More Detail 

In several cases, EPA entered into contracts that did not have adequately defined 

terms and conditions. These contracts did not adequately describe exactly what 

services would be received, at what levels (e.g., frequency or type) the services 

would be provided, or how much EPA would pay for individual services. 

For example, EPA’s aforementioned contract for trailers to house EPA personnel 

in New Orleans bundled support services. This contract required EPA to pay 

$200 per trailer for daily janitorial services, laundry services, toiletries, linens, 

towels, pillows, and trash removal. These services were not individually priced. 

Therefore, when trailers were vacant and janitorial, laundry, and linen services 

were not needed or needed to be reduced, it was difficult to determine the proper 

amount to be credited to the contract. Moreover, when services are bundled, it is 

difficult to determine whether the prices paid were reasonable, and we were not 

able to make such a determination. 

Also, EPA’s previously noted food service contract to provide meals needed more 

detail. The contract stipulated 3 meals a day to 150 employees, for a total of 450 

meals, at a total contract price of almost $750,000. However, the contract did not 

specify either the type of food to be served or a price for each meal. This proved 

problematic when EPA determined that lunch was unnecessary because many 

employees traveled to distant work sites. EPA requested that the contractor stop 

lunch. EPA’s contracting officers consequently negotiated to have the contractor 

increase the quality and quantity of breakfast and dinner rather than reduce the 

contract price. 

6
Contract Performance Periods Longer than Necessary 

Three procurements had performance periods that appeared unnecessarily long. 

Understandably, it is necessary to pay a premium for emergency services 

following a disaster. However, as conditions improve and the demand for 

emergency services subsides, prices should decline. Negotiating emergency 

services contracts with long periods of performance makes EPA vulnerable to 

overpaying. Further, EPA entered into many of these early contracts as sole 

source procurements, and lower rates could likely be obtained later through 

competition. 

For example, on September 10, 2005, EPA entered into a sole source contract for 

helicopter services at a rate of $750 per hour. The original order and modification 

did not specify a period of performance but a subsequent modification established 

a 12-month period of performance through September 2006. Had this contract 

remained in place, EPA could have paid the noncompetitive rate for up to 1 year. 

However, the EPA Control Board representative expressed concern regarding the 

length of this contract, and EPA ended the contract in November 2005. 

Price Reasonableness Determinations Inadequate 

On September 9, 2005, EPA issued a Class Justification for Other-Than-Full-andOpen Competition. While this allowed EPA to more easily award contracts 

needed for Katrina, EPA at times did not meet one important requirement of this 

class justification. Contracting officers needed to determine that the anticipated 

cost to the Government would be fair and reasonable. However, in approximately 

half of the purchase orders reviewed by the OIG and EPA’s Control Board 

representative, price reasonableness determinations were either missing from the 

file, documented well after the procurement, or inadequately supported. 

We considered reasonableness determinations to be inadequately supported 

because there was little evidence that the contracting officer attempted to check 

the prices of other sources, such as the Internet, similar procurements, or General 

Services Administration price lists. Many times the purchaser said it considered 

prices reasonable based on the past experience or knowledge of the responders. 

Non-Katrina Items Purchased Using Relaxed Authority 

We found a few instances where EPA used the micro-purchase authority under 

Hurricane Katrina to purchase items not related to the Katrina response. In most 

cases, these appeared to be year-end purchases. An example was the purchase of 

video conferencing equipment using EPA’s appropriated funds. EPA bought 

12 of the machines on a sole source basis on September 30, 2005, the last day of 

the fiscal year. The documentation cited the Justification for Other-Than-Fulland-Open Competition authority for Katrina response as the justification. 

Eventually, three of these machines were in fact used in regions impacted by 

7
Katrina. However, the other nine machines were not. Four of the machines were 

delivered to Research Triangle Park, North Carolina, while as of February 2006, 

the remaining five machines remained in their boxes, unopened, in the basement 

of EPA headquarters in Washington, DC. 

Procurements Often Rushed and Contracting Personnel Not Available 

Many conditions understandably occurred because of the extreme rush to obtain 

equipment and services immediately after Hurricane Katrina occurred. However, 

a contributing factor was that contracting personnel were not always involved in 

the upfront negotiations. Instead, facility and response personnel sometimes 

performed preliminary negotiations. EPA’s Control Board representative also had 

this same concern, noting “Documentation suggests that the contractual 

negotiations are being performed by technical staff leaving various contracting 

officers to craft contractual language after the fact and based on ambiguous 

circumstances and agreements.” This appeared to have occurred because 

contracting officers initially sent to the affected area were overwhelmed with 

work. In some cases, this is why price reasonableness determinations and other 

documentation were completed after the procurement. Another contributing 

factor was that the rotation of contracting officers added to workload. Generally 

every 2 weeks, new contracting officers would arrive and have to review and 

analyze ongoing procurements and initiate new procurements. 

EPA Initiated Corrective Actions Promptly 

Many of the contracting issues discussed in this chapter resulted from 

collaborative reviews by the OIG and EPA’s Control Board representative. These 

issues were discussed with Control Board members, who agreed that contracts 

needed more flexibility and details, and that periods of performance were at times 

too long. As a result, EPA took prompt action while the Katrina response was 

still in process. For example, EPA awarded new contracts for temporary housing 

and food that contained more flexibility and details. Moreover, EPA terminated 

several contracts with periods of performance that were considered too long. 

While opportunities for improvement still need to be considered, during EPA’s 

response to Hurricane Katrina, personnel made a commendable effort in a major 

crisis situation. EPA should consider its Katrina experiences to better prepare for 

future disaster responses. In that light, EPA should consider increasing the 

number of contracting officers in the field immediately after large disasters. It 

should also consider having contracts in place for services, such as housing and 

food service, that it will need to respond to future disasters. Region 6 personnel 

indicated that, at their request, EPA headquarters has initiated a process to 

establish these types of contracts. 

8
Recommendations 

Recognizing that the Assistant Administrators for OSWER and OARM have 

begun a process to improve EPA’s response efforts for future catastrophic events 

based on its Katrina experience, we recommend that the Assistant Administrators: 

2-1 Develop a strategy/plan to deploy a sufficient number of contracting 

officers and other support personnel to an emergency response area. 

2-2 Develop predetermined lists of volunteers who are willing to be deployed 

for time periods of 2 weeks or longer. 

2-3 Continue exploring establishing advance agreements with vendors that are 

flexible and detailed for the items EPA used substantially during its 

Katrina response, such as housing, recreational vehicles, and food 

services. 

Agency Response and OIG Comment 

EPA concurs with all of the recommendations in this chapter, and has initiated 

actions to address the recommendations. EPA has developed and provided initial 

training for a Response Support Corps list of EPA personnel willing and prepared 

to deploy to future incidents of national significance. This list includes 

contracting personnel. OARM is an active participant in the Government-wide 

Chief Acquisition Officer Council Contracting Contingency Work Group, which 

has a goal of creating a similar Government-wide list for use by all Federal 

agencies in the event of future incidents of national significance. OARM is also 

working with the Office of Management and Budget to develop a list of Federal 

Government-wide acquisition professionals who can be called upon to support 

emergency response efforts. 

OARM is currently in the process of awarding two national blanket purchasing 

agreements to provide emergency response technical support and logistical 

services (food, housing, facilities, etc.). The terms and conditions of these 

agreements will be as flexible as possible to address the lessons learned by EPA 

responses to incidents of national significance, including Hurricanes Katrina and 

Rita. 

OARM, however, does not agree that negotiations were often performed by 

facility or response personnel without contracting officer involvement. It stated 

that no Region 6 facility/logistics personnel participated in negotiations without a 

warranted contracting officer present. 

OARM stated that it prefers the more flexible and detailed contract terms and 

agreed these contract types would have been beneficial. However, due to the 

circumstances, it believes they made the correct decisions. The EPA contracting 

9
10

officer negotiated the absolute minimum the vendor was willing to accept to plan 

and prepare meals. Likewise, they contend they negotiated a daily rate for the 

trailers that was considerably less than the FEMA-allowable per diem, in spite of 

the lack of opportunity to build in flexibility within the initial emergency housing 

contract. Moreover, as market conditions changed and flexibility could be built 

into the solicitation, the trailer contracts were re-competed. 

While the OIG did not observe the negotiations, a number of EPA personnel in 

the disaster area who observed and participated in negotiations told us and EPA’s 

Control Board Representative that facility or response personnel performed 

negotiations without contracting officer involvement. We agree that the housing 

and food services contracts were negotiated and awarded under less than ideal 

conditions. Our reporting that future contracts awarded under similar conditions 

should be more detailed and flexible was not intended as a criticism of the 

contracts awarded for the Katrina response or the price paid for each trailer. The 

intent of our report is to offer suggestions for the future. 

We made requested changes to the report when we deemed them appropriate. 

The full text of EPA’s response is in Appendix A. 
Chapter 3

EPA Can Improve Reviews of Contractor Invoices 

EPA needed to improve its review of contractor invoices to help prevent payment 

of duplicate, unallowable, and/or unreasonable costs. Our review of a limited 

number of invoices found that contractors overcharged EPA: 

• $18,298 in duplicate payments. 

• $54,734 by using inappropriate indirect cost and labor rates. 

• $110,843 in boat rentals. 

We brought these matters to EPA’s attention during our review. EPA agreed with 

all those overcharges and contractors have agreed to repay the Agency. The 

overcharges often occurred because EPA did not assign an adequate number of 

experienced contracting personnel to review contractor billings. We noted that 

EPA promptly assigned more personnel to review contractor billings after we 

brought this issue to their attention, eliminating our concerns in this area and 

reducing EPA’s vulnerability to further duplicate charges and erroneous billings. 

EPA Contracting Personnel Did Not Perform Sufficient Reviews 

During the initial stages of EPA’s response to Hurricane Katrina, EPA contracting 

personnel did not perform detailed reviews of amounts billed on the Region 4 

START and ERRS contracts, as well as the Region 6 ERRS contracts. In many 

cases, the contracting officers relied on reviews performed by response personnel 

in the affected area who were directing the cleanup. Conversely, the contracting 

officer and project officer for the Region 6 START contract did perform detailed 

reviews of each invoice. 

EPA policy requires contracting officers to perform one detailed review of a 

contractor’s invoices each year. Most contracting officers cited this policy as a 

reason they performed limited invoice reviews. They also said they did not have 

enough time to perform detailed reviews because the number of transactions and 

the costs billed on the START and ERRS contracts increased significantly 

because of Hurricane Katrina. However, this increased volume also escalated the 

risk of errors, overcharges, and erroneous double billings to EPA. 

Duplicate Charges and Billing Errors Occurred 

Soon after EPA began its response to Hurricane Katrina, we reviewed the costs 

submitted by the six ERRS contractors on their initial billings to verify the 

accuracy of the amounts billed to EPA. Our review identified several duplicate 

charges, as noted in Table 3-1. We brought these duplicate charges to the 

11
attention of EPA personnel during our review. The contractors concurred with 

our review results and have agreed to repay EPA. 

 Table 3-1: Duplicate Charges 

Contractor Duplicate Charges Amount 

1 Labor (22 separate instances) $14,003 

1 Per Diem 669 

2 Equipment (6 separate instances) 1,682 

3 Labor 1,696 

3 Equipment 248 

Total $18,298 

Source: EPA OIG analysis of contractor invoices 

As part of our review, we also verified the accuracy of direct labor rates charged, 

labor categories used, and indirect rates billed. We noted various overcharges 

(see Table 3-2), which we brought to EPA’s attention during our review. The 

contractors concurred with our review results and have agreed to repay EPA. 

 Table 3-2: Overcharges Related to Inappropriate Indirect Cost

 and Labor Rates 

Contractor Overcharges for Amount 

1 General & Administrative Rate $51,503 

5 Labor Rate 2,888 

6 Labor Category 343 

Total $54,734 

Source: EPA OIG analysis of contractor invoices 

EPA Overcharged for Contractor-Owned Boats 

The ERRS contracts with all six contractors assisting with the Katrina response 

specified that the maximum charge for each contractor-owned equipment item 

used on a task order should not exceed the contractor's average purchase price or 

the average value for all similar pieces of equipment in their inventory. When the 

average purchase price is reached on a particular task order, a usage rate must be 

negotiated with the contracting officer before additional amounts are billed. The 

usage rate is to reimburse the contractor for operating costs such as maintenance, 

license, and insurance. 

We noted numerous instances where the contractor or its subcontractors either 

billed, or had charges approved for invoices that would be submitted, for more 

than the average purchase price of company-owned boats. In some cases, the 

average purchase price was surpassed after just 21 days of usage. When we 

informed Region 6 personnel about this issue they determined that the clause 

limiting charges for contractor-owned equipment did not flow down to 

subcontracts. Subsequently, the contractor agreed to implement this practice with 

their subcontractors, and is currently working to reimburse EPA the amounts 

charged in excess of average purchase prices. By our calculations, EPA has been 

overcharged more than $110,000 for boat rentals, as shown in Table 3-3. 

12
 Table 3-3: Overcharges Related to Boat Rentals 

Task Amount Average Amount 

Boat Type 

Boat 14/16 ft. JEC1 

Order 

56 

Charged 

$10,598 

Purchase Price 

$6,770 

Overcharged 

$3,828 

Pontoon Boat ONYX-1 56 46,234 16,176 30,058 

Pontoon Boat ONYX-2 56 46,234 16,176 30,058 

Boat 21ft. 0555-11 56 46,234 16,176 30,058 

16ft. Monarch 0255-04 52 7,895 6,770 1,125 

20ft. Sea Ark 9855-02 52 28,070 16,176 11,894 

24ft. Boat w/cabin 0155-05 52 16,512 16,176 336 

26ft. Spill Boat 0555-07 52 17,338 16,176 1,162 

28ft. Spill Boat 0555-06 52 17,338 16,176 1,162 

G3 20ft. Boat 0555-11 52 17,338 16,176 1,162 

Total $110,843 

Source: EPA OIG analysis of contractor invoices 

EPA Needs Increased Review of Invoices during Catastrophes 

We recognize that current procedures provide for EPA personnel to review, on a 

daily basis, supporting documentation that contractors use to bill the Agency. 

However, the personnel performing these initial reviews do not have the same 

knowledge of the contract terms and requirements as the contracting personnel in 

the regional office who are normally responsible for the contract, and do not 

always review the same documentation. The initial field reviews can be rigorous, 

and are performed on a daily basis, but are only of supporting documentation. 

Contracting officer reviews normally evaluate the actual bill along with 

supporting documentation in its entirety and in greater depth on a biweekly or 

monthly basis. 

Current procedures specify that contracting officers provide a detailed review of 

one contractor invoice each year, with response personnel providing additional 

reviews. However, EPA’s response to incidents such as Hurricane Katrina 

substantially increased the volume of transactions normally experienced. The 

increased volume associated with catastrophic incidents significantly increases the 

risk of errors, fraud, waste, and abuse. Under such conditions, EPA should 

establish a plan that provides additional contracting personnel to review more 

invoices than reviewed under normal circumstances. 

During our review, we explained to EPA personnel the need for more detailed 

invoice reviews by the contracting officers in the regional offices. Region 4 

promptly provided additional contracting personnel to review invoices for 

hurricane relief. Their subsequent reviews found numerous additional errors, 

discrepancies, and overcharges. These reviews show the need for increased 

attention by contracting personnel. Region 6 officials indicated they also 

increased reviews of invoices. 

13
Recommendations 

We recommend that the Assistant Administrator for OSWER, in conjunction with 

OARM: 

3-1 Establish a policy and procedures for reviewing contractor invoices 

submitted during disasters that provide for additional contracting 

personnel in the regional offices so that more billings can be reviewed 

under each contract being used. 

3-2 Ensure that contract clauses to limit charges for contractor-owned 

equipment flow down from the prime contract to the subcontracts. 

We further recommend that the Regional Administrator, Region 6: 

3-3 Continue efforts to recoup the amounts overcharged by contractors for 

boat rental that exceeded the average purchase price. 

Agency Response and OIG Comment 

EPA concurs with all of the recommendations in this chapter, and has initiated 

actions to address the recommendations. EPA is currently reviewing applicable 

guidance documents containing requirements and recommendations for personnel 

to perform timely reviews of invoices at the deployment site. Further, selected 

EPA contracting officers participated in an Incident Command System 

symposium in August 2006 to address key response support issues, including 

contract management and invoice approval. The Incident Command positions of 

Finance Section Chief, Procurement Unit Leader, and Cost Unit Leader are being 

further clarified to ensure roles and responsibilities are clearly established and 

communicated (including invoice approvals). Additionally, EPA states that it will 

review all affected contracts and ensure that the contract clauses limit charges for 

contractor-owned equipment, and Region 6 will continue to work with the 

contractor to ensure reimbursements or credits are received by EPA for boat 

rentals that exceeded the average purchase price. 

However, EPA believes its invoice review process was adequate, especially 

considering the extraordinary nature of the incident. The review process evolved 

and improved throughout the response. The team of field accountants that 

reviewed the 1900-55 daily reports included experienced ERRS contracting 

officers/contract specialists, and project officers from other regions. The process 

evolved from line-by-line reviews of the daily reports, including identifying and 

reporting deficiencies, to proactively reviewing invoices as they were being 

prepared onsite. This practice enabled numerous corrections to be made before 

the invoices were finalized. As the OIG review was concurrent with the EPA 

invoice review, EPA was unable to verify, with the information provided, whether 

14
the charges identified by the OIG were in addition to the errors found during our 

review process. 

OARM’s actions taken and planned meet the intent of our recommendations. 

However, we do not agree with OARM’s comment that its initial invoice review 

process was adequate considering the extraordinary nature of the incident. 

Because of the extraordinary nature of the hurricane response, more review 

capacity was needed initially for invoices. Additional capacity was added after 

OIG reviews highlighted errors and overcharges by the contractors. The 

overcharges for boat rentals are one such overcharge the OIG identified. The 

purpose of this chapter was to highlight the need for adding review capacity to 

EPA’s initial response actions when major disasters occur. Based on OARM’s 

response, it appears EPA will plan for this during future disasters. 

We made requested changes to the report when we deemed them appropriate. 

The full text of EPA’s response is in Appendix A. 

15
Chapter 4

Property Management during a Disaster Challenging 

EPA’s procedures for managing property appeared to be generally adequate for 

normal business situations, but EPA’s response to Hurricane Katrina was far from 

normal business. As a result, EPA property purchased for hurricane relief was not 

initially safeguarded and recorded properly. After we and EPA’s Control Board 

representative highlighted this need, EPA took action to locate and record 

equipment purchases. However, EPA’s subsequent property management efforts 

proved difficult and resource intensive. We recognize that it may not be possible 

to eliminate all the challenges associated with property management when 

responding to a disaster. Nonetheless, to better safeguard property, EPA needs to 

revise its procedures for managing property during future disaster responses. 

EPA personnel agreed, and while the Katrina response was still in process, they 

formed a workgroup to determine how to improve property management 

procedures for future disaster situations. 

Katrina Caused Problems in Property Management 

EPA defines property as nonconsumable items acquired specifically for the use of 

a Government employee at the job site. They include such items as computers, 

communication devices, and test equipment. Individual items purchased by EPA 

for the Hurricane Katrina response cost as much as $82,500. EPA’s procedures 

stipulate that equipment costing $5,000 or more, as well as items on the 

“Sensitive Items” lists, must have a bar code decal affixed to them and entered 

into the Fixed Assets System (FAS) database. This system shows the location of 

the item and assigns responsibility for safeguarding it. Normally, most 

accountable property is received at a central EPA location, given a decal at the 

time of delivery, and then entered into FAS before being put into use. EPA 

guidance further provides that if equipment is delivered directly to the user, the 

user must notify the custodial officer so that the item can be recorded in FAS. 

EPA did not begin affixing decals and recording most items purchased for its 

hurricane response until approximately 4 months after Katrina occurred. By that 

time, identifying and locating the property purchased was difficult due to both the 

volume of items acquired and the various methods used to acquire them. Large 

portions of the equipment were purchased by personnel in regional offices and 

delivered to the affected areas, and by EPA personnel in the devastated areas 

usually via Government purchase cards. Equipment was delivered to various 

locations within a three-State area either without property specialists available or 

without them knowing the equipment was purchased and delivered. As a result, 

equipment valued at about $6 million was initially pressed into service without 

normal safeguards. Even several months after most items were decaled and 

16
recorded, we remained concerned as to whether EPA will be able to identify all 

items purchased and verify whether they have been properly decaled and 

safeguarded. During the Katrina response, which involved various States, 

numerous locations received materials and equipment. Also, several EPA 

personnel told us they believed having more property management specialists 

earlier in the process may have helped. For future disasters, EPA managers 

should try to determine whether they can minimize the number of locations where 

materials and equipment are initially delivered, and also provide a sufficient 

number of property management specialists. 

There was much confusion about how equipment should be recorded in FAS. 

Some responders were either not aware of EPA’s property management 

requirements, or used different “homegrown” methods. For example, Region 4 

did not input equipment into the FAS. Instead, it planned to rely on temporary 

log/data sheets maintained in the field until the equipment was returned to EPA 

offices, at which time it planned to decal and enter equipment into FAS. 

Similarly, an on-scene coordinator responsible for setting up 11 satellite dishes in 

all three States, costing a total of almost $250,000, did not enter the items into 

FAS, and instead entered them into a spreadsheet and used a map to keep track of 

where the dishes were located. Initially, both Regions 4 and 6 used informal and 

incomplete accountability methods during the aftermath of Hurricane Katrina. 

There was also confusion about which items should be entered into FAS. 

Normally, items costing less than $5,000 are not entered into FAS unless they are 

considered sensitive items that are defined as having a “high potential for theft or 

to be converted to private use.” However, these rather vague terms caused 

confusion among property management personnel. As a result, Region 4’s three 

separate accountable areas and Region 6 did not consider many similar items as 

sensitive. Most regions had their own lists of which items they considered 

sensitive. In early January 2006, EPA established a national sensitive items list. 

EPA needs to ensure this list is widely disseminated throughout the Agency and 

updated periodically, since most regions had their own sensitive items lists. 

Further complicating the process, purchases made for Katrina relief using 

purchase orders and purchase cards were not segregated. Rather, they were 

commingled with all other purchases for normal business. We shared the 

documents related to equipment purchases that we had obtained with Region 6, 

where most of the equipment purchases were made, but the process of identifying 

and recording equipment still proved tedious and very time consuming. Several 

months later, Region 6 had limited assurances that all equipment purchased for 

Katrina had been given decals and recorded into FAS. EPA needs to devise a 

process to segregate the documentation for equipment purchased for disaster relief 

from routine business equipment purchases. This will facilitate the recording and 

decaling of equipment rushed into service. The Agency should determine the 

feasibility of providing responders with emergency purchase cards issued only for 

a specific disaster, as one method to segregate purchase documentation. 

17
Steps Taken to Safeguard Equipment during Katrina Response 

When we brought the need to record and safeguard equipment to EPA’s attention, 

Region 4 personnel told us they planned to continue relying on the log sheets 

being maintained in the field, and affix decals and record the equipment into FAS 

after it was returned to the Region. While Region 4’s process did not follow 

EPA’s procedures, it purchased insignificant amounts of equipment in comparison 

to Region 6. 

Conversely, when we informed personnel in Region 6, where the vast majority of 

the equipment was purchased, they made an immediate and concerted effort to 

identify purchased equipment. However, because Region 6 property managers 

had not received much of the purchase order information and purchase card 

receipts, they needed to search for supporting documentation or physically locate 

items and then search for purchase records. Much of the equipment was 

purchased using the Government purchase cards of numerous volunteers from 

EPA offices across the Nation. When they returned to their regional offices, the 

purchase card receipts went with them. 

Delaying the decaling and recording of purchased property and equipment in FAS 

placed significant amounts of EPA and FEMA property at risk of being lost or 

stolen because no one was responsible for the items. Initially, differences 

between regions impacted both the type of items to be decaled and recorded, as 

well as when it would be recorded into the system. Incomplete information such 

as this could hinder EPA’s ability to obtain and use equipment needed to protect 

public health and the environment in the event of a terrorist attack or other 

nationally significant incident. Where possible, EPA should attempt to further 

adapt and refine its existing property management requirements to accommodate 

the unusual and unforeseen conditions experienced during its response to 

Hurricane Katrina. 

Recommendation 

4-1 Recognizing that the Assistant Administrator for OSWER has begun a 

process to improve EPA’s response efforts for future catastrophic events 

based on its Katrina experience, and that the Assistant Administrator for 

OARM has initiated a similar process for safeguarding equipment, we 

recommend that the Assistant Administrators for OSWER and OARM 

consider: 

• Centralizing or reducing the number of locations for equipment 

receipt. 

• Providing a sufficient number of property specialists in the affected 

area early during the crisis. 

18
• Ensuring that sensitive items included in the Agency’s list are clearly 

defined, updated periodically, and disseminated regularly. 

• Issuing purchase cards to responders for purchases during a specific 

disaster. 

• Establishing a national custodial area in FAS for future large-scale 

national disasters so that all equipment purchases can be recorded 

more quickly and in a central location. 

Agency Response and OIG Comment 

OARM and OSWER concurred with all of our recommendations except one, and 

provided several comments. Regarding its ability to centralize equipment receipt, 

EPA stated that depending on the specific nature and scope of the incident, EPA’s 

response process will typically include a central location for equipment delivery 

and recording/tracking. There may, however, be situations that warrant delivery 

directly to noncentralized response sites. The Logistics Chief is responsible for 

this determination, and EPA said the final version of the Incident Management 

Handbook that addresses the Logistics Chief responsibilities will be completed by 

December 31, 2006. 

EPA agreed with the need to provide a sufficient number of property specialists to 

a crisis area, and has provided initial training to Response Support Corps 

personnel, including property specialists, who are willing to deploy to future 

incidents of national significance. OSWER and OARM are developing a national 

inventory tracking system to ensure consistent and accurate equipment tracking 

and management. It is scheduled to be deployed in January 2007. OARM also 

has drafted a new policy to clarify and communicate the appropriate process and 

related requirements for property management during responses to incidents of 

national significance. EPA said this document, which will include the OIG’s 

recommendation, should be completed by December 31, 2006. 

EPA personnel did not agree to provide its emergency responders purchase cards 

for use in any response. They indicated it would be problematic to wait for a 

disaster to occur before issuing new cards to responders. They understand there is 

a need to segregate and track purchases made in response to a specific disaster 

situation. However, they believe this can be better accomplished through 

electronic logs to capture and store information on such purchases. They plan on 

developing and implementing this capability in Fiscal Year 2007. 

EPA said the OIG report implies that property accountability was neglected 

because EPA did not begin affixing decals and recording items purchased for its 

hurricane response for approximately 4 months. EPA said the report should 

reflect that 15 days after Hurricane Katrina, a task order was issued to the 

Region 6 contractors to develop a property tracking data base. This tasking 

19
illustrates the Agency’s recognition of the need to track property. Additionally, a 

T-card system was established to track field equipment. These interim systems 

initially utilized in lieu of decals did provide basic accountability for property and 

equipment purchased for the immediate response. 

In the early days of the response, there was understandable confusion regarding 

recording accountable property information within FAS. EPA said the report 

should accurately reflect that the responsibility for entering information on the 11 

satellite dishes procured by EPA headquarters rested with each region’s property 

officers. This equipment belonged to EPA, and was not procured with FEMA 

dollars. To immediately provide communications support for the Katrina 

response, the equipment was drop-shipped to the field once it was procured, in 

lieu of being sent to the regional offices for FAS entries by the responsible 

parties. This immediate critical support requirement clearly illustrates why 

interim property procedures were put in place until such time as the appropriate 

accountable property personnel became involved. 

We believe EPA’s response meets the intent of all our recommendations. Its 

reluctance to issue purchase cards to emergency responders is understandable. 

We offered this as a recommendation, and EPA’s alternative appears worthwhile. 

We agree there was understandably confusion in the aftermath of Katrina. 

However, we do not agree that EPA’s interim property procedures were the 

optimum method to cope with a disaster of this magnitude. The confusion 

surrounding how and who should record the satellite dishes is evidence enough. 

Stating that it took 4 months to begin recording purchases was not intended as a 

criticism, but an indication that locating and recording equipment after the fact 

with documentation scattered across a large response area should be avoided if 

possible. It proved to be extremely labor-intensive for EPA personnel to record 

equipment purchases after the equipment was pressed into use. EPA needs to 

review what happened during Katrina with a view toward improving its responses 

to future disasters. 

We made requested changes to the report when we deemed them appropriate. 

The full text of EPA’s response is in Appendix A. 

20
Status of Recommendations and 

Potential Monetary Benefits 

POTENTIAL MONETARY 

RECOMMENDATIONS BENEFITS (in $000s) 

Rec. 

No. 

Page 

No. Subject Status1 Action Official 

Planned 

Completion 

Date 

Claimed 

Amount 

Agreed To 

Amount 

2-1 9 Develop a strategy/plan to deploy a sufficient 

number of contracting officers and other support 

personnel to an emergency response area. 

O Assistant Administrators for 

OSWER and OARM 

12/31/06 

2-2 9 Develop pre-determined lists of volunteers who are 

willing to be deployed for time periods of 2 weeks 

or longer. 

C Assistant Administrators for 

OSWER and OARM 

04/30/06 

2-3 9 Continue exploring establishing advance 

agreements with vendors that are flexible and 

detailed for items that EPA used substantially 

during its Katrina response, such as housing, 

recreational vehicles, and food services. 

O Assistant Administrators for 

OSWER and OARM 

09/30/06 

3-1 14 Establish a policy and procedures for reviewing 

contractor invoices submitted during disasters that 

provide for additional contracting personnel in the 

regional offices so that more billings can be 

reviewed under each contract being used. 

O Assistant Administrators for 

OSWER and OARM 

12/31/06 

3-2 14 Ensure that contract clauses to limit charges for 

contractor-owned equipment flow down from the 

prime contract to the subcontracts. 

O Assistant Administrators for 

OSWER and OARM 

12/31/06 

3-3 14 Continue efforts to recoup the amounts 

overcharged by contractors for boat rental that 

exceeded the average purchase price. 

O Regional Administrator, 

Region 6 

12/31/06 $110.8 $110.8 

- Based on our recommendations during the course 

of our review, EPA recovered $18,298 from 

- $18.3 $18.3 

contractors in duplicate charges.

- Based on our recommendations during the course 

of our review, EPA recovered $54,734 from 

- $54.7 $54.7 

contractors for overcharges related to indirect cost 

and labor rates.

4-1 18 Consider centralizing or reducing the number of 

locations for equipment receipt; providing a 

sufficient number of property specialists in the 

affected area early during the crisis; ensuring that 

sensitive items included in the Agency’s list are 

clearly defined, updated periodically, and 

disseminated regularly; issuing purchase cards to 

responders for purchases during a specific 

disaster; and establishing a national custodial area 

in FAS for future large-scale national disasters so 

that all equipment purchases can be recorded 

more quickly and in a central location.2 

O Assistant Administrators for 

OSWER and OARM 

12/31/06 

1 

2 

O = recommendation is open with agreed-to corrective actions pending 

C = recommendation is closed with all agreed-to actions completed 

U = recommendation is undecided with resolution efforts in progress 

EPA agreed to take an acceptable alternative action in lieu of issuing purchase cards to responders 

21
Appendix A 

Full Text of Agency Response 

MEMORANDUM 

SUBJECT: Response to Draft Audit Report: Existing Contracts Enabled EPA to Quickly 

Respond to Hurricane Katrina; Future Improvement Opportunities Exist 

FROM: Luis A. Luna 

 Assistant Administrator 

TO: Carl A. Jannetti 

 Director, Contract Audits 

Thank you for the opportunity to submit comments on the draft report entitled, “Existing 

Contracts Enabled EPA to Quickly Respond to Hurricane Katrina; Future Improvement 

Opportunities Exist.” We generally agree with the draft report’s findings and recommendations, 

but have attached specific and detailed comments below. 

Should you have any questions, please contact Kerrie O’Hagan, Division Director of the 

Policy, Training, and Oversight Division in the Office of Acquisition Management, at (202) 564-

4479. 

cc: Chuck Gherardini 

Kerrie O’Hagan 

Cris Thompson 

John Oliver 

John Trefry 

Johnsie Webster 

Lucy Yarbrough 

Brenda Durden 

22
Comments on Draft Audit Report - “Existing Contracts Enabled EPA to Quickly Respond 

to Hurricane Katrina; Future Improvement Opportunities Exist” 

General Comments on Report/Findings -

- Chapter 1, Page 1, Background - 3rd paragraph, 1st line - Please change “EPA” to “EPA, 

Region 6,”. We had more than one Incident Command Center (ICC). The Metaire ICC was the 

one established in Region 6. Another ICC was established in Region 4, first in Mobile, AL., then 

moved to Biloxi, MS. 

- Chapter 2, Page 5, Background, 2nd full paragraph - The draft report states “negotiations were 

often performed by facility or response personnel without contracting officer involvement.” This 

is not correct. Market research was performed by personnel other than procurement staff, an 

acceptable contracting practice, but no Region 6 facility/logistics personnel participated in 

negotiations without a warranted contracting officer present. 

- Chapter 2, Page 5, Contract Agreements Need More Flexibility - We agree that more flexible 

contract terms for both food service and the trailers would have been beneficial. However, due 

to the circumstances (extremely limited sources who could provide these items, coupled with the 

vendors’ unwillingness to accept less than a guaranteed amount/price), we believe we made the 

correct decisions. The EPA contracting officer negotiated the absolute minimum the vendor was 

willing to accept in order to plan meals and purchase the food required to prepare the meals. 

Likewise, we negotiated a daily rate for the trailers that was considerably less than the FEMA 

allowable per diem, in spite of the lack of opportunity to build in flexibility within the initial 

emergency housing contract. Please note that, as market conditions changed and flexibility 

could be built into the solicitation, the trailer contracts were re-competed. 

- Chapter 2, Page 6, Contract Requirements Need More Detail - 2nd paragraph - Although these 

services were not individually priced, the continuous occupancy of the trailers required that the 

services be performed daily. While it is normally preferable to separate custodial services, due 

to the lack of available sources in the weeks following the disaster and the immediate need for 

acceptable housing, it was determined to be in the best interest of the Government to combine 

services. 

- Chapter 2, Page 8, Procurements Often Rushed and Contracting Personnel Not Available - The 

draft report states “facility and response personnel sometimes performed preliminary 

negotiations.” As we stated above, the facility and response personnel performed market 

research, not negotiations. When the time came to negotiate scope and price, Region 6 

facility/logistics personnel never participated in negotiations without a warranted contracting 

officer present. 

- Chapter 3, Page 12, EPA Overcharged for Contractor-Owned Boats - 1st paragraph, 2nd line -

After the sentence ending “...did not flow down to subcontracts,” we would like to add the 

following sentence: “However, the contractor has agreed to implement this practice with their 

subcontractors, and is currently working on a reimbursement of amounts charged in excess of 

average purchase prices.” 

23
- Chapter 3, Page 12, EPA Needs Increased Review of Invoices During Catastrophes - 2nd 

paragraph - The review process evolved and improved throughout the response. The team of 

field accountants that reviewed the 1900-55 daily reports included experienced ERRS 

contracting officers/contract specialists, and project officers from other Regions. The process 

evolved from line by line reviews of the daily reports, including identifying and reporting 

deficiencies, to proactively reviewing invoices as they were being prepared on-site. This 

practice enabled numerous corrections to be made before the invoices were finalized. In 

addition, the normal program review took place on the invoices, utilizing the Removal Cost 

Management System (RCMS) invoicing module. All discrepancies found were addressed and 

resolved by the contractors, contracting officers, and project officers. As the OIG review was 

concurrent with the EPA invoice review, EPA was unable to verify, with the information 

provided, whether the charges identified by the OIG were in addition to the errors found during 

our review process. 

- Chapter 3, Page 12, EPA Needs Increased Review of Invoices During Catastrophes - last 

paragraph, 2nd sentence - Please add Region 6 to this sentence. Both Regions provided 

additional contracting personnel for the invoice reviews. 

- Chapter 3, Page 13, EPA Needs Increased Review of Invoices During Catastrophes - Delete 

the last sentence, starting “Region 6....” The last comment above addresses Region 6's action. 

- Chapter 4, Page 14, Katrina Caused Problems in Property Management – 1st paragraph – 

Please change the term “custodial officer” to “property accountable officer (PAO).” 

- Chapter 4, Page 14, Katrina Caused Problems in Property Management - 2nd paragraph - The 

draft report states that “EPA did not begin affixing decals and recording items purchased for its 

hurricane response until approximately 4 months after Katrina occurred.” This language implies 

that property accountability was neglected. The report should accurately reflect that, on 

September 12, 2005, fifteen days after Hurricane Katrina, a task order was issued to the Region 6 

START contractors to develop a property tracking data base. This tasking illustrates the 

Agency’s recognition of the need to track property purchased in response to this disaster. 

Additionally, the USCG T-card system was established to track field equipment for operational 

decision-making purposes. 

Although the draft report criticizes EPA for not affixing decals to accountable property 

and entering information into the Fixed Asset System (FAS) as required under EPA property 

guidelines, the report should recognize that the systems initially utilized in lieu of decals did, in 

fact, provide basic accountability for property and equipment purchased for the immediate 

response. These interim procedures were used while EPA Logistics personnel were continuing 

to provide essentially needed support for responders. Once the critical first stages of the response 

were brought under control, the purchase and delivery/receiving processes were brought on line 

when Region 6 Logistical personnel became engaged in the response. 

- Chapter 4, Page 15, Katrina Caused Problems in Property Management – 2nd paragraph - In the 

early days of the response, there was understandable confusion regarding recording accountable 

24
property information within FAS. The report should accurately reflect that the responsibility for 

entering information on the 11 satellite dishes procured by HQ EPA through its National 

Approach to Response (NAR 4) communications equipment contract, rested with each Region’s 

property accountable officers. This equipment belonged to EPA, and was not procured with 

FEMA dollars. To immediately provide communications support for the Katrina response, the 

equipment was drop shipped to the field once it was procured, in lieu of being sent to the 

Regional Offices for FAS entries by the responsible parties. This immediate critical support 

requirement clearly illustrates why interim property procedures were put in place until such time 

as the appropriate accountable property personnel became involved. 

- Chapter 4, Page 16, Steps Taken to Safeguard Equipment during Katrina Response – 3rd 

paragraph - We recommend replacing the third sentence with the following: “Incomplete 

information such as this could hinder EPA’s ability to maximize the effectiveness with which it 

utilizes equipment for responding to disasters.” 

Comments on Recommendations – 

2-1 – Recognizing that the Assistant Administrators for OSWER and OARM have begun a 

process to improve EPA’s response efforts for future catastrophic events based on its 

Katrina experience, we recommend that the Assistant Administrators develop a 

strategy/plan to deploy a sufficient number of contracting officers and other support 

personnel to the emergency response area. 

Response – We concur with this recommendation. We also suggest adding the words “or make 

available” after “deploy, ” as well as a new sentence to the Recommendation that reads: “This 

should be a flexible strategy where the Region(s) can determine the deployment strategy based 

on the individual requirements of the emergency.” 

OSWER and OARM have initiated the following to address this Recommendation: 

- EPA has developed and provided initial training for a Response Support Corps (RSC) list of 

EPA Headquarters and Regional personnel willing and prepared to deploy to future incidents of 

national significance (INS). This list includes contracting personnel. OSWER is working with 

EPA’s National Incident Coordination Team (NICT) and the Regional RSC coordinators to 

develop national guidance that will identify and refine the training and exercise requirements for 

the RSC. OARM/OAM is participating on the further development of this list, including 

contracting officers. A National RSC Guidance document is expected to be available by 

December 2006. Part of this guidance will include the requirement that personnel deploy for two 

weeks or longer. 

- OARM/OAM has already prepared a Headquarters/Regional List of Contracting Officers 

available to be deployed to support EPA response activities, as part of a Federal Governmentwide effort. This list was prepared in April 2006. OARM/OAM is an active participant in the 

Government-wide Chief Acquisition Officer Council (CAOC) Contracting Contingency Work 

Group, which has a goal of creating a similar Government-wide list for use by any and all 

Federal agencies in the event of future incidents of national significance. 

25
- OARM/OAM is working with OMB to develop a list of Federal Government-wide acquisition 

professionals that can be called upon by Federal agencies to support emergency response efforts. 

This program includes providing emergency response training tailored to the contracting 

functions that may be needed for responding to incidents of national significance. 

2-2 – Recognizing that the Assistant Administrators for OSWER and OARM have begun a 

process to improve EPA’s response efforts for future catastrophic events based on its 

Katrina experience, we recommend that the Assistant Administrators develop predetermined lists of volunteers who are willing to be deployed for periods of 2 weeks or 

longer. 

Response – We concur. Please see our comments above for Recommendation 2-1. 

2-3 – Recognizing that the Assistant Administrators for OSWER and OARM have begun a 

process to improve EPA’s response efforts for future catastrophic events based on its 

Katrina experience, we recommend that the Assistant Administrators continue exploring 

establishing advance agreements with vendors that are flexible and detailed for the items 

EPA used substantially during its Katrina response, such as housing, recreational vehicles, 

and food services. 

Response – We concur. OARM/OAM is leading the effort to address this issue, and is currently 

in the process of awarding two national blanket purchasing agreements (BPAs) to provide 

emergency response technical support and logistical services (food, housing, facilities etc.) 

OARM/OAM estimates that the BPAs will be in place by 9/30/06. The terms and conditions 

will be as flexible as possible to address the lessons learned by EPA responses to incidents of 

national significance, including Hurricanes Katrina and Rita. 

3-1 – We recommend that the Assistant Administrator for OSWER, in conjunction with 

OARM, establish a policy and procedures for reviewing contractor invoices submitted 

during disasters that provide for additional contracting personnel in the regional offices so 

that more billings can be reviewed under each contract being used. 

Response – In general, we concur. We believe the invoice review and approval process during 

the hurricane response was adequate (see comments above under General Comments on 

Report/Findings), especially considering the extraordinary nature of the incident, and especially 

with the major support contracts (ERRS and START). However, OARM and OSWER are 

currently reviewing applicable guidance documents containing requirements and 

recommendations for appropriate personnel to perform timely reviews of invoices at the 

deployment site. Furthermore, OSWER, OARM/OAM, and Regional Contracting Officers 

participated in an Incident Command System (ICS) symposium in August 2006 with a primary 

goal of addressing key response support issues including contract management, invoice approval, 

etc. 

The ICS-established positions of Finance Section Chief, Procurement Unit Leader, and 

Cost Unit Leader functions (including invoice approvals) are being further developed and 

26
clarified to ensure proper roles and responsibilities are clearly established and communicated. 

The roles and responsibilities of these (and the other ICS) positions, which will report to and 

work for OSWER, will be presented in the form of an Incident Management Handbook. A draft 

document will be available October 1, 2006. The final version will be completed December 31, 

2006. 

3-2 – We recommend that the Assistant Administrator for OSWER, in conjunction with 

OARM, ensure that contract clauses to limit charges for contractor-owned equipment flow 

down from the prime contract to the subcontracts. 

Response – We concur. OARM/OAM will review all affected contracts by the end if CY 2006, 

in addition to future requirements, to ensure that such clauses are included. 

3-3 – We further recommend that the Regional Administrator, Region 6, continue efforts to 

recoup the amounts overcharged by contractors for boat rental that exceeded the average 

purchase price. 

Response – We concur. Region 6’s contracting staff will continue to work with the contractor to 

ensure that reimbursements or credits are received by EPA for boat rental that exceeded the 

average purchase price. We will attempt to ensure that all related reimbursements or credits are 

received by the end of CY 2006. 

4-1 (Bullet 1) – Recognizing that the Assistant Administrator for OSWER has begun a 

process to improve EPA’s response efforts for future catastrophic events based on its 

Katrina experience, and that the Assistant Administrator for OARM has initiated a similar 

process for safeguarding equipment, we recommend that the Assistant Administrators for 

OSWER and OARM consider centralizing or reducing the number of locations for 

equipment receipt. 

Response – We generally concur, but please see our notes below. EPA implements an incident 

command system (ICS) when conducting responses to incidents of national significance. ICS 

established clear roles and responsibilities for various response personnel/positions. The 

Logistics Section Chief is responsible for the overall coordination and processing of equipment 

needs, including working with the Procurement Unit Leader on procurement and with other 

groups including the Operations Section on equipment needs. Based on the timing and location 

of these identified needs, the Logistics Section Chief will help coordinate the scheduled delivery 

of equipment. Depending on the specific nature and scope of the incident, the process will 

typically include a central location for equipment delivery and recording/tracking. 

There may, however, be situations that warrant delivery of equipment directly to non-centralized 

response sites. This will be up to the Logistics Section Chief. The roles and responsibilities of 

this and other ICS-established positions are in the process of being defined and clarified. The 

final version of the Incident Management Handbook that will address the roles and 

responsibilities will be completed by December 31, 2006. 

27
4-1 (Bullet 2) – Recognizing that the Assistant Administrator for OSWER has begun a 

process to improve EPA’s response efforts for future catastrophic events based on its 

Katrina experience, and that the Assistant Administrator for OARM has initiated a similar 

process for safeguarding equipment, we recommend that the Assistant Administrators for 

OSWER and OARM consider providing a sufficient number of property specialists in the 

affected area early during the crisis. 

Response – We concur. EPA has developed and provided initial training to Response Support 

Corps personnel, including property secialists, in Headquarters and the Regional offices. These 

are personnel willing and prepared to deploy to future incidents of national significance (INS). 

OSWER is working with EPA’s NICT and the Regional Response Support Corps coordinators to 

develop national guidance which will identify and refine the training and exercise requirements 

for the RSC, including all necessary specialist requirements. A National RSC Guidance 

document is anticipated by December 31, 2006. 

4-1 (Bullet 3) – Recognizing that the Assistant Administrator for OSWER has begun a 

process to improve EPA’s response efforts for future catastrophic events based on its 

Katrina experience, and that the Assistant Administrator for OARM has initiated a similar 

process for safeguarding equipment, we recommend that the Assistant Administrators for 

OSWER and OARM consider ensuring that sensitive items included in the Agency’s list 

are clearly defined, updated periodically, and disseminated regularly. 

Response – We concur. OARM has drafted and is currently revising a new policy document to 

clarify and communicate the appropriate process and related requirements for property 

management during responses to incidents of national significance. This document, which will 

include your recommendation, should be completed by December 31, 2006. 

In addition to standard policy publication and dissemination processes, this effort will also be 

coordinated and communicated via the National Approach to Response (NAR) Administration 

and Finance Support Workgroup. Also, the property management process was one key item of 

discussion at the Incident Command System (ICS) symposium in August 2006. The position of 

Logistics Section Chief and related subordinate unit leaders are being further developed and 

clarified to ensure proper roles and responsibilities during responses to incidents of national 

significance, including clear guidelines for property management. The roles and responsibilities 

of these (and the other ICS) positions will be presented in the form of an Incident Management 

Handbook. A draft document will be available October 1, 2006. The final version will be 

completed December 31, 2006. 

4-1 (Bullet 4) – Recognizing that the Assistant Administrator for OSWER has begun a 

process to improve EPA’s response efforts for future catastrophic events based on its 

Katrina experience, and that the Assistant Administrator for OARM has initiated a similar 

process for safeguarding equipment, we recommend that the Assistant Administrators for 

OSWER and OARM consider issuing purchase cards to responders for purchases during a 

specific disaster. 

28
Response – We do not agree with this recommendation. EPA’s emergency responders already 

have purchase cards issued to them for use in any response. It would not only be unnecessary, 

but problematic, to wait for a disaster to occur before issuing new cards to responders. We 

understand that there is a need to segregate and track purchases made in response to a specific 

disaster situation. We believe this can be better accomplished through obtaining electronic log 

capability that could be used within the Incident Command Structure to capture and store 

information on such purchases. We plan on developing and implementing this capability in FY 

2007. 

4-1 (Bullet 5) – Recognizing that the Assistant Administrator for OSWER has begun a 

process to improve EPA’s response efforts for future catastrophic events based on its 

Katrina experience, and that the Assistant Administrator for OARM has initiated a similar 

process for safeguarding equipment, we recommend that the Assistant Administrators for 

OSWER and OARM consider establishing a national custodial area in FAS for future 

large-scale national disasters so all equipment purchases can be recorded more quickly and 

in a central location. 

Response - We concur. OSWER and OARM property personnel are developing a national 

inventory tracking system to ensure consistent and accurate equipment tracking and management 

in future responses to incidents of national significance. This tracking system is scheduled to be 

deployed in January 2007. OARM has drafted, and is currently revising, a new policy document 

to clarify and communicate the appropriate process and related requirements for property 

management during responses to incidents of national significance, including the use of this 

tracking system. 

In addition to standard policy publication and dissemination processes, this effort will also be 

coordinated and communicated via the National Approach to Response (NAR) Administration 

and Finance Support Workgroup. Also, the property management process was one key item of 

discussion at the Incident Command System (ICS) symposium in August 2006. The position of 

Logistics Section Chief and related subordinate unit leaders are being further developed and 

clarified to ensure proper roles and responsibilities during responses to incidents of national 

significance, including clear guidelines for property management. The roles and responsibilities 

of these (and the other ICS) positions will be presented in the form of an Incident Management 

Handbook. A draft document will be available October 1, 2006. The final version will be 

completed December 31, 2006 

29
Appendix B 

Distribution 

EPA Headquarters 

Office of the Administrator 

Assistant Administrator for Solid Waste and Emergency Response 

Assistant Administrator for Administration and Resources Management 

Agency Followup Official 

Agency Followup Coordinator 

General Counsel 

Associate Administrator for Congressional and Intergovernmental Relations 

Associate Administrator for Public Affairs 

Audit Followup Coordinator, Office of Solid Waste and Emergency Response 

Audit Followup Coordinator, Office of Administration and Resources Management 

Acting Inspector General 

EPA Region 4 

Regional Administrator 

Regional Audit Followup Coordinator 

EPA Region 6 

Regional Administrator 

Regional Audit Followup Coordinator 

30