U.S. ENVIRONMENTAL PROTECTION AGENCY

OFFICE OF INSPECTOR GENERAL

EPA Should Increase 

Fixed-Price Contracting for 

Remedial Actions 

Report No. 13-P-0208 March 28, 2013 

Scan this mobile 

code to learn more 

about the EPA OIG. 
 

 

 

 

Report Contributors: Michael Petscavage 

 Melinda Burks 

 David Penman 

 Doug LaTessa 

Abbreviations 

CO Contracting Officer 

CPFF Cost-Plus-Fixed-Fee 

EAS EPA Acquisition System 

EPA U.S. Environmental Protection Agency 

FAR Federal Acquisition Regulation 

GAO U.S. Government Accountability Office 

IDIQ Indefinite-Delivery/Indefinite-Quantity 

LTRA Long Term Remedial Action 

OAM Office of Acquisition Management 

OARM Office of Administration and Resources Management 

OIG Office of Inspector General 

OMB U.S. Office of Management and Budget 

OSRTI Office of Superfund Remediation and Technology Innovation 

OSWER Office of Solid Waste and Emergency Response 

QAP Quality Assessment Plan 

RAC Remedial Action Contract 

RI/FS Remedial Investigation/Feasibility Study 

T&M Time-and-Materials 

Hotline 

To report fraud, waste, or abuse, contact us through one of the following methods: 

e-mail: OIG_Hotline@epa.gov write: EPA Inspector General Hotline 

phone: 

fax: 

1-888-546-8740 

202-566-2599 

1200 Pennsylvania Avenue, NW 

Mailcode 2431T 

online: http://www.epa.gov/oig/hotline.htm Washington, DC 20460 
 

 

U.S. Environmental Protection Agency 13-P-0208 

March 28, 2013 Office of Inspector General 

At a Glance
 

Why We Did This Review 

We conducted this review to 

determine if the U.S. 

Environmental Protection 

Agency (EPA) is reducing the 

amount of high risk contracting 

activities for remedial actions. 

In the cleanup of Superfund 

sites, EPA uses a variety of 

instruments (such as contracts, 

cooperative agreements, and 

interagency agreements) to 

obtain Superfund remedial 

services. One such instrument 

used in procuring these 

services is the Remedial Action 

Contract (RAC). The Agency 

had expenditures of almost 

$570 million for remedial 

actions under RAC contracts 

for fiscal years 2007 through 

2011. 

This report addresses the 

following EPA Goals or 

Cross-Cutting Strategies: 

 Cleaning up communities 

and advancing sustainable 

development. 

 Strengthening EPA’s 

workforce and capabilities. 

For further information, contact 

our Office of Congressional and 

Public Affairs at (202) 566-2391. 

The full report is at: 

www.epa.gov/oig/reports/2013/ 

20130328-13-P-0208.pdf 

EPA Should Increase Fixed-Price Contracting 

for Remedial Actions 

What We Found 

EPA continues to rely on high risk cost-reimbursement contracts and time-andmaterials task orders in the Superfund remedial program. The President, U.S. 

Office of Management and Budget, Congress, and U.S. Government 

Accountability Office have called for a reduction in high risk contracts. Resistance 

to change, regional program office pressure, lack of leadership, and lack of trained 

qualified staff have contributed to the reliance on high risk contracts. Reducing the 

reliance on these contracts can result in numerous benefits, including cost 

savings, increased competition, and achievement of socio-economic goals. 

Additionally, the EPA Acquisition System (EAS) contains inaccurate contract and 

task order types. Specifically, 5 of 17 contracts and 22 of 60 task orders and work 

assignments reviewed had an incorrect contract or award type listed in EAS. The 

inaccurate data in EAS is due to the lack of a specific EAS data quality plan and a 

decentralized quality assessment process. As a result, EPA is misreporting 

contract and spending information to the public.

 Recommendations and Planned Agency Corrective Actions 

We recommend that EPA require written acquisition plans for cost reimbursement 

RAC contracts be approved by the Head of the Contracting Activity. We also 

recommend that EPA develop performance measures and goals for each region 

for the use of fixed-price contracts and task orders, and recommend that EPA 

provide training to staff on how and when less risky contracts and task orders 

should be used. Finally, we recommend that EPA determine whether staffing 

changes are needed in each region to ensure that staff have the skills to manage 

the increased use of fixed-price contracts and task orders and develop a data 

quality plan for EAS to ensure the adequacy of data across all regions. 

EPA agreed in principle to the objectives of the report – to improve acquisition 

planning and increase the use of fixed price contracts where appropriate. EPA 

concurred with two of our recommendations but disagreed or did not respond to 

four others. EPA did agree to provide training on how and when less risky 

contracts and tasks orders are appropriate. EPA indicated that the decision on 

contract type must be made on a case-by-case basis and did not agree with 

requiring certain contract types or setting performance measures for fixed price 

contracting. We revised one of the draft report recommendations to not require a 

certain contract type, but to elevate the responsibility for approving future costreimbursable RAC contracts.

 Noteworthy Achievements 

EPA Region 7 is implementing the vision of the original Contracts 2000 Strategy to 

increase the use of fixed price contracting for Superfund remedial actions. 
 

 

 

UNITED STATES ENVIRONMENTAL PROTECTION AGENCY 

WASHINGTON, D.C. 20460 

THE INSPECTOR GENERAL 

March 28, 2013 

MEMORANDUM 

SUBJECT:	 EPA Should Increase Fixed-Price Contracting for Remedial Actions 

 Report No. 13-P-0208 

FROM: Arthur A. Elkins Jr. 

TO:	 Craig E. Hooks, Assistant Administrator 

Office of Administration and Resources Management 

Mathy Stanislaus, Assistant Administrator 

Office of Solid Waste and Emergency Response 

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

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

problems the OIG has identified and corrective actions the OIG recommends. This report 

represents the opinion of the OIG and does not necessarily represent the final EPA position. 

EPA agreed with two recommendations and provided corrective actions with completion dates, 

and these recommendations are considered resolved. For the other four recommendations, the 

Agency either disagreed or the response did not address the recommendation, and these will be 

resolved through the audit resolution process. Final determinations on matters in this report will 

be made by EPA managers in accordance with established audit resolution procedures. 

Action Required 

In accordance with EPA Manual 2750, the resolution process begins immediately with the 

issuance of this report. We are requesting a meeting within 30 days between the Director, Office 

of Acquisition Management; Director, Office of Superfund Remediation and Technology 

Innovation; and the OIG’s Assistant Inspector General for Audit. If resolution is still not reached, 

the Assistant Administrator for Administration and Resources Management and the Assistant 

Administrator for Solid Waste and Emergency Response are required to complete and submit the 

dispute resolution request to the Chief Financial Officer to continue resolution. 
We have no objections to the further release of this report to the public. We will post this report 

to our website at http://www.epa.gov/oig. 

If you or your staff have any questions regarding this report, please contact Melissa Heist, 

Assistant Inspector General for Audit, at (202) 566-0899 or heist.melissa@epa.gov; or 

Janet Kasper, Product Line Director, at (312) 886-3059 or kasper.janet@epa.gov. 
 

 

 

 

 

 

 

 

 

 

 

EPA Should Increase Fixed-Price Contracting 13-P-0208 

for Remedial Actions 

Table of Contents 

Chapters 

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

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

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

 Noteworthy Achievements ........................................................................... 4 

 Scope and Methodology .............................................................................. 4 

2 EPA Continues to Rely on High Risk Contracts for Remedial Actions......... 8
 

Federal Government Encouraged to Limit High Risk Contracts .................. 8 

EPA Continues Reliance on High Risk Contracts and Task Orders 

 for Remedial Actions ............................................................................. 9 

EPA Culture Encourages Status Quo ......................................................... 10 

EPA Missing Out on the Benefits of Fixed-Price Contracting ...................... 14 

 Recommendations ...................................................................................... 15 

Agency Response and OIG Evaluation ....................................................... 16 

3 Inaccurate Contract Data................................................................................... 18 

OMB’s Open Government Directive Requires Data Quality ........................ 18 

Incorrect Contract and Task Order Types Listed in EAS ............................. 19 

Lack of a Specific Data Quality Plan for EAS and a Decentralized 

 QAP Process Led to Data Integrity Issues ............................................ 19 

EPA Is Misreporting Vital Contract and Spending Information .................... 20 

 Recommendations ...................................................................................... 20 

Agency Response and OIG Evaluation ....................................................... 20 

Status of Recommendations and Potential Monetary Benefits.............................. 22
 

Appendices 

A Sampled Contracts, Task Orders, and Work Assignments for 

 Data Integrity ...................................................................................................... 23 

B Agency Response to Draft Report and OIG Evaluation.................................. 25 

C Distribution ......................................................................................................... 37 
 

 

 

Chapter 1

Introduction 

Purpose 

In recent years, the President, U.S. Office of Management and Budget (OMB), 

Congress, and U.S. Government Accountability Office (GAO) have raised 

concerns or called for a reduction in high risk contracts. The U.S. Environmental 

Protection Agency (EPA) Office of Inspector General (OIG) conducted this audit 

to determine whether EPA is reducing the amount of high risk contracting 

activities for remedial actions. 

Background 

Superfund Cleanup Process 

Congress enacted the Comprehensive Environmental Response, Compensation, 

and Liability Act, commonly referred to as “Superfund,” to address threats to 

human health or the environment resulting from releases or potential releases of 

hazardous substances. EPA has primary responsibility for managing cleanup and 

enforcement activities under Superfund. 

EPA’s Superfund cleanup process can be lengthy; it can sometimes take decades 

to clean up the contamination. The cleanup process involves a series of steps 

during which specific activities take place or decisions are made (figure 1). 

Figure 1: Superfund cleanup phases 

Source: GAO Report GAO-12-109, January 2012. 

During the site assessment process, EPA and states collect data to identify, 

evaluate, and rank hazardous waste sites based on Hazard Ranking System 

criteria. Using these criteria, EPA conducts a preliminary assessment and, if 

13-P-0208 1 
 

 

warranted, a site inspection to determine whether the site warrants short- or longterm cleanup attention. Sites that EPA determines are among the nation’s most 

seriously contaminated hazardous waste sites are placed on the National Priorities 

List for attention under the Superfund program. 

After a site is placed on the National Priorities List, the remedial process begins 

with a two-part study of the site: (1) a remedial investigation to characterize site 

conditions and assess the risks to human health and the environment, and (2) a 

feasibility study to evaluate various options to address the problems identified 

through the remedial investigation. The culmination of these studies is a record of 

decision, which identifies the selected remedy for addressing the site’s 

contamination and a cost estimate for implementing the remedy. EPA or the 

primary responsible party may develop preliminary estimates of construction 

costs and, as the site moves from the study phase into the remedial action phase, a 

more accurate cost estimate may be developed. The method of implementation for 

the selected remedy is then developed during remedial design and implemented 

during the remedial action phase, when actual cleanup of the site occurs. 

When all construction of the cleanup remedy at a site is finished, all immediate 

threats have been addressed, and all long-term threats are under control, EPA 

generally considers the site to be “construction complete.” Sites where additional 

work is required after construction is completed then enter into the post 

construction phase, which includes actions such as operation and maintenance and 

conducting 5-year reviews. When EPA determines that no further site response is 

appropriate, it deletes the site from the National Priorities List. 

Remedial Action Contracts (RACs) 

In the cleanup of Superfund sites, EPA uses a variety of instruments such as 

contracts, cooperative agreements, and interagency agreements to obtain services 

to assist in the remediation of Superfund sites. EPA awards contracts for remedial 

services using RACs, which are full service contracts that provide all services 

needed in the Superfund cleanup process. The services include program support 

(management); remedial investigation and feasibility studies; engineering services 

to design remedial actions; and engineering services for construction oversight. 

RAC contractors may also provide technical and management services supporting 

EPA’s coordination and/or oversight of remedial activities performed by a State, 

the U.S. Army Corps of Engineers, or responsible parties identified in 

enforcement actions. Overall, the Agency had expenditures of almost $570 

million for remedial actions under RAC contracts for fiscal years 2007 through 

2011. 

Contracts 2000 Strategy 

The Office of Solid Waste and Emergency Response (OSWER), in conjunction 

with the Office of Acquisition Management (OAM) within the Office of 

13-P-0208 2 
 

 

Administration and Resources Management (OARM), developed the Superfund 

Contracts 2000 Strategy Report (Contracts 2000 Strategy) to formulate the 

structure of the Superfund contracting program for the year 2000 and beyond. The 

central purpose of the strategy was to develop a portfolio of contracts for the 

future that best met program needs while using the best procurement practices. 

The strategy established the following goals: 

 Balance national consistency with regional flexibility. 

 Introduce more competition into the contracting process. 

 Increase small-, minority-, and women-owned business participation in the 

Superfund contracting program. 

 Adopt new contracting vehicles and methods such as performance-based, 

multiple award, and fixed-price contracting. 

While the strategy kept most of the existing contract infrastructure in place, it 

shifted away from large, full service contracts such as RACs to functionally 

focused contracts for design and construction services. The Agency stated that 

functional contracts sized and focused on specific activities should reduce 

infrastructure costs and allow for greater competition. 

The Agency stated in the Contracts 2000 Strategy that it planned to split up the 

requirements previously consolidated under the RACs to allow more firms, 

especially small businesses, to participate in the program and increase 

competition. The rationale was that smaller contracts can be more readily 

adaptable to changing program requirements and increase opportunities for the 

use of fixed-price, completion form, and performance-based contracting. 

Subsequent to issuing the Contracts 2000 Strategy, the Agency changed the 

strategy to a menu approach, allowing regions to choose from a variety of contract 

methods and types, including the full service RACs. 

Contracts 2010 Strategy 

As the successor to the Contracts 2000 Strategy, OSWER and OAM established 

the Contracts 2010 Strategy in March 2011. This strategy has seven goals, 

incorporating those highlighted in the previous Contracts 2000 Strategy and 

adding others that reflect new program directions and heightened governmentwide concerns for efficiency and procurement process improvements. This 

strategy sets the Agency’s framework for acquisitions in support of the Superfund 

program activities for the next 10 years. The seven goals are: 

 Balance national consistency with local flexibility. 

 Ensure that there is appropriate competition in the contracting process. 

 Increase participation of all socio-economic concerns in the Superfund 

contracting program. 

 Implement green policies and procedures. 

13-P-0208 3 
 

 

 Identify and implement opportunities and initiatives for process and cost 

efficiencies. 

 Identify the full range of vehicles or instruments available for obtaining 

services for the Superfund cleanup programs. 

 Mitigate high risk contracting practices. 

To achieve the goal of mitigating high risk contracting practices, the Agency 

identified funding obligated to high risk contacts. The intent is to identify new and 

existing acquisitions that may be converted to less risky vehicles. To mitigate 

risks associated with high risk contracts, the Agency identified as a best practice 

issuing fixed-priced orders against indefinite-delivery/indefinite-quantity (IDIQ) 

contracts, when possible. 

Noteworthy Achievements 

Region 7 implemented the vision of the original Contracts 2000 Strategy. For 

example, the region is breaking out the construction portion of the remedial action 

and contracting for it directly instead of having the RAC contractor manage it. 

This allows the region to compete each remedial action, taking advantage of 

increased competition. Region 7 has trained and hired the staff needed to award 

and manage fixed-price contracts for remedial actions. As of May 2012, Region 7 

had awarded 38 site specific contracts since 2005. We reviewed all of these 

contracts and determined that only one was not a fixed-price type contract. 

Region 7’s transition to site specific contracts has resulted in fewer high risk 

contracts, increased competition, and greater achievement of socioeconomic 

contracting goals. 

Scope and Methodology 

We conducted this audit from September 2011 to January 2013 in accordance 

with generally accepted government auditing standards. 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. 

We visited Regions 4, 7, and 9, and headquarters (which administers the RAC 

contracts for Regions 1 and 8). Regions 1, 4, and 9 use IDIQ RAC contracts, 

while Region 8’s RAC contracts are cost-plus-fixed-fee (CPFF). Region 7 uses 

mostly fixed-price contracts for remedial actions. Our goal was to gain a broad 

perspective of contracting for remedial actions across the country, which includes 

providing audit coverage of regions using IDIQ, cost-reimbursement, and fixedprice contracts. Including audit coverage of Regions 1, 4, 7, 8, and 9 gave us the 

broad perspective needed to form sound conclusions on the Agency’s remedial 

action contracting as a whole. 

13-P-0208 4 
 

 

We interviewed contracting and program staff in each of these five regions to 

document the processes used to select a contract type for remedial services and to 

discuss the types of remedial work performed. We also surveyed Superfund and 

contracting staff in the other regions to help us identify similar work across the 

country that could possibly be done as fixed-price or could be compared with 

similar work that we know has been done fixed-price elsewhere. In addition, we 

performed the following to answer our audit objective: 

 Determined the type of RAC contracts in existence prior to the current 

RAC contracts and compared to the most recent RAC contracts. 

 Determined the number of fixed-price site specific remedial action 

contracts since 2002. 

 Determined the universe of IDIQ and cost-reimbursable RAC contracts. 

 Determined the universe of RAC task orders or work assignments for 

those regions we visited. 

 Interviewed regional management and staff regarding their perspectives on 

fixed-price and IDIQ contracts. 

	 Met with OSWER’s Office of Superfund Remediation and Technology 

Innovation (OSRTI) and OAM to gain their perspectives on contract type, 

and to obtain and discuss performance measures or goals related to RAC 

contracts or the overall reduction of risky contract types. 

 Determined how Regions 4 and 7 have overcome institutional resistance 

and other barriers to using fixed-price contracting. 

 Obtained additional information from Region 4 regarding its multiple 

award solicitation. 

 Obtained and analyzed acquisition plans for the RAC contracts. 

 Determined if similar remedial actions existed within a region where EPA 

used both a fixed-price and time-and-materials (T&M) contract or task 

order to perform the selected remedy. 

For all five regions reviewed, we obtained a listing of task orders or work 

assignments awarded and developed a judgmental sampling methodology for each 

contract. We selected the task orders and work assignments for review if they met 

the following criteria: (1) the award was a remedial action; or (2) if there were 

less than five remedial action task orders or work assignments, then long term 

remedial actions (LTRA), remedial investigation/feasibility studies (RI/FS), 

remedial designs, oversight task orders, and 5-year reviews were also 

judgmentally selected for review. We also included in the sample fixed-price 

contracts awarded by Region 7. The following provides specific details on each 

region and the contracts, task orders, and work assignments selected for review. 

	 Region 1. Region 1 has two IDIQ RAC contracts. For contract EP-S1-06­

01, we judgmentally reviewed 8 of 53 task orders. The target population 

was remedial action task orders. Because there were only three remedial 

actions, we also judgmentally reviewed three LTRA task orders and two 

remedial action oversight task orders to enlarge the sample size. For 

13-P-0208 5 
 

 

contract EP-S1-06-03, we reviewed 8 of 64 task orders. We reviewed 

three remedial actions and judgmentally reviewed four LTRA task orders 

and one remedial design task order. 

	 Region 4. Region 4 has two IDIQ RAC contracts. For contract EP-S4-09­

02, we judgmentally reviewed 21 of 64 task orders. In addition to the 14 

remedial action task orders, we judgmentally reviewed one 5-year review, 

one removal support, one remedial action oversight, and four LTRA task 

orders to enlarge the sample size. For contract EP-S4-08-03, we 

judgmentally reviewed 4 of 25 task orders. Since there was only one 

remedial action, we also reviewed one RI/FS task order, one remedial 

design task order, and one risk assessment task order to enlarge the sample 

size. 

	 Region 7. Because Region 7 was the one region implementing the 

Contracts 2000 Strategy, we reviewed all 38 site specific contracts issued 

between June 2005 and May 2012. 

	 Region 8. Region 8 has two cost-reimbursement RAC contracts. For 

contract EP-W-06-006, we judgmentally reviewed three of the four 

remedial action work assignments. For contract EP-W-05-049, we 

reviewed the only two remedial action work assignments issued under the 

contract. 

	 Region 9. Region 9 has two IDIQ RAC contracts. Since there was only 

one remedial action for contract EP-S9-08-03, we also judgmentally 

reviewed two LTRA task orders and two 5-year reviews to enlarge the 

sample size. For contract EP-S9-08-04, we reviewed all five remedial 

action task orders and judgmentally reviewed one 5-year review. 

For the above contracts, task orders, and work assignments reviewed, we 

determined whether the type was cost-reimbursement or fixed. We documented 

the type of work being performed and determined if similar scopes of work 

existed on fixed-price task orders or contracts. We also performed steps to review 

data quality issues discovered during preliminary research. These steps entailed 

comparing the contract, task order, and work assignment type within EPA’s 

systems to the type identified in the contract files for each contract, task order, 

and work assignment reviewed during our audit. We determined controls 

governing correct entry of this data and discussed with staff and management the 

reasons behind any discrepancies. Because we relied on source documentation, 

the data quality issues identified did not impact our conclusion regarding our 

primary audit objective. 

We reviewed internal and management controls in the context of the Agency’s 

process for selecting contract type in the remedial program. We obtained an 

13-P-0208 6 
 

 

 

understanding of this process through analysis of the laws, regulations, and 

guidance, as well as interviews. 

We also reviewed the most recent Federal Managers’ Financial Integrity Act 

assurance letters for OSWER and OARM, as well as GAO and OIG management 

challenges documents. EPA did not identify internal control weaknesses directly 

related to our audit objectives. 

Prior Audit Coverage 

EPA OIG 

In OIG Report No. 2005-P-00001, Response Action Contracts: Structure and 

Administration Need Improvement, dated December 6, 2004, the OIG 

recommended that the Agency develop and implement a plan for RACs that 

increases use of IDIQ and site specific contracts, and conduct a lessons learned 

analysis of the new IDIQ contracts. We followed up on this prior report during 

this audit and determined that the Agency did not fully implement these 

recommendations. 

GAO 

In GAO Report No. GAO-09-921, Contract Management: Extent of Federal 

Spending under Cost-Reimbursement Contracts Unclear and Key Controls Not 

Always Used, issued in September 2009, GAO reported that federal agencies 

obligate billions of dollars annually using cost-reimbursement contracts. GAO 

stated that this type of contract involves high risk for the government because of 

the potential for cost escalation and because the government pays a contractor’s 

costs of performance regardless of whether the work is completed. Additionally, 

GAO stated that cost-reimbursement contracts are suitable only when the cost of 

the work to be done cannot be estimated with sufficient accuracy to use fixedprice contracts. GAO made recommendations to OMB’s Office of Federal 

Procurement Policy aimed at encouraging timely analysis to determine if a 

transition can be made to contracts with a firmer pricing basis. 

13-P-0208 7 
 

 

Chapter 2

EPA Continues to Rely on High Risk Contracts 

for Remedial Actions 

EPA continues to rely on high risk cost-reimbursement contracts and T&M task 

orders in the Superfund remedial program. The President, OMB, Congress, and 

GAO have called for a reduction in high risk contracts. Resistance to change, 

regional program office pressure, lack of leadership, and lack of trained qualified 

staff have contributed to the overreliance on high risk contracts. Reducing 

reliance on these contracts can result in numerous benefits, including cost savings, 

increased competition, and achievement of socioeconomic goals. 

Federal Government Encouraged to Limit High Risk Contracts 

Presidential and OMB Memorandums 

On March 4, 2009, President Obama issued a memo regarding federal contracting 

practices. The memo stated that cost-reimbursement contracts create a risk that 

taxpayer funds will be spent on contracts that are wasteful, inefficient, subject to 

misuse, or otherwise not well designed to serve the needs of the federal 

government or the interests of the American taxpayer. The memo directed OMB 

to issue guidance to govern the appropriate use and oversight of all contract types 

in full consideration of the agency’s needs, and to minimize risk and maximize 

the value of government contracts. On July 29, 2009, OMB issued a memo 

providing guidance to agencies to reduce high risk contracts. The memo stated 

that cost-reimbursement, T&M, and labor-hour contracts pose a risk because they 

provide no direct incentive to the contractor for cost control. However, a 

subsequent OMB memo provided examples of when cost-reimbursement 

contracts are appropriate (e.g., when there is considerable uncertainty about the 

resources that will be necessary to achieve the government’s objective). 

Congressional Action 

Section 864 of the Duncan Hunter National Defense Authorization Act for Fiscal 

Year 2009, PL 110–417, required that the Federal Acquisition Regulation (FAR) 

be revised to address the use of cost-reimbursement contracts. Specifically, the 

FAR addresses the following: 

 When and under what circumstances cost-reimbursement contracts are 

appropriate. 

 The acquisition plan findings necessary to support a decision to use costreimbursement contracts. 

 The acquisition workforce resources necessary to award and mange costreimbursement contracts. 

13-P-0208 8 
 

 

 

FAR 16.1 

The FAR groups contract types into two broad categories: fixed-price contracts 

and cost-reimbursement contracts. It further states that specific contract types 

range from firm-fixed-price, in which the contractor has full responsibility for the 

performance costs and resulting profit (or loss), to CPFF, in which the contractor 

has minimal responsibility for the performance costs and the negotiated fee 

(profit) is fixed. The FAR also states that contracting officers (COs) should avoid 

protracted use of a cost-reimbursement or T&M contract after experience 

provides a basis for firmer pricing. 

FAR 16.3 

The FAR states that the CO shall use cost-reimbursement contracts only when: 

(1) circumstances do not allow the agency to define its requirements sufficiently 

to allow for a fixed-price type contract, or (2) uncertainties involved in contract 

performance do not permit costs to be estimated with sufficient accuracy to use 

any type of fixed-price contract. Further, a cost-reimbursement contract may be 

used only when specific factors have been considered and adequate government 

resources are available to award and manage a contract other than firm-fixedprice. 

EPA Continues Reliance on High Risk Contracts and Task Orders for 

Remedial Actions 

Despite urging from the President, OMB, Congress, and EPA internal strategies 

(Contracts 2000 and 2010 Strategies), only EPA Regions 4 and 7 have reduced 

high risk contracting activities in the Superfund remedial program.1 As of June 

2012, there were 24 RAC contracts. Of those 24 contracts, 12 (50 percent) were 

high risk, CPFF contracts and 12 (50 percent) were IDIQ contracts. The 12 high 

risk CPFF contracts were awarded from four EPA regional offices (Regions 2, 3, 

5, and 8). Despite the inherent risks associated with these contracts, these four 

EPA regional offices have not transitioned to IDIQ contracts. 

The advantage of IDIQ contracts is that they allow for the possibility of awarding 

fixed-price task orders. We found that only Region 4 is significantly issuing 

fixed-price task orders. We reviewed 25 Region 4 task orders and found that 18 

were firm-fixed-price type task orders. These task orders were for remedial 

actions, including some long-term remedial actions. We reviewed 30 additional 

task orders from Regions 1 and 9 (which also have IDIQ contracts) and found that 

29 were high risk T&M task orders. We confirmed through interviews with both 

EPA headquarters and regional program and contracts staff that EPA does not 

award a significant amount of lower risk, task orders for remedial action activities 

1

 OMB defines high risk contracting activities as noncompetitive contracting, cost-reimbursement contracts, T&M 

contracts, and labor hour contracts. 

13-P-0208 9 
 

 

outside of Region 4. Therefore, while some regions have converted their RAC 

contracts to IDIQ, most continue to rely on high risk task order types. 

Region 7 has awarded 38 site specific contracts since 2005, the majority of which 

were for remedial actions. We reviewed all 38 and determined that 37 were fixedprice type contracts. Region 7 contracts with the construction contractor directly, 

using regional contracting staff to award and administer the contracts, and 

remedial project managers to oversee the construction contractor. 

EPA Strategies to Reduce High Risk Contracting Not Successful 

EPA’s Contracts 2000 Strategy encouraged shifting away from large umbrella 

contracts (such as the full service RACs that perform all pipeline activities from 

site assessment to cleanup) to functionally focused contracts for design and 

construction services. This shift was done in part to increase opportunities for the 

use of fixed-priced, performance-based contracting and to reduce the overreliance on cost-reimbursement contracts. However, the plan allowed for 

flexibility when awarding contracts. This flexibility allowed regions to continue 

to use and rely heavily on high risk CPFF contracts and high risk task orders 

pursuant to their IDIQ contracts. 

In 2011, EPA published its Contracts 2010 Strategy Report, which sets the 

framework for acquisitions in support of the Superfund program activities for the 

next 10 years. One of the goals of the Contracts 2010 Strategy is to mitigate high 

risk contracting practices. In order to achieve the lowest level of high risk 

contracts possible, EPA identified several tasks to reduce the number of these 

high risk contracts. However, this plan lacks specifics and once again allows for 

regional flexibility. Without increased specificity and goals, this strategy may also 

be ineffective in reducing high risk contracts and task orders. 

EPA Culture Encourages Status Quo 

EPA Regional Program Staff Resistant to Change 

Most EPA regional program offices have resisted the use of fixed-price 

contracting in the remedial program for more than a decade. EPA regional 

program offices prefer the full service RAC cost-reimbursement contracts or IDIQ 

contracts utilizing T&M task orders because they provide flexibility in structuring 

projects at various stages of the remedial program. The full service RAC contracts 

allow EPA to leverage its resources, as EPA project managers are used to oversee 

multiple sites and act as the focal point of communications and coordinate project 

team efforts, ensuring that project participants work together to accomplish the 

goals of the project. 

The regions’ resistance to change is well documented through the years and was 

continually communicated to the OIG during this audit. One of the earliest 

13-P-0208 10 
 

 

examples of resistance from the regions came when EPA tried to implement the 

Contracts 2000 Strategy. The original Contracts 2000 Strategy called for dividing 

the design and construction portions of the RAC contracts so that the construction 

portion could possibly be fixed-price. However, the regions did not like this 

mandate because of the Agency’s limited experience and in-house resources to 

directly contract and manage construction projects. Therefore, Contracts 2000 

was ultimately implemented using a menu approach emphasizing regional 

flexibility and only encouraged the use of fixed-price contracts. The menu 

approach allowed regions to choose from several options when developing their 

contracts. Those options included use of site specific contracts, RACs, remedial 

design contracts, and interagency agreements. The menu approach has allowed 

the status quo to continue for more than a decade. When discussing why fixedprice contracting is not being implemented with OAM headquarters, regional 

contracting staff, and OSRTI headquarters, the overall response was because of 

regional program office resistance. 

More recently, OAM and OSWER developed the Contracts 2010 Strategy. This 

strategy once again emphasized regional flexibility. Superfund program and 

contracting representatives are working on Phase 2 of the Contracts 2010 

Strategy. While this plan is not complete, the OIG obtained a draft of the plan and 

it is also not specific with regard to contract types and allows for continuing 

flexibility for the regions. When we discussed with OAM and OSRTI staff the 

lack of specificity regarding contract type, regional program resistance was cited 

as the reason why more progress is not being made in reducing high risk 

contracting. 

EPA Staff Believe that Remedial Actions Do Not Lend Themselves to 

Fixed-Price Type Contracts 

One of the reasons EPA regional staff cited for not using fixed-price contracts is 

that there are too many unknown and unforeseen factors associated with 

subterranean construction. Both program and contracting staff in EPA regions 

informed us that in order to award fixed-price type contracts, the work to be 

performed must not be complex, or there must be few unknowns so that the 

activities can be well-defined. While the OIG agrees that fixed-price contracts 

lend themselves to a well-defined scope of work and not all tasks can be fixedprice, we do not agree that remedial actions do not lend themselves to fixedpricing. Both Region 4 and Region 7 regularly award fixed-price type contracts or 

task orders for remedial actions and have done so for several years. When 

identifying the types of activities funded with fixed-price type contracts in 

Regions 4 and 7, we found similar types of activities in other regions that do not 

use fixed-price contracting. 

In addition, EPA’s RAC contractors award fixed-price type subcontracts to 

accomplish the remedial actions. These RAC contractors are generally architect 

and engineering firms and usually do not perform the remedial action themselves. 

13-P-0208 11 
 

 

 

Instead, these firms subcontract out the performance of the selected remedy. We 

reviewed several of these subcontracts or proposed subcontract agreements 

between architectural and engineering firms and their subcontractors, and all of 

the subcontracts reviewed were fixed-price type subcontracts. The types of fixedprice type subcontracts awarded were for various services, including the 

following: 

 Dredging and related services. 

 Drilling services.
 

 In-situ chemical oxidation. 

 In-situ thermal treatment. 

 Removal of access roads, and enhancements to stream banks, roads, and 

fencing. 

 Removal of contaminated tailings and soil. 

Program Office Pressure 

The CO has ultimate responsibility for determining contract type. COs are 

responsible for safeguarding the interests of the United States in its contractual 

relationships. In order to perform this responsibility, COs should be allowed wide 

latitude to exercise business judgment. At the same time, the program offices are 

the CO’s customer, resulting in a situation that can create a conflict for the CO 

between satisfying the customer and determining the appropriate contract type 

based on the statement of work and other related data. Contracting staff stated that 

the program offices wield significant influence on the selection of the contract 

type. One CO stated that he was surprised at how much influence the program 

office has on contract type at EPA, while another CO stated that the program 

office essentially dictates the contract type. In other cases, the discussion of the 

task order type is not even taking place between the program office and the CO. 

It is assumed that the task order type will be T&M and a discussion of whether 

certain tasks can be fixed does not take place. 

Lack of Leadership and Lack of Performance Measures 

Overcoming the barriers that have prevented EPA from moving away from high 

risk contracting requires strong leadership. In the past, however, OAM and 

OSRTI have not always displayed strong leadership. For example, the original 

Contracts 2000 Strategy called for dividing the design and construction portions 

of the RAC contracts to provide more opportunity for fixed-price contracting. 

EPA regions essentially rejected this approach, and management allowed the plan 

to be changed to a more flexible menu approach which allowed regions flexibility 

and choices. In fact, regions were allowed to keep the same contracting practices 

and continue to operate as in the past. Again in April 2004, another EPA 

Superfund study2

 highlighted discussions about whether the existing contracts are 

2

 EPA, SUPERFUND: Building on the Past, Looking to the Future, April 22, 2004 

13-P-0208 12 
 

 

used effectively and whether different contract types should be used more 

frequently (e.g., performance-based and site specific contracts). This same study 

stated that site specific and task order contracts can result in significant cost 

savings to the program. However, EPA has awarded almost no site specific 

contracts outside of Region 7, nor fixed-price task orders outside of Region 4. 

With the Contracts 2010 Strategy, the leadership strategy of allowing regional 

flexibility continues to be advocated resulting in continued use of high risk 

contracting strategies. OAM management informed us that they have a number of 

initiatives that they believe will address the issue. Some of these initiatives 

include: 

 Institutionalizing a more disciplined acquisition planning process. 

 Implementing management controls and oversight mechanisms to ensure 

the performance of the required analysis and documentation for the 

selection of appropriate contract types. 

However, it is too early to evaluate the impact of any of these initiatives. 

Neither the Contracts 2000 nor Contracts 2010 Strategies included performance 

goals or measures for assessing progress toward using fixed-price contracting. 

The Government Performance and Results Act of 1993 emphasized the use of 

goals for program performance and measuring results. The Government 

Performance and Results Modernization Act of 2010 reemphasized the use of 

goals and measures to improve outcomes. Performance goals can help programs 

achieve results. Performance measures may assist the Agency in moving toward 

fixed-price contracting. In fact, the EPA Director of Small Business Programs 

stated that performance measures have helped EPA become one of the top 

agencies in meeting small business goals. 

EPA Officials and Staff Cite Lack of Personnel as Barrier to FixedPrice Contracting 

EPA officials and staff stated that they do not have personnel with the right skill 

mix or experience to award, administer, and manage fixed-priced contracts. While 

this may be the case, the Agency has had more than a decade since its Contracts 

2000 Strategy to train and hire the staff needed to implement fixed-price 

contracting in the remedial program, and with the exception of Region 7, has 

chosen not to do so. 

In 2005, OSWER initiated the Superfund Workload Assessment. The primary 

purposes of the Superfund Workload Assessment were to: 

 Better understand how Superfund personnel resources are being used 

across the program relative to the future long-term workload. 

 Establish a baseline of current workload distribution and resource 

constraints. 

13-P-0208 13 
 

 

	 Explore opportunities to continue to improve the program’s use of its 

personnel resources. 

OMB Guidance Memorandum M-09-26, Managing the Multi-Sector Workforce, 

instructs agencies to determine the mix of skills and amount of labor needed for 

the agency to perform efficiently and effectively. According to the guidance, 

agencies should take into account the mission, functions, desired performance 

standards, and workload. While the Superfund Workload Assessment did examine 

the workforce on board at the time of the assessment, it did not identify the mix of 

skills needed for the agency to implement the Contracts 2000 Strategy. 

EPA staff contended that a fixed-priced contract is more labor intensive than a 

cost-reimbursement contract and requires adequate, experienced personnel to 

award, administer, and manage a fixed-priced contract. While fixed-pricing work 

does require more upfront planning such as developing a well defined scope of 

work, this makes the stages after award easier to administer and manage. 

Moreover, cost-reimbursement contracts require increased government 

surveillance. FAR 16.301-3 states that a cost-reimbursement contract can only be 

used when adequate government resources are available to award and manage a 

contract other than firm-fixed-priced. This includes appropriate government 

surveillance during performance to provide reasonable assurance that efficient 

methods and effective cost controls are used. This point was reiterated in OMB’s 

memorandum in response to the President’s directive concerning high risk 

contracting, which stated that cost-reimbursement and T&M contracts are often 

used without an appropriate basis or sufficient management and oversight to limit 

taxpayer risk. 

EPA Missing Out on the Benefits of Fixed-Price Contracting 

The reliance on high risk contracts and task orders provides little incentive to the 

contractor to control costs. As a result, EPA is not reaping the benefits of cost 

savings related to fixed-price contracting. Fixed-price contract savings can 

sometimes be difficult to calculate, since projects are often unique. We found one 

instance in Region 7 where EPA was cleaning up residential yards in the same 

county using two different contractors. One contract was a T&M contract, and the 

other contract was awarded by paying the contractor a fixed price per ton of 

remediated land. Tasks performed for each contract were similar. We used a 

conversion rate to convert tons to cubic yards and found the cost per cubic yard 

for the T&M contract was $80.16, while the cost per cubic yard for fixed price 

type contract was $32.74. EPA awarded the first contract using a high risk T&M 

contract. It later awarded the second contract using a fixed price per ton because 

of several concerns, one of which was the cost being incurred to clean up the 

yards using the T&M contract. By moving to the fixed-price type contract, 

Region 7 saved $13,828,003 for the 261,607 cubic yards removed by the fixedprice contractor. 

13-P-0208 14 
 

 

 

Region 7’s use of fixed-price type contracts has also resulted in increased 

socioeconomic participation. Region 7 has continually had the highest percentage 

of contracts awarded as “small business” from 2006 through 2011. In fact, 

Region 7 has led in almost each category for small business concerns during that 

time period. The EPA Director of the Office of Small Business Programs 

informed us that Region 7 is the premier regional office in terms of meeting 

EPA’s small business goals. 

Another benefit of Region 7’s use of site specific contracting is competition. We 

reviewed 38 Region 7 site specific contracts. Of those, 30 were awarded 

competitively. The average number of bids for the 30 competitive contracts was 

8.4, and the number of bids ranged between 3 and 17. For 4 of the 30 competitive 

contracts, the range of bids was over $24 million. Other regions are not able to 

take advantage of the benefits of competition since they do not competitively 

award task orders or work assignments under RAC contracts. 

Recommendations 

We recommend that the Assistant Administrator for the Office of Administration 

and Resources Management: 

1a. Require that written acquisition plans for future cost-reimbursement RAC 

contracts be approved by the Head of the Contracting Activity. 

1b. For current cost reimbursement RAC contracts, at the end of the base 

period, require written acquisition plans be prepared and approved by the 

Head of the Contracting Activity. 

We recommend the Assistant Administrators for both the Office of 

Administration and Resources Management and the Office of Solid Waste and 

Emergency Response: 

2. Develop performance measures for each region for the use of fixed-price 

contracts and task orders for remedial actions. The performance measures 

should be implemented in a way that holds the regions accountable (both 

the Superfund program staff and contracting staff) for decreasing the use 

of high risk contracts and task orders. 

3.	 As part of the implementation of the Contracts 2010 Strategy, provide 

training to both Superfund program and contracting staff on how and 

when less risky contracts and task orders should be used in the Superfund 

remedial program. 

4.	 Determine whether staffing changes are needed in each region to ensure 

that staff have the skills to manage the increased use of fixed-price 

13-P-0208 15 
 

 

contracts and task orders, and develop a plan for addressing the staffing 

needs. 

Agency Response and OIG Evaluation 

EPA agreed in principle to the objectives of the report – to improve acquisition 

planning and increase the use of fixed price contracts where appropriate. 

However, the Assistant Administrators did not agree with some of the 

recommendations, and provided specific comments to passages in the report. 

Our responses to the specific comments can be found in Appendix B. 

A recurring comment in the response to the draft report is that the draft did not 

provide a balanced view of fixed-price contracting and that it might not always be 

appropriate for Superfund work. We agree that OMB guidance states that when 

there is considerable uncertainty regarding what is needed a cost reimbursable 

contract may be more effective. The OMB memorandum goes on to state that, 

over time, experience should generally enable the agency to address the 

uncertainties, making it possible to convert to fixed-price contracting. While 

subsurface and underwater activities are difficult to characterize, there are other 

types of remediation activities that the EPA has past experience with and 

converting to fixed-price contracting should be considered. 

In the draft report, the first recommendation was that the EPA replace all current 

cost-reimbursement RAC contracts at the end of the current base or option period 

with IDIQ contracts to allow the use of fixed-price task orders when appropriate. 

EPA did not agree with recommendation 1, and stated that OAM recently 

published Interim Policy Notice 12-03 on Acquisition Planning. EPA stated that 

the processes, procedures, and oversight associated with the interim policy notice 

are intended to institutionalize more informed and collaborative decision making 

throughout the acquisition planning process, which includes contract type. The 

Agency also stated that due to the requirements of the recently established 

Remedial Acquisition Framework, EPA plans to review all of the Agency’s 

contracts in support of the Superfund Remedial Program in order to determine the 

appropriate time to re-compete under the new proposed remedial model described 

in the framework. 

Based on available information, the Agency’s proposed action will not address the 

recommendation. We reviewed the interim policy notice for acquisition planning 

and it requires that FAR Part 7 requirements must be met for all EPA acquisitions. 

It does require the contract team to document the rationale for the contract type 

proposed. However, this would not be applied to the RAC contracts until the 

current contracts expire. As for the remedial action framework, the EPA was 

unable to provide a copy to review. Until we are able to review the framework 

and determine that it adequately addresses replacing the RAC contracts that only 

allow for cost reimbursement task orders, we cannot accept the alternate 

correction action. 

13-P-0208 16 
 

 

 

Based on the EPA’s response to the draft report, we revised recommendation 1. 

We recognize that the revised acquisition policy does require that the rationale for 

the contract type be documented. Due to the size of the RAC contracts and the 

issues in the audit report regarding program office pressure and resistance to 

change, we are recommending that the written acquisition plan be approved by 

the Head of the Contracting Activity, as opposed to the Chief of the Contracting 

Office. For the current cost-reimbursable RAC contracts we are recommending 

that the agency re-evaluate whether cost-reimbursable is the appropriate form of 

contract at the end of the base contract periods. RAC contracts generally have 

5 option years, making the expiration date of some of the current costreimbursable contracts as 2018 and 2019. We believe that action should be taken 

sooner than that. The audit resolution process will be used to resolve this 

recommendation. 

For recommendation 2, the Agency did not agree with establishing performance 

measures. The Agency stated that it would develop guidelines for use when 

selecting the most appropriate type of contract and task order, considering the 

results of the Remedial Acquisition Framework and the Centers of Expertise 

Study. The proposed guidelines are not available for the OIG to evaluate, in 

particular whether it includes a method for evaluating the effectiveness of the 

guidelines in increasing the use of fixed-price contracting vehicles. The audit 

resolution process will be used to resolve this recommendation. 

EPA agreed with recommendation 3 and committed to providing training to both 

Superfund program and contracting staff. The training will include how to 

document the analysis leading up to the contract type selection. The targeted 

completion date is November 30, 2013. The Agency actions, when implemented, 

should address the recommendation. 

For recommendation 4, the Agency agreed to continue to ensure that staff have 

the skills necessary to manage all types of contracts. The ongoing Centers of 

Expertise study is assessing the staffing needs associated with implementing new 

business processes, such as prescriptive acquisition planning requirements. In 

responding to the draft report, the Agency acknowledged that it will require 

additional resources and infrastructure to perform direct construction activities. 

While the Agency agreed that it should maximize the use of fixed-price 

contracting as appropriate, it has not addressed how it will develop the 

infrastructure needed to support fixed-price contracting. Therefore, we consider 

this recommendation unresolved and will initiate the audit resolution process. 

13-P-0208 17 
 

 

 

Chapter 3

Inaccurate Contract Data 

The EPA Acquisition System (EAS) contains inaccurate contract and task order 

information. Specifically, 5 of 17 contracts and 22 of 60 task orders and work 

assignments had an incorrect contract or award type listed in EAS. EPA’s Open 

Government Data Quality Plan 1.0 states that each of the 13 major EPA 

contracting offices is responsible for overseeing the quality of its acquisition 

operations through its Quality Assessment Plan (QAP). Additionally, EPA’s 

Acquisition Handbook states that by using the QAPs, EPA verifies and validates 

that the information in EPA’s procurement system is consistent with the official 

contract files. The inaccurate data in EAS is due to the lack of a specific EAS data 

quality plan and a decentralized QAP process. EAS data is made available to the 

public through the Federal Procurement Data System. As a result, EPA is 

misreporting contract and spending information to the public. 

OMB’s Open Government Directive Requires Data Quality 

In February 2010, OMB issued an Open Government Directive regarding the 

quality of federal spending information. The directive cited duplication of data, 

missing transactions and data elements, and inaccurate or untimely data as the 

challenge with regards to the accuracy of federal spending data. The directive also 

stated that agencies should ensure that information on federal spending is 

objective and of high quality. OMB directed agencies to submit data quality plans 

by April 14, 2010. Additionally, OMB required the Senior Accountable Official 

of each agency to certify its plan. 

To comply with OMB’s directive, EPA issued its Open Government Data Quality 

Plan 1.0 on May 18, 2010. This plan states that each of the 13 major EPA 

contracting offices is responsible for overseeing the quality of its acquisition 

operations through its QAP. Each QAP should contain internal control and 

integrity requirements to ensure that acquisition rules and regulations are 

followed, files and records are kept to document the acquisition processes and 

procedures, and sufficient efforts are taken to perform pre- and post-award 

reviews of transactions to ensure that controls are working as intended. Each QAP 

also directly places the responsibility for data quality and integrity on the contract 

specialists and contracting officers. 

In order to maintain visibility of all Agency QAPs, OAM requires a current 

repository of the plans for all primary contracting organizations. Based on this 

requirement, all current QAPs shall be submitted to OAM for review and 

concurrence. Thereafter, all primary contracting organizations must submit their 

QAP to OAM for review when the plans have been modified. 

13-P-0208 18 
 

 

EPA’s Acquisition Handbook states that by using the QAPs, EPA verifies and 

validates that the information in EPA’s procurement system is consistent with the 

official contract files. It further states that a summary of the validation is required 

to be documented for the record. 

Incorrect Contract and Task Order Types Listed in EAS 

Five of 17 (29 percent) contracts reviewed had incorrect contract types listed in 

EAS when compared to the individual contract file. Additionally, 22 of 60 

(37 percent) task orders and work assignments reviewed had award types listed in 

EAS that did not match the individual task order or work assignment file. 

In response to finding outlines provided to EPA, OAM stated that the “Contract 

Type Per File” and “EAS Contract Type” do not represent coding inconsistencies, 

as both data entries are correct. OAM asserts that contracts may be both IDIQ and 

T&M. IDIQ refers to the contract type and T&M refers to the pricing arrangement 

for the task order. OAM believes both contract types may accurately describe one 

contract in terms of type and pricing, and OAM sees no error in this reporting. 

Nonetheless, OAM believes that consistency in how such data is reported is 

important for effective contract management and will consider developing policy 

guidance to facilitate consistency in how such data is reported. We disagree with 

OAM regarding the use of the pricing arrangement for the contract type. The 

contract type refers to the overall contract and the pricing arrangement applies to 

the task orders issued under that contract. Pricing arrangement under an IDIQ 

contract may allow for many different task order types. For example, the pricing 

arrangement for one region’s contracts allows for three different types of task 

orders to be issued. Therefore, these contracts should be reported as IDIQ 

contracts. 

Our analysis resulted in a lower accuracy rate than what EPA certified to OMB. 

EPA’s certification to OMB for fiscal year 2011 had an 88.3 percent accuracy rate 

for the correct contract type and a 99.5 percent accuracy rate for the correct award 

type when comparing EAS to the individual contract or task order file. EPA’s data 

is based on a contractor’s review, and we did not review the contractor’s scope 

and methodology. 

The analysis for both the 17 contracts and 60 task orders and work assignments 

are detailed in appendix A. 

Lack of a Specific Data Quality Plan for EAS and a Decentralized 

QAP Process Led to Data Integrity Issues 

EPA does not have a specific data quality plan for EAS. Instead, EPA relies on its 

overall data quality plan, EPA’s Open Data Quality Plan 1.0, for acquisitions. The 

plan states that data integrity is the responsibility of the contract specialist and CO 

and that specific data integrity requirements are contained in each of EPA’s major 

13-P-0208 19 
 

 

 

contracting offices’ QAPs. Because of the absence of a specific data plan for EAS 

and the decentralized reliance on QAPs, EPA does not have a consistent 

methodology for reviewing and maintaining contract data integrity in EAS. 

We reviewed six QAPs and found that all had the basic requirements of a QAP as 

defined in EPA’s Acquisition Handbook. However, in some cases the QAPs 

lacked detailed instructions on how to accomplish the data validation. We also 

found that Region 1 is operating on an unapproved QAP, further highlighting the 

inconsistent methods for validating the integrity of contract data through the QAP 

process. In response to why there were errors concerning contract type and award 

type in EAS, contracting officers from Regions 1, 4, and 9 stated they were due to 

input errors. 

EPA Is Misreporting Vital Contract and Spending Information 

Federal spending information is designed to inform the public on how and where 

tax dollars are being spent to provide transparency to the federal government’s 

operations. EAS data is made available to the public through the Federal 

Procurement Data System. As a result, EPA is certifying inaccurate contract data 

in required annual submissions to the OMB. 

Recommendations 

We recommend that the Assistant Administrator for the Office of Administration 

and Resources Management: 

5.	 Develop and implement a data quality plan for EAS to ensure the 

adequacy of data across all regions. The plan should include detailed 

instructions for ensuring contract types and task order pricing 

arrangements are input in EAS correctly and that procedures are 

established to verify the accuracy of the information. 

6.	 Ensure that Region 1 has an approved QAP and members of Region 1’s 

contracting staff are aware of the QAP’s contents and requirements. 

Agency Response and OIG Evaluation 

In response to recommendation 5, the EPA agreed that data quality is important and 

would evaluate the source of discrepancies and implement appropriate corrective 

action. After the exit conference, OAM revised its response to the recommendation 

to include additional activities that it is conducting. In 2011 and 2012, OAM 

provided training to contracting staff targeted at correcting past errors. In FY 2013, 

OAM will continue training and is planning on conducting quarterly data quality 

reviews. Through its self-assessment and peer review programs, OAM will also 

conduct file reviews, which include data reporting. As the Regional Acquisition 

Framework progresses, OAM will identify opportunities to ensure consistency in 

EPA’s reporting on associated contracting vehicles, and will implement the policy 

13-P-0208 20 
 

 

or training necessary to improve agency-wide acquisition report. The response did 

not address development of a data quality plan or provide an explanation as to why 

it was not needed. The response relies upon QAPs that the audit found lacked 

detailed instructions on how to accomplish the data validation. The Remedial 

Action Framework is not completed and available for us to assess the adequacy of 

the actions EPA plans to take. The additional information did not provide an 

adequate response to the recommendation and the audit resolution process will be 

used to resolve the recommendation. 

In response to recommendation 6, the Agency stated that the Region 1 QAP has 

been approved and staff are aware of the QAP’s contents and requirements. The 

Agency’s action addressed the recommendation. Therefore, we consider the 

corrective action completed. 

13-P-0208 21 
 

 

 

 

 

 

 

 

 

 

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 

1a 

1b 

2 

3 

4 

5 

15 

15 

15 

15 

15 

20 

Require that written acquisition plans for future 

cost-reimbursement RAC contracts be approved by 

the Head of the Contracting Activity. 

For current cost-reimbursement RAC contracts, at 

the end of the base period, require written 

acquisition plans be prepared and approved by the 

Head of the Contracting Activity. 

Develop performance measures for each region for 

the use of fixed-price contracts and task orders for 

remedial actions. The performance measures 

should be implemented in a way that holds the 

regions accountable (both the Superfund program 

staff and contracting staff) for decreasing the use of 

high risk contracts and task orders. 

As part of the implementation of the Contracts 

2010 Strategy, provide training to both Superfund 

program and contracting staff on how and when 

less risky contracts and task orders should be used 

in the Superfund remedial program. 

Determine whether staffing changes are needed in 

each region to ensure that staff have the skills to 

manage the increased use of fixed-price contracts 

and task orders, and develop a plan for addressing 

the staffing needs. 

Develop and implement a data quality plan for EAS 

to ensure the adequacy of data across all regions. 

The plan should include detailed instructions for 

ensuring contract types and task order pricing 

arrangements are input in EAS correctly and that 

procedures are established to verify the accuracy 

of the information. 

U 

U 

U 

O 

U 

U 

Assistant Administrator for 

Administration and 

Resources Management 

Assistant Administrator for 

Administration and 

Resources Management 

Assistant Administrator for 

Administration and 

Resources Management, 

and Assistant Administrator 

for Solid Waste and 

Emergency Response 

Assistant Administrator for 

Administration and 

Resources Management, 

and Assistant Administrator 

for Solid Waste and 

Emergency Response 

Assistant Administrator for 

Administration and 

Resources Management, 

and Assistant Administrator 

for Solid Waste and 

Emergency Response 

Assistant Administrator for 

Administration and 

Resources Management 

11/30/13 

6 20 Ensure that Region 1 has an approved QAP and 

members of Region 1’s contracting staff are aware 

of the QAP’s contents and requirements. 

C Assistant Administrator for 

Administration and 

Resources Management 

03/04/13 

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 

13-P-0208 22 

1 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Appendix A 

Sampled Contracts, Task Orders, and 

Work Assignments for Data Integrity 

RAC Contracts and Region 7 Site Specific Contracts 

Region Contract EAS contract type 

Contract type as listed 

in the contract 

Contract 

Type same 

Contract 

Type 

different 

Region 1 EP-S1-06-03 T&M IDIQ X 

Region 1 EP-S1-06-01 T&M IDIQ X 

Region 4 EP-S4-09-02 T&M IDIQ X 

Region 4 EP-S4-08-03 T&M IDIQ X 

Region 7 EP-S7-09-02 Fixed-Price Fixed-Price X 

Region 7 EP-R7-08-14 Fixed-Price Fixed-Price X 

Region 7 EP-S7-11-07 IDIQ IDIQ X 

Region 7 EP-S7-11-01 Fixed-Price Fixed-Price X 

Region 7 EP-R7-08-12 IDIQ IDIQ X 

Region 7 EP-S7-07-10 Fixed-Price Fixed-Price X 

Region 7 EP-S7-11-04 IDIQ IDIQ X 

Region 7 EP-S7-10-03 Fixed-Price Fixed-Price X 

Region 8 EP-W-05-049 CPFF CPFF X 

Region 8 EP-W-06-006 CPFF CPFF X 

Region 9 EP-R9-09-01 T&M IDIQ X 

Region 9 EP-S9-08-03 IDIQ IDIQ X 

Region 9 EP-S9-08-04 IDIQ IDIQ X 

RAC Contract Task Orders and Work Assignments 

Region Contract TO/WA 

EAS Contract 

/TO/WA Pricing 

Pricing per TO/WA 

in EPA files 

EAS and EPA 

file the same 

EAS and EPA 

file different 

for T0/WA 

type 

Region 1 EP-S1-06-03 1 T&M T&M X 

Region 1 EP-S1-06-03 5 T&M T&M X 

Region 1 EP-S1-06-03 12 T&M T&M X 

Region 1 EP-S1-06-03 17 multiple3

 T&M X 

Region 1 EP-S1-06-03 22 multiple T&M X 

Region 1 EP-S1-06-03 37 T&M T&M X 

Region 1 EP-S1-06-03 38 multiple T&M X 

Region 1 EP-S1-06-03 45 T&M T&M X 

Region 1 EP-S1-06-01 3 T&M T&M X 

Region 1 EP-S1-06-01 8 multiple T&M X 

Region 1 EP-S1-06-01 28 multiple T&M X 

Region 1 EP-S1-06-01 31 multiple T&M X 

Region 1 EP-S1-06-01 41 multiple T&M X 

3

 Task order contains multiple line items with differing award types (i.e. cost-type, T&M, FP, etc.) 

13-P-0208 23 
 

 

 

 

 

 

 

 

Region Contract TO/WA 

EAS Contract 

/TO/WA Pricing 

Pricing per TO/WA 

in EPA files 

EAS and EPA 

file the same 

EAS and EPA 

file different 

for T0/WA 

type 

Region 1 EP-S1-06-01 42 T&M T&M X 

Region 1 EP-S1-06-01 52 multiple T&M X 

Region 1 EP-S1-06-01 53 T&M T&M X 

Region 4 EP-S4-09-02 1 multiple FFP X 

Region 4 EP-S4-09-02 2 T&M T&M X 

Region 4 EP-S4-09-02 9 Multiple FFP X 

Region 4 EP-S4-09-02 10 Fixed-Price FPP X 

Region 4 EP-S4-09-02 11 Fixed-Price FFP X 

Region 4 EP-S4-09-02 12 Fixed-Price T&M X 

Region 4 EP-S4-09-02 14 T&M FFP X 

Region 4 EP-S4-09-02 15 T&M T&M X 

Region 4 EP-S4-09-02 16 T&M FFP X 

Region 4 EP-S4-09-02 20 T&M FFP X 

Region 4 EP-S4-09-02 24 T&M FFP X 

Region 4 EP-S4-09-02 27 T&M FFP X 

Region 4 EP-S4-09-02 28 T&M FFP X 

Region 4 EP-S4-09-02 33 cost FFP X 

Region 4 EP-S4-09-02 42 T&M FFP X 

Region 4 EP-S4-09-02 46 Fixed-Price FFP X 

Region 4 EP-S4-09-02 51 Fixed-Price FFP X 

Region 4 EP-S4-09-02 56 Fixed-Price FFP X 

Region 4 EP-S4-09-02 59 Fixed-Price FFP X 

Region 4 EP-S4-09-02 61 T&M FFP X 

Region 4 EP-S4-09-02 62 T&M FFP X 

Region 4 EP-S4-08-03 6 T&M T&M X 

Region 4 EP-S4-08-03 8 T&M T&M X 

Region 4 EP-S4-08-03 11 T&M T&M X 

Region 4 EP-S4-08-03 15 Fixed-Price T&M X 

Region 8 EP-W-05-049 209 CPFF CPFF (LOE) X 

Region 8 EP-W-05-049 212 CPFF CPFF (LOE) X 

Region 8 EP-W-06-006 107 CPFF CPFF (LOE) X 

Region 8 EP-W-06-006 108 CPFF CPFF (LOE) X 

Region 8 EP-W-06-006 115 CPFF CPFF (LOE) X 

Region 9 EP-R9-09-01 1 T&M T&M X 

Region 9 EP-R9-09-01 2 T&M T&M X 

Region 9 EP-S9-08-03 8 T&M T&M X 

Region 9 EP-S9-08-03 17 T&M T&M X 

Region 9 EP-S9-08-03 36 T&M T&M X 

Region 9 EP-S9-08-03 41 T&M T&M X 

Region 9 EP-S9-08-03 50 T&M T&M X 

Region 9 EP-S9-08-04 7 T&M T&M X 

Region 9 EP-S9-08-04 43 T&M T&M X 

Region 9 EP-S9-08-04 45 T&M T&M X 

Region 9 EP-S9-08-04 48 T&M T&M X 

Region 9 EP-S9-08-04 50 T&M T&M X 

Region 9 EP-S9-08-04 53 T&M T&M X 

Region 9 EP-S9-08-04 65 Fixed-Price Fixed-Price X 

Source: OIG analysis of contract files and EAS data. 

13-P-0208 24 
 

 

 

 

Appendix B 

Agency Response to Draft Report and OIG Evaluation 

UNITED STATES ENVIRONMENTAL PROTECTION AGENCY 

WASHINGTON, D.C. 20460 

MAR 4 2013 

MEMORANDUM 

SUBJECT:	 Response to Office of lnspector General Draft Report No. OA-FY11-0594 

EPA Must Increase Fixed-Price Contracting in the Remedial 

Program, Dated January 8, 2013 

FROM: Craig E. Hooks 

Assistant Administrator for Administration and Resources Management 

Mathy Stanislaus 

Assistant Administrator for Solid Waste and Emergency Response 

TO: Melissa Heist 

Assistant Inspector General for Audit 

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

draft audit report. Following is a summary of the agency's overall position, along with its 

position on each of the report's 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. For those report 

recommendations with which the agency does not agree, we have explained our position and 

proposed alternatives to recommendations. 

Overall Comments 

The Assistant Administrators for OSWER and OARM agree in principle to the objectives of 

this report, which are to improve acquisition planning and oversight and to maximize the use 

of firm fixed price contracts when appropriate. However, we are not in agreement with some 

13-P-0208 25 
 

 

of the recommendations offered in the OIG's draft Report. OSWER and OARM support the 

Administration's call to reduce vulnerabilities related to "high risk" contracts by using more 

fixed rate and fixed price contracts. We are committed to mitigating high risk contracts 

through improved acquisition planning, management and oversight of the contracts, and we 

are committed to identifying opportunities to fix price new contracts. Evaluating and 

proposing the most efficient and appropriate contracting vehicle is a component of the 

Superfund Remedial program's current effort to implement the Contracts 2010 Strategy effort. 

The Superfund remedial program is preparing its next generation contracting strategy 

implementing Contracts 2010, called the Remedial Acquisition Framework. It is currently 

being developed by a workgroup of program and acquisition representatives as a guide to 

remedial acquisitions in a reduced budget climate. As part of this effort, EPA is examining its 

program operations and future workload to identify areas that may yield efficiencies and cost 

savings. EPA is evaluating the use of fixed price contracts for certain types of work, such as 

ongoing monitoring of five year reviews. The goals of the Remedial Acquisition Framework 

will be balanced with the best approach to achieve the Superfund remedial cleanup mission in 

the most efficient and effective manner. The OIG findings in this report, and the subsequent 

recommendations, seemed to have ignored the Superfund Program's use of fixed price 

subcontracts in the remedial construction program. Although Remedial Action Contracts 

(RACs) may be cost reimbursement at the contract level, the RAC contractor awards 

subcontracts for construction as fixed price. Additionally, on statements regarding fixed price 

construction, the cost of federal construction oversight must be factored into any calculations 

of acquisition effort. 

OIG Response 1: As we discuss on page 12 of the report, EPA’s RAC contractors award fixedprice type subcontracts to accomplish the remedial actions. The use of fixed-price type 

subcontracts is one of the reasons we believe that more opportunities exist for EPA to use 

fixed-price contracts and task orders. 

Specific Comments 

Our staff conducted an extensive review of the report and has significant concerns about the 

lack of data supporting the report's assertions and conclusions. The report's title and "At a 

Glance" section focus on fixed price contracting in the remedial program; however, it only 

provides anecdotal generalizations regarding one segment of the remedial program, remedial 

action construction. It ignores significant parts of the remedial program that are components 

of the contracts examined, namely: Site Assessment/Characterization, Remedial 

Investigation and Feasibility Studies, Risk Assessment, Remedy Selection, Remedial Design, 

and Post Construction. In addition, the report only addresses a small portion, not necessarily a 

representative sample, of the remedial program's universe of existing acquisition vehicles, 

excluding work performed by the US Army Corps of Engineers and States. 

OIG Response 2: Our audit focused on remedial construction activities funded through RAC 

and site specific contracts, but also looked at other activities that were purchased under the RAC 

contracts. Our conclusion was that remedial construction had the greatest opportunities for use of 

fixed-price type contracts. Unless specifically stated in the report, the term remedial action refers 

to the remedial construction activities. 

13-P-0208 26 
 

 

 

As a result, OSWER and OARM believe that the draft report fails to provide a balanced 

portrayal of fixed rate contracting. The report states that fixed price contracts must be used 

without explaining the benefits, downsides or conditions under which they should be used. 

Furthermore, the report appears to use varying terms to describe fixed priced contracting, 

such as firm fixed price type and fixed rate, and thus it is unclear the type of fixed price 

contract the OIG is recommending. We currently use fixed rate contracts and task orders 

throughout the program. For example, as mentioned above, the subcontracts for 

construction under RAC contracts are fixed price. EPA also uses the Emergency and Rapid 

Response Services (ERRS) contracts, which are fixed rate time and material (T&M) for less 

complex construction projects. 

OIG Response 3: We agree that fixed-price contracting cannot be used in all circumstances and 

state that in the report. We revised the report to ensure it did not imply that fixed price 

contracting must always be used. To avoid any confusion between fixed-price and fixed rate, we 

changed the reference to a specific Region 7 contract at the end of chapter 2 to state “fixed price 

per ton.” 

The Superfund program utilizes contract vehicles appropriate for the uncertain conditions that 

exist at its sites. The contract types used are based on many factors, including, but not limited 

to: resources, site conditions and characteristics, unforeseen risks and site cleanup objectives. 

While fixed rate and fixed price contracting has a place in the Superfund remedial program, 

such an approach has significant disadvantages that the report fails to appropriately 

acknowledge. We recommend that the report include a discussion of the undue risks to the 

Government and failures (e.g., cost increases from uncertain site conditions, change orders, 

and claims) of firm fixed priced type contracts with respect to subsurface and under water 

construction projects. What may work in Region 7, e.g., for above ground projects, may not 

work for complex projects in other regions, such as ground water sites. 

OIG Response 4: We agree that fixed-price contracting is not suitable for all remedial actions. 

However, we found the types of remedial actions that Region 4 and 7 funded with fixed-price 

type contracts were similar to activities that other regions funded with other than fixed-price type 

contracts. Region 4 did fund activities related to the treatment of ground water through fixedprice task orders. Costs can increase beyond what was originally anticipated in both fixed-price 

and CPFF contracts. For example, both types of contracts can be adjusted if unforeseen site 

conditions exist. For the 12 RAC contracts that are CPFF, the discussion of whether a fixed-price 

task order can be used to fund the activities is not occurring because the contract does not allow 

for fixed-price. With an IDIQ contract, which is what we advocate in recommendation 1, fixedprice task orders can be considered. 

Several regions have attempted to replicate the Region 7 site specific model with mixed 

success. While Region 4 did attempt a fixed price project, additional contamination was 

uncovered at the site, increased oversight was required to oversee the removal of the 

additional contamination, and the ultimate price of the project was higher than projected. 

13-P-0208 27 
 

 

Furthermore, remedial funding allocations late in the fiscal year make it extremely difficult to 

prepare and award fixed price contracts by September 30. 

OMB recognized that fixed price contracts might not be appropriate for projects similar to 

Superfund remedial cleanup work 

The purpose of the report states that the OIG conducted the audit in order to determine 

whether EPA is reducing the amount of high risk contracting activities, which include not 

only cost reimbursement and time and materials type contracts, but also non-competitive 

and sole source contracts awarded when only one bid or offer is received. The report 

identifies the initial OMB memorandum calling for Departments and Agencies to reduce 

their "high risk" contracting but only mentions the OMB memorandum dated October 27, 

2009, entitled "Increasing Competition and Structuring Contracts for Best Results", which 

acknowledges that, in some cases, where uncertain circumstances are present, it may be 

appropriate to use a "high risk" contract. 

Although OMB issued a caution regarding high risk contracts and directed Federal Agencies to 

decrease their use by ten percent, OMB did not direct the use of firm fixed price contracts in 

lieu of cost reimbursement or time and materials contracts. 

Conversely, OMB's implementing guidelines, included in the above memorandum, says "The 

President's Memorandum further states that government contracts should be structured to 

'minimize risk and maximize value' for the taxpayer. In most cases, fixed-price contracts will 

be best suited for achieving this goal because they provide the contractor with the greatest 

incentive for efficient and economical performance. In circumstances where there is 

considerable uncertainty regarding the requirements, however, cost-reimbursement contracts 

or, in more limited circumstances, time-and- materials or labor-hour (T&MILH) contracts may 

provide for a more effective allocation of risk between the government and the contractor." 

EPA selects the most appropriate contracts depending on the risk, in accordance with OMB's 

guidance. Recommending what would effectively be subjective performance measures for 

firm fixed price contracting, and holding staff accountable to those measures, is the equivalent 

of requiring the selection of a contract type irrespective of the judgment of the acquisition 

staff or the reasonableness of the approach. EPA, therefore, does not agree with the 

recommendation for performance measures, instead EPA will focus on strengthening the 

acquisition planning process to ensure the appropriate contract type is properly determined 

including firm fixed price type contracts where appropriate. 

OIG Response 5: We agree that where there is considerable uncertainty regarding the 

requirements, a cost reimbursement or other high risk contract may be appropriate. We 

disagree, however, with the Agency’s statement that EPA selects the most appropriate 

contract depending on the risk. We identified RAC contracts with identical statements of 

work, which according to the EPA’s guidance, is a basis for determining contract type. One 

of these contracts is a CPFF contract, while the other is an IDIQ contract. Because the 

statements of work are identical, the contract type should also be identical. For CPFF 

contracts, there is no ability to issue fixed-price work assignments, meaning the discussion 

of whether to use a fixed-price vehicle for remedial actions cannot occur. 

13-P-0208 28 
 

 

This report does not provide a balanced view of firm fixed price contracting.

Benchmarking against the initial Contracts 2000 Strategy rather than the revised strategy 

is erroneous, and stating that revisions were due to a lack of leadership is subjective. 

References to the first Contracts 2000 Strategy and statements that a lack of leadership 

prevented EPA from moving away from high risk contracts are subjective. Although the initial 

Contract 2000 Strategy recommended dividing Superfund design, construction and oversight 

activities into two types of functional contracts, the strategy was amended with the Contracts 

2000 - Design Construction Decision. This is the document to which the OIG should refer 

when referencing Contracts 2000. In the amendment EPA clearly states the rationale for 

implementing a menu approach-"centered around the Agency's limited experience base to 

directly contract for and manage construction projects, and the in-house resources that would 

be needed to place and manage construction projects". A workgroup of EPA employees 

evaluated options and presented them for senior management's consideration and decision. 

The draft report improperly and without support characterizes that process as ''management 

OIG Response 6: Our conclusions regarding the past lack of leadership are supported by 

adequate evidence, including numerous interviews, and past management action or inaction. 

When the Contract 2000 report was issued in 1999, it stated that there were opportunities for 

the use of fixed-price, completion form, and performance-based contracting in the Superfund 

program. The decision to allow a menu approach, as described in the Contracts 2000 – 

Design/Construction Contracts memorandum was premised on all contracts being structured to 

encourage the increased use of completion form, fixed-price, and performance based 

approaches to ordering work. The 2004 Superfund study recommended that OAM and OSWER 

work together to encourage the use of alternative contract types, such as performance based and 

site specific contracts. Despite these recommendations, our report found the EPA has generally 

continued to rely upon cost reimbursable type contracts and task orders for remedial actions. 

allowed the plan to be changed" or as a lack of leadership. 

The report creates an unsubstantiated correlation between firm fixed price contracts 

and increased competition, achieving socioeconomic goals, and cost savings. 

All contracts that are competed, including cost reimbursement contracts, can be structured to 

encourage small businesses' proposals and enhance competition. We encourage the OIG to 

be less definitive about the link between firm fixed price contracts and increased competition 

and the achievement of socio economic goals as other contracts types, e.g., the time and 

materials ERRS contracts, have achieved socioeconomic goals. Although certain fixed price 

contracts might make it easier to achieve competition or socioeconomic goals, all contract 

types can achieve these results. 

OIG Response 7: Since 2006, Region 7 has continually had the highest percentage of 

contracts awarded as “small business.” Region 7 staff informed us that the region’s use of 

site-specific contracting is a major contributor to its small business achievements. EPA 

headquarters staff told us that Region 7 is instrumental in helping EPA achieve its small 

business goals. 

13-P-0208 29 
 

 

There is risk associated with any type of contract, and this report does not provide an accurate 

picture of the risks associated with using a fixed price contract or other type of contract 

vehicle. When competing work that is well defined, using fixed-price contracts may result in 

lower cost. Many of the projects addressed in Region 7 as site specific contracts are in this 

category. Uncertainty in site conditions, inherent at certain Superfund sites, may lead to 

uncertainty in project scope and higher costs under a fixed price scenario due to the contractor 

building in costs associated with the higher risk. 

Projects that involve subsurface and underwater actions, including groundwater remediation 

and sediment remediation, are difficult to characterize and uncertainties and findings of 

additional contamination may lead to more expensive cleanups if performed fixed price as 

contractors increase price to account for these uncertainties. While the Superfund program 

has performed site cleanups for over thirty years, each site and its unique topography and 

contaminant characteristics means that-each remedial action (RA) project is different and 

does not fit the mold of repetitive type work that is typical of fixed price contracts. In 

addition, change orders and claims may affect the final price of a contract, obviating 

potential cost savings anticipated at the beginning of the project. Region 4 encountered this at 

the Tower Chemical site, where the final costs after accounting for increased quantities and 

contaminants found onsite, in addition to the costs of the oversight contractor, resulted in 

costs similar to what had originally been anticipated under the RAC contract. 

Given the constrained budget facing the Superfund Remedial program, the funding 

requirements related to fixed price contracting presents a significant obstacle. An additional 

disadvantage to using fixed price contracts in a fiscally constrained environment is that fixed 

price contracts must be funded up front. When EPA awards direct construction contracts, 

such as Region 7’s site specific contracts, EPA must set aside the full value of the contract 

and is unable to leverage the funding. That is, in many situations, because of the manner in 

which funding is allocated to the Agency (e.g. under a continuing resolution), the Superfund 

Remedial program must incrementally fund construction projects. Funding remedial action 

construction cost reimbursement type contracts allows for incremental funding which 

stretches the limited Superfund dollars available for cleanup. 

Direct construction using fixed price contracts may require additional resources for EPA to 

oversee construction and handle change orders and claims. Region 7 designed and followed a 

human resource acquisition and development strategy that could be difficult for other 

Regions to implement. Region 7 uses its On Scene Coordinator's (OSCs) to assist the 

Remedial Project Managers (RPMs) in performing construction oversight. These resources to 

perform construction oversight may not be available in other Regions with multiple large, 

complex projects, such as Region 2 or 8. Current EPA full time equivalents (FTE) resources 

constrain hiring of sufficient RPMs and Contracting Officers for EPA to perform a high 

volume of fixed price construction projects. Given current budget constraints and likely 

reductions in FTEs, it will be difficult, if not impossible for other Regions to achieve Region 

7's level of technical capability and technical experience. Limited resources were one 

rationale behind the change in implementation of the Contracts 2000 Strategy. 

13-P-0208 30 
 

 

OIG Response 8: Our report does not recommend that EPA Regional offices adopt the 

Region 7 model, but does recommend that EPA look for increased opportunities to use 

fixed-price type contracts and assess the resources needed to achieve that goal. In fact, the 

Design/Construction Contracts Decision Memorandum stated that all contracts would be 

structured to encourage the use of fixed-price approaches when ordering work. 

RAC construction contracting and Site-Specific contracting are not equal and 

should not be compared. 

Statements in the report indicate a lack of understanding of how Superfund performs its 

remedial action construction and the Region 7 Site Specific approach. EPA uses the 

Remedial Action Contracts (RACs) to purchase the services of a contractor to serve as the 

construction manager of a project. Region 7 has developed the capability to perform 

construction management in-house, and thus like the RAC contractor, procures the remedial 

action construction contracts directly. Region 7 provides all of the oversight capabilities 

with Region 7 staff, including staff that perform field oversight, address contract change 

orders and handle contract claims. In order to provide an equal comparison between site 

specific contracts and RACs, the costs associated with construction oversight must be 

considered when site specific contracts are utilized. Furthermore, the report should 

recognize that construction, either subcontracted by a RAC or procured directly under a site 

specific contract are procured predominantly as a firm fixed price (under RACs) or a fixed 

unit price (under a site specific contract). So in many respects the Superfund Remedial 

program is benefiting from and using a fixed-price approach, albeit at a Subcontractor level. 

While Region 7 is to be commended for its success in developing the infrastructure to 

conduct direct construction contracting, their practices should not be used as a basis to apply 

it nationwide. The development of the infrastructure to perform direct construction 

activities is intensive and requires extra resources, training and FTE. Lessons gained from 

other regions' attempts to firm fix price construction projects indicate that it takes more than 

adjusting the contract type to be successful. We must also have the proper infrastructure and 

available funding to fully fund the contract. In fact, the decision to not develop a nationwide 

direct construction infrastructure at EPA was made at the inception of program in 1980; 

instead, EPA chose to collaborate with the USACE and use their existing infrastructure for 

cleaning up Superfund remedial projects. Although EPA may not be able to achieve a 

nationwide shift to fixed price construction contracting, we do anticipate more fixed price 

projects. Many of the five-year review projects are being performed via fixed rate task 

orders, and Regions are examining their work type and oversight workload to determine if 

other types of projects, such as long-term remedial projects, might have components of the 

work that can be fixed price. EPA anticipates that the guidance provided from both the 

program and OAM will continue a shift to fix pricing work where possible and appropriate. 

Data Analysis Approach is flawed 

The "judgmental sample methodology" approach calls into question the validity of the data 

sample selected. It is not clear what "judgmental" means and how or why the additional 

projects were selected. The OIG reviewed half of EPA's Regions using judgmental 

13-P-0208 31 
 

 

 

sampling. Both the random sample and sample methodology bring into question statements 

the OIG makes in the next chapter that "only" one Region is performing any particular 

activity. Without the data to support these statements, the OIG should be consistent and not 

make broad conclusions based on interviews covering 50% of the universe. Region 7 has two 

RAC contracts called Architect and Engineering Services (ACE). For consistency, it would 

have been appropriate to collect data from these contracts, when other Regions' RACs were 

being evaluated for activities other than remedial action. 

OIG Response 9: A judgmental sample is a nonrandom sample selected based on the 

opinion of auditors. As discussed in the Scope and Methodology, we reviewed contracts and 

task orders from Regions 1, 4, 7, 8, and 9. We surveyed other regional offices and received 

survey responses from Regions 2, 3, 5, 6, and 10. We also reviewed data on fixed-price site 

specific contracts and RAC contracts awarded across all regions. Our goal was to gain a 

broad perspective of contracting for remedial actions across the country, and we believe that 

was accomplished via our methodology. In our opinion, our methodology and conclusions 

ensure compliance with the Inspector General Act of 1978 and the December 2011 revision 

of the Government Auditing Standards. 

The use of opinions instead of data to explain how fixed price contracts are used in the 

Superfund Program is flawed. 

The initial Contracts 2000 strategy for design and constructions was not implemented; it is 

disingenuous to state that it is not successful when it was amended and not used. 

Furthermore, the change to the Contracts 2000 strategy is not an example of the Regions' 

resistance to change. The Regions were legitimately concerned about funding uncertainties 

and the lack of necessary infrastructure to directly procure and manage multi-million dollar 

projects. Although the expertise to conduct direct procurement and management of 

construction contracts could be developed, it would cost more in funding, FTE, and time than 

the Agency had at that time, especially in light of the resources available through the USACE. 

The federal government has come to recognize these alliances through strategic sourcing 

initiatives, and OMB has issued directives to not recreate what is already available elsewhere 

in the government. Referring to the original report and stating that it was rejected and 

management allowed the plan to be changed dismisses the work performed in evaluating the 

possibility of implementing the plan and the rationale for why it was not. ' 

The RAC contracts were awarded several years prior to the President's and OMB's emphasis 

on reducing the use of high risk contracts, thus they should not be measured against an 

initiative that was not in place when they were awarded. In addition the statement that only 

Regions 4 and 7 have reduced high risk contracting activities in the remedial program is not 

based on fact. Without having looked at all Regions, it is not accurate to say "only" as the data 

is for 50% of the universe. In addition, the OIG looks only at remedial actions when referring 

to the remedial program, a much broader universe. 

The statement "most EPA Regional offices have resisted the use of fixed price" is 

subjective. Regional offices have not rejected the use of fixed pricing per se, but rather have 

13-P-0208 32 
 

 

 

chosen not to pursue firm fixed price approaches under direct construction contracting 

vehicles for the reasons cited previously. 

The statements that EPA "hands over responsibility" and "simply oversees'' are a gross 

misstatement. Remedial Project Managers (Remedial Project Manager) and Contracting 

Officers hold the ultimate responsibility for each project and ensure that the outcome of the 

project protects the public from the harm of hazardous materials. Projects are not "simply 

overseen" by the RPM, but monitored on a daily basis to ensure that all components of the 

project are proceeding appropriately. 

OIG Response 10: We changed the language regarding the responsibilities of EPA 

Remedial Project Managers. 

Points Requiring Clarification 

On page 4, the first paragraph. This paragraph needs additional language to differentiate the 

discussion from Contracts 2010. This is the EPA's response to OMB's directive in 2009 to 

reduce high risk contracts by 10%. 

OIG Response 11: We identified this language in the Contracts 2010 Strategy Report, 

page 20 (Intended Result), and page 21 (Examples of How to Get There). 

On pag12, we are unfamiliar with the references to the April 2004 Superfund study. 

Please provide citations. 

OIG Response 9: U.S. EPA Study: SUPERFUND: Building on the Past, Looking to the 

Future; April 22, 2004. Page 92 (bottom of page), and Page 93 (2nd full paragraph). We 

provided EPA a copy of the study. 

In the attached tables clarify if the contract or task order was site specific, RAC or ERRS. 

Responses to Recommendations 

2-1 Replace all current cost-reimbursement RAC contracts at the end of the current 

base or option period with IDIQ contracts to allow the use of fixed-price task orders 

when appropriate. 

2-1 The Agency does not fully agree with this recommendation. Per FAR 16.1, selecting 

contract type is a matter for negotiation and requires the exercise of sound judgment. Factors 

that should be considered in this negotiation are risk, complexity of the requirement, expected 

price competition, urgency of the requirement, period of performance of the requirement 

(the longer the more risk), and the contractor's technical capability and financial 

responsibility. The FAR also states the objective is to negotiate a contract type and price that 

13-P-0208 33 
 

 

 

will result in reasonable contractor risk and provide the contractor with the greatest incentive 

for efficient and economical performance. President Obama's March 4, 2009, 

memorandum is not intended to supersede either the afore-mentioned regulatory guidance or 

the contracting officer's business judgment in selecting the appropriate contract type. 

However, the Agency does agree that contract files should reflect appropriate analysis and 

contain adequate support and justification for the contract type selected. 

Accordingly, as the Agency's current cost reimbursement remedial action contracts were in 

place prior to the issuance of the President's and OMB 2009 memoranda, EPA does not 

intend to modify our existing cost reimbursement remedial contracts at this time, before 

performing the analysis set forth in FAR 16.1. However, the Assistant Administrators for 

OARM and OSWER agree that the Agency should endeavor to decrease the number of costreimbursement contracts to the maximum extent possible, where appropriate, and will 

implement processes to ensure the required analysis is conducted to determine the 

appropriate contract type, and the results of that analysis are documented in the contract file. 

To that end, OAM recently published Interim Policy Notice (lPN) 12-03 on Acquisition 

Planning. The processes, procedures, and oversight associated with this lPN are intended to 

institutionalize more informed and collaborative decision making throughout the 

acquisition planning process, which includes the decision on contract type. Additionally, as 

anticipated by the requirements of the recently established Remedial Acquisition 

Framework, the Agency plans to review all of the Agency's contracts in support of the 

Superfund Remedial program in order to determine the appropriate time to re-compete 

under the new proposed remedial model described in the framework. The Agency has 

targeted completion of this review by June 2013. 

2-2 Develop performance measures for each region for the use of fixed-price contracts 

and task orders for remedial actions. The performance measures should be 

implemented in a way that holds the regions accountable (both the Superfund 

program staff and contracting staff) for decreasing the use of high risk contracts and 

task orders. 

2-2 The Assistant Administrators of both OARM and OSWER agree that there may be 

opportunities to replace existing contracts to allow for more fixed price vehicles within the 

Remedial program. It should be noted that President Obama's March 4, 2009, memorandum 

is not intended to supersede either the regulatory guidance or the contracting officer's 

business judgement in selecting the appropriate contract type. The Agency cautions the OIG 

against assuming that all cost-type contracts impose greater risk on the Government than other 

contract types, including firm fixed price type contracts in certain situations. In order to 

reduce the risk associated with contracts other than fixed price, the Agency is currently 

implementing a process to improve acquisition planning, practicing due diligence in terms of 

identifying the best contract type for the work required and documenting the basis for 

determining the contract type selected. To that end, OSWER and OARM will develop 

guidelines for use when selecting the most appropriate type of contract and task order, as 

applicable, considering results from the Acquisition Planning process, the Remedial 

Acquisition Framework, and the Centers of Expertise Study. Given the significant effort this 

13-P-0208 34 
 

 

will entail, OSWER and OARM have targeted completion of effort this by ·September 30, 

2013. 

2-3 As part of the implementation of the Contracts 2010 Strategy, provide training to both 

Superfund program and contracting staff on how and when less risky contracts and task 

orders should be used in the Superfund remedial program. 

2-3 The Assistant Administrators of OARM and OSWER agree that additional training is 

necessary and are committed to providing that training to both Superfund program and 

contracting staff. Training developed will consider results from the Acquisition Planning 

process, the Remedial Acquisition Framework, and the Centers of Expertise Study, and will 

include when and how less risky contracts and task orders should be used, including how to 

document the analysis leading up to the contract type selection, in the Superfund Remedial 

Program. OARM and OSWER have targeted completion of this effort by November 30, 

2013. 

2-4 Determine whether staffing changes are needed in each region to ensure that staff have 

the skills to manage the increased use of fixed-price contracts and task orders, and develop 

a plan for addressing the staffing needs. 

2-4 as indicated in 2-3 above, the Assistant Administrators of both OARM and OSWER 

agree to continue to ensure that staff possesses the skills necessary to manage all types of 

contracts ranging from cost reimbursement to firm fixed price. A recently initiated.and 

ongoing Centers of Expertise study is assessing staffing needs associated with 

implementation of new business processes such as prescriptive Acquisition Planning 

requirements. OARM and OSWER will monitor progress on these efforts on an ongoing 

basis through a robust training program and regular Contracts Management Assessment 

Team (CMAT) MAT reviews. 

3-5 Develop and implement a data quality plan for EAS to ensure the adequacy of data 

across all regions. The plan should include detailed instructions for ensuring contract 

types and task order pricing arrangement are input in EAS correctly and that 

procedures are established to verify the accuracy of the information. 

3-5 The Assistant Administrator for OARM agrees that data quality is important for 

effective contract management. OARM will evaluate the source of the discrepancies in the 

EAS data and, depending on the evaluation results, the Agency will implement appropriate 

corrective action to address proper coding on contract and task order pricing arrangements 

in EAS. The OARM will complete this by June 2013. 

3-6 Ensure that Region 1 has an approved QAP and members of Region 1's 

contracting staff are aware of the QAP's contents and requirements. 

3-6 Region 1's August 2012 QAP has been approved and posted on the OAM policy website, and staff are aware of the QAP's contents and requirements. 

Thank you for your review. If you have questions regarding these comments, please contact 

John Bashista in OARM or James Woolford in OSRTI. 

13-P-0208 35 
 

 

 

cc: John Bashista, OARM/OAM 

James Woolford, 

OSWER/OSRTI Nigel Simon, 

OSWER/OPM 

13-P-0208 36 
 

 

Appendix C 

Distribution 

Office of the Administrator 

Assistant Administrator for Solid Waste and Emergency Response 

Assistant Administrator for Administration and Resources Management 

Principal Deputy Assistant Administrator for Solid Waste and Emergency Response 

Deputy Assistant Administrator for Solid Waste and Emergency Response 

Principal Deputy Assistant Administrator for Administration and Resources Management 

Agency Follow-Up Official (the CFO) 

Agency Follow-Up Coordinator 

General Counsel 

Deputy General Counsel 

Associate Administrator for Congressional and Intergovernmental Relations 

Associate Administrator for External Affairs and Environmental Education 

Audit Follow-Up Coordinator, Office of Solid Waste and Emergency Response 

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

13-P-0208 37