‐ 

 

 

 

   

       

U.S. ENVIRONMENTAL PROTECTION AGENCY

OFFICE OF INSPECTOR GENERAL

Audit of American Recovery 

and Reinvestment Act-Funded 

Cooperative Agreement 

2S-96099601 Awarded to the 

Idaho Department of 

Environmental Quality 

Report No. 13-R-0206 March 28, 2013 

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Abbreviations 

ARRA American Recovery and Reinvestment Act of 2009 

CA Cooperative Agreement 

CFR Code of Federal Regulations 

CIPD Certification of Independent Price Determination 

EPA U.S. Environmental Protection Agency 

IDEQ Idaho Department of Environmental Quality 

IPA Independent Public Accounting 

RFQ Request for Quotes 

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-R-0206 

March 28, 2013 Office of Inspector General 

At a Glance
 

Why We Did This Review 

The U.S. Environmental 

Protection Agency awarded 

American Recovery and 

Reinvestment Act Cooperative 

Agreement 2S-96099601 to the 

Idaho Department of 

Environmental Quality. The 

Office of Inspector General 

wanted to determine whether 

IDEQ’s procurements and use 

of force account under the 

cooperative agreement 

complied with Code of Federal 

Regulations requirements 

under 40 CFR Part 35 

Subpart O, and whether the 

objectives of the cooperative 

agreement were met. To do so, 

the OIG contracted with Ollie 

Green & Company, an 

Independent Public Accounting 

firm, to audit the agreement. 

This report addressed the 

following EPA Goals and 

Cross-Cutting Strategies: 

 Cleaning up communities 

and advancing sustainable 

development. 

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-R-0206.pdf 

Audit of American Recovery and Reinvestment ActFunded Cooperative Agreement 2S-96099601 Awarded 

to the Idaho Department of Environmental Quality

 What the IPA Auditors Found 

Ollie Green & Company, the IPA firm hired by the OIG to conduct the audit, found 

that IDEQ complied with Idaho’s state procurement policies and procedures, as 

required by 40 CFR §35.6550(a), which referenced 40 CFR §31.36(a). The IPA 

contractor also found substantial compliance with 40 CFR Part 35 Subpart O. 

However, the IPA contractor found that IDEQ did not require its contractors to 

include Certification of Independent Price Determination language in its bid 

proposals as required by 40 CFR §35.6550(b)(3). The IPA contractor also found 

that IDEQ did not require its contractors to have accident and catastrophic loss 

insurance coverage as required by 40 CFR §35.6590(b). Finally, the IPA 

contractor found that IDEQ did not require its contractors to retain its records for 

10 years after submitting its final federal financial status report as required by 

40 CFR §35.6705. 

The IPA contractor is responsible for the content of the audit report. The OIG 

performed the procedures necessary to obtain reasonable assurance about the 

IPA’s independence, objectivity, qualifications, technical approach and audit 

results.

 Recommendations and Corrective Actions 

The IPA contractor’s report recommends that the Region 10 regional 

administrator require IDEQ to review and gain an understanding of the 

requirements of 40 CFR §35.6550(b)(3) and ensure that all current and future bid 

proposals contain CIPD language. The report also recommends that the regional 

administrator require IDEQ to ensure that all contracts issued under this 

cooperative agreement include a 10-year record retention period as required by 

40 CFR §35.6705. The report also recommends that the regional administrator 

require IDEQ to ensure that current and future contractors are covered by 

accident and catastrophic loss insurance as required by 40 CFR §35.6590(b). In 

addition, the report recommends that the regional administrator require IDEQ to 

update its policies and procedures to ensure that they address CIPD, 10-year 

record retention, and accident and catastrophic loss insurance requirements. 

IDEQ agreed with three of the four findings but did not directly address the 

recommendations in its draft report response. IDEQ has updated its procurement 

manual to address the CIPD and record retention requirements. Region 10 had 

no objections to the findings and agrees that IDEQ needs to address the 

recommendations. 
 

 

 

 

UNITED STATES ENVIRONMENTAL PROTECTION AGENCY 

WASHINGTON, D.C. 20460 

THE INSPECTOR GENERAL 

March 28, 2013 

MEMORANDUM 

SUBJECT:	 Audit of American Recovery and Reinvestment Act-Funded 

Cooperative Agreement 2S-96099601 Awarded to the 

Idaho Department of Environmental Quality 

Report No. 13-R-0206 

FROM:	 Arthur A. Elkins Jr. 

TO:	 Dennis McLerran, Regional Administrator 

Region 10 

This memorandum transmits the final report for the audit of American Recovery and 

Reinvestment Act cooperative agreement 2S-96099601 awarded to the Idaho Department of 

Environmental Quality. 

The independent public accounting firm Ollie Green & Company conducted this audit on behalf 

of the Office of Inspector General. The audit was required to be conducted in accordance with 

Government Auditing Standards, issued by the comptroller general of the United States. The IPA 

firm is responsible for the audit report and the conclusions expressed in that report. The OIG 

performed the procedures necessary to obtain a reasonable assurance about the IPA’s 

independence, objectivity, qualifications, technical approach and audit results in order to accept 

the conclusions and recommendations. 

A status of recommendations table is also provided at the end of this report that summarizes the 

findings which the IPA firm has identified and the corrective actions it recommends. The 

recommendations represent the opinion of the IPA and the OIG and do not necessarily represent 

the final position of the U.S. Environmental Protection Agency. EPA managers, in accordance 

with established audit resolution procedures, will make final determination on matters in this 

report. 
 

 

Action Required 

In accordance with EPA Manual 2750, you are required to provide your final management 

decision to us within 180 days, or by September 24, 2013. To expedite the resolution process, 

please also email an electronic version of your management decision to adachi.robert@epa.gov. 

Your response will be posted on the OIG’s public website, along with our memorandum 

commenting on your response. Your response should be provided as an Adobe PDF file that 

complies with the accessibility requirements of Section 508 of the Rehabilitation Act of 1973, as 

amended. The final response should not contain data that you do not want to be released to the 

public; if your response contains such data, you should identify the data for redaction or removal. 

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

available at http://www.epa.gov/oig. 

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

assistant inspector general for audit, at (202) 566-0899 or heist.melissa@epa.gov; or 

Robert Adachi, product line director, at (415) 947-4537 or adachi.robert@epa.gov. 
 

Audit of American Recovery and 


Reinvestment Act Funded Cooperative 


Agreement No. 2S-96099601 Awarded to the Idaho 


Department of Environmental Quality 

 

October 29, 2012 

Mr. Robert Adachi, Director of Forensic Audits 

U.S. Environmental Protection Agency 

Office of Inspector General 

San Francisco, CA 94105 

Mr. Adachi: 

Please find attached a copy of the final audit report of our Recovery Act audit of 

Cooperative Agreement No. 2S-9609960 awarded to Idaho Department of 

Environmental Quality (IDEQ) on July 2, 2009. Our audit was conducted in 

accordance with the terms and conditions of Contract No. EP-G12H-00376 

dated April 2, 2012 and 2011 Revised Government Auditing Standards. 

We appreciate the opportunity to have worked with the U.S Environmental 

Protection Agency, Office of Inspector General. Please contact me with any 

questions you may have. 

Sincerely, 

Ollie Green, MBA, CPA 

Managing Partner 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Audit of American Recovery and Reinvestment Act 13-R-0206 

Cooperative Agreement 2S-96099601 Awarded to the 

Idaho Department of Environmental Quality 

Table of Contents 

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

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

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

Scope and Methodology ......................................................................................... 1
	

Results of the Audit .................................................................................................... 3
	

Procurement ............................................................................................................ 3 

IDEQ Did Not Require Contractors to Include Certification of Independent 

 Price Determination Language in Their Bid Proposals ............................... 4 

IDEQ Contracts Did Not Require a 10 Year Records Retention Period 

IDEQ Did Not Require Contractors to Have Accident and Catastrophic 

.......... 4 

Insurance Coverage ................................................................................... 5 

Force Account Activity ............................................................................................. 6 

Cooperative Agreement Objectives ........................................................................ 6 

Recommendations...................................................................................................... 6 

Agency and Recipient Comments ............................................................................. 7 

Ollie Green & Company Response ............................................................................ 7 

Appendices 

A IDEQ’s Response to the Draft Report .......................................................... 9 
 

 

Introduction 

Purpose 

The purpose of our audit was to determine whether the Idaho Department of 

Environmental Quality (IDEQ) procurements and the use of force account under 

Cooperative Agreement (CA) 2S-96099601complied with Title 40 Code of 

Federal Regulations (CFR) Part 35, Subpart O, requirements. The purpose also 

included determining whether the objectives of the CA were met. 

Background 

IDEQ was awarded CA No. 2S-96099601for $15 million by U.S. Environmental 

Protection Agency (EPA) on July 2, 2009, to remediate 450-500 leadcontaminated properties at the Bunker Hill Superfund site. The CA was later 

amended (Amendment No. 3) on December 10, 2009, to increase the amount to 

$16,800,000. This project was funded at 100 percent by the ARRA with no state 

match requirement. The period of performance was from July 2, 2009, through 

June 30, 2012. Funding for this CA was part of the $600 million Superfund 

hazardous site cleanup funded by ARRA. 

Scope and Methodology 

Our ARRA performance audit covered the period from July 2, 2009, through June 

30, 2012. We conducted our fieldwork at IDEQ in Boise, Idaho from May 14 to 

May 18, 2012, and from June 18 to June 20, 2012. The scope of our audit was 

limited to determining whether: 

 IDEQ’s procurements under the CA were conducted in accordance with 

Title 40 CFR Part 35, Subpart O; 

 IDEQ’s force account complied with Title 40 CFR Part 35, Subpart O; and 

 The objectives of the CA were met. 

Our scope included the review of IDEQ’s procurement processes and controls 

related to ARRA CA transactions. Our work included reviewing IDEQ’s 

solicitation, evaluation, tabulation and award processes related to CA 2S96099601 procurements. Because IDEQ utilized two contractors already under 

contract (awarded in July 2006) to conduct ARRA CA remediation work, we 

extended our audit scope to include Year 2006 procurement of the two 

contractors. IDEQ provided all Year 2006 procurement information requested 

except detailed tabulation support documentation. IDEQ provided a summary 

tabulation sheet and indicated that the detailed documentation supporting the 

tabulations had been destroyed. Our scope for the extended period was limited 

accordingly. 

13-R-0206 1 
 

 

 

 

Our audit methodology included conducting structured interviews and discussions 

with officials at IDEQ and OIG to gain an understanding about the internal 

controls, processes, systems and procedures used to capture measure and report 

IDEQ’s procurements and force account activity and how IDEQ met the 

objectives of the CA. 

We requested, received and reviewed documentation from IDEQ to assess 

IDEQ’s procurement processes, force account activity and internal controls over 

procurements. This documentation included the State’s procurement policies and 

procedures and a written description of the internal controls that were in place 

during the audit period designed to detect and/or prevent potential errors related to 

the procurement process. We also requested, received and reviewed property files 

and other documentation required to verify that the program objectives were met. 

We used a judgmental sampling approach to select 10 properties to verify that all 

remediation work was completed in accordance with the requirements of the CA. 

A performance audit includes gaining an understanding of internal controls 

considered significant to the audit objectives, testing controls, and testing 

compliance with significant laws, regulations and other requirements. For this 

engagement, we obtained an understanding of IDEQ’s procurement processes and 

internal controls. The testing of internal controls over this process was not 

determined to be significant to our audit objectives. 

We conducted this performance audit 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 provided a reasonable basis for our findings and 

conclusions based on our audit objectives. 

13-R-0206 2 
 

 

 

 

 

 

 

 

 

 

 

 

Results of the Audit 

Procurement 

Generally we found that IDEQ complied with Idaho’s State procurement policies 

and procedures as required by Title 40 CFR 31.36 (a). We also found substantial 

compliance with 40 CFR Part 35 Subpart O. However, we found that IDEQ did 

not require its contractors to include Certification of Independent Price 

Determination (CPID) language in their bid proposals as required by Title 40 CFR 

35.6550 (b) (3). Our audit also found that IDEQ did not require its contractors to 

have accident and catastrophic loss insurance coverage as required by Title 40 

CFR 35.6590 (b). Finally, we found that IDEQ did not require its contractors to 

retain its records for 10 years after submitting its final Federal Financial Status 

report as required by Title 40 CFR 35.6705. See Table 1 below. 

Table 1: IDEQ’s Compliance With Title 40 CFR Part 35, Subpart O 

Number 

CFR Number CFR Title of 

Findings 

40 CFR 31.36 (a) State Procurement Policies 

40 CFR 31.36 (j) Payments to Consultants 

40 CFR 35.6500 Use of Force Account 

40 CFR 35.6550 (a)(5) Selection Procedures 

40 CFR 35.6550 (a) (9 Intergovernmental Agreements 

40 CFR 35.6550 (b) Contractor Standards 1 

40 CFR 35.6555 (c) Written Specifications 

40 CFR 35.6565 (b)-(d) Procurement Methods 

40 CFR 35.6570 Use of Same Engineer 

40 CFR 35.6575 Restrictions on Contract Types 

40 CFR 35.6590(b) Accident/Catastrophic Insurance 1 

40 CFR 35.6600 Contractor Claims 

40 CFR 35.6705 Records Retention 1 

Total 3 

As illustrated in Table 1 above, we found three findings related to IDEQ’s 

compliance with 40 CFR Part 35 Subpart O. Our findings are summarized below. 

13-R-0206 3 
 

 

 

 

IDEQ Did Not Require Contractors to Include Certification of 

Independent Price Determination Language in Their Bid Proposals 

IDEQ did not require its contractors to include CIPD language in their bid 

proposals. Our audit found that IDEQ’s two prime contractors utilized to conduct 

ARRA remediation work did not have CIPD language in their bid proposals as 

required by 40 CFR 35.6550(b) (3). Title 40 CFR 35.6550(b) (3) states that the 

recipient must require that each contractor include in its bid or proposal a 

certification of independent price determination. This document certifies that no 

collusion, as defined by Federal and State antitrust laws, occurred during bid 

preparation. 

In conducting our work, we found that IDEQ contracted with United Mine 

Services, Inc and Ferguson Contracting, Inc. to conduct the ARRA CA 

remediation work. We found that these two contractors had held contracts with 

IDEQ since June 2006 and July 2006 respectively and their contracts were due to 

expire in November 2009 and December 2009 respectively. The initial ARRA CA 

remediation work was conducted by these two contractors from July 2, 2009 (CA 

award date) through December 31, 2009. 

On February 1, 2010, IDEQ solicited bid proposals from qualified contractors to 

continue the ARRA remediation work required by CA 2S-96099601. Six bid 

proposals were received and the two incumbent contractors were awarded new 

contracts to continue the ARRA remediation work. The effective date of their 

new contracts was April 19, 2010. Our review of the six bid proposals found that 

none included the CIPD language required by 40 CFR 35.6550(b) (3). 

Our review of IDEQ’s Purchasing Policies and Procedures Manual issued July 1, 

2000, and revised on January 18, 2012 found no requirement for IDEQ to comply 

with Title 40 CFR 35.6550(b) (3). The IDEQ financial officer indicated that 

IDEQ erred in not requiring CIPD language in the bid proposals. He also 

indicated that IDEQ has developed approved CIPD language and will add this 

language to all future bid proposal requirements. 

As a result of this departure from 40 CFR 35.6550(b) (3), IDEQ had no 

assurances that bid prices submitted by the contractors were independently 

determined. 

IDEQ Contracts Did Not Require A 10 Year Records Retention Period 

IDEQ did not specify a 10-year records retention period in its contracts as 

required by Title 40 CFR 35.6705. Our audit found that IDEQ’s contracts 

13-R-0206 4 
 

 

 

 

 

 

specified a 3 year records retention period. Title 40 CFR 35.6705 requires 

contractors to retain records for 10 years after submitting its final Federal 

Financial Status report unless otherwise directed by the EPA award official. 

Our work included requesting copies of the two contracts awarded to the 

contractors conducting the ARRA lead contamination remediation work required 

by CA No. 2S-96099601 at the Bunker Hill Superfund site. Upon conducting our 

review of these contracts, we found that both contracts specified only a 3 year 

records retention period. 

Our review of IDEQ’s Purchasing Policies and Procedures Manual issued July 1, 

2000, and revised on January 18, 2012 found no requirement for IDEQ to comply 

with Title 40 CFR 35.6705. IDEQ indicated that the Department’s records 

retention period is 33 years. However, due to an oversight, this information was 

not conveyed to the contractors. IDEQ indicated that it will establish language in 

future contracts stating these retention periods and will require contractors to 

retain records for the prescribed periods. 

As a result of the 3 year records retention period specified in IDEQ’s contracts, 

IDEQ’s contractors are currently required to retain records related to the CA for 

only 3 years. 

IDEQ Did Not Require Its Contractors to Have Accident and 

Catastrophic Loss Insurance Coverage 

Our audit found that IDEQ did not require it contractors to have accident and 

catastrophic loss insurance coverage as required by Title 40 CFR 35.6590 (b). To 

conduct our work, we requested and received the insurance requirements and 

coverage amounts for IDEQ contractors conducting the lead contamination 

remediation work at the Bunker Hill Superfund site. 

Our review of IDEQ’s Purchasing Policies and Procedures Manual issued July 1, 

2000, and revised on January 18, 2012 found no requirement for IDEQ to comply 

with Title 40 CFR 35.6590 (b). We found that IDEQ required its contractors to 

have the following insurance coverage: 

 Idaho Worker’s Compensation Insurance (minimum $100,000); 

 Comprehensive General Liability (minimum $1,000,000 per occurrence); 

 Automobile Liability Insurance (no less than $1,000,000). 

IDEQ’s financial officer indicated that the Department feels that it has met the 

requirements of Title 40 CFR 35.6590 (b). He indicated that if the Department 

has not met the requirement, it would have been an oversight and 

misinterpretation of the regulation. Finally, he indicated that all future contracts 

will have that requirement added if determined necessary. Title 40 CFR 35.6590 

(b) states that the recipient must require the contractor to provide insurance 

13-R-0206 5 
 

 

 

 

 

 

against accidents and catastrophic loss to manage any risk inherent in completing 

the project. 

This departure from Title 40 CFR 35.6590 (b) put IDEQ at risk that the contract 

work may not be completed by the contractor due to accident or catastrophic loss. 

Force Account Activity 

Title 40 CFR 35.6500 (a) defines Force Account work as the use of the recipient’s 

own employees or equipment for construction, construction-related activities 

(including architecture and engineering services), or repair or improvement to a 

facility. Our audit found that IDEQ had no Force Account activity related to the 

CA. 

Cooperative Agreement Objectives 

The EPA awarded CA No. 2S-96099601 to IDEQ on 2 July 2009. The purpose of 

the CA was to provide federal assistance in the amount of $16,800,000 for 

remediation of 450-500 lead-contaminated properties at the Bunker Hill 

Superfund site. Our audit found that IDEQ completed the remediation of 480 lead 

contaminated properties in accordance with requirements of the CA. 

Recommendations: 

We recommend that the Regional Administrator, Region 10: 

1.		 Require IDEQ to review and gain an understanding of the requirements of 

40 CFR 35.6550(b) (3) and ensure that all current and future bid proposals 

contain CIPD language. 

2.		 Require IDEQ to ensure that all contracts issued under this CA include the 

10 year record retention period as required by Title 40 CFR 35.6705. 

3.		 Require IDEQ to ensure that current and future contractors are covered by 

accident and catastrophic loss insurance as required by Title 40 CFR 

35.6590 (b). 

4.		 Require IDEQ to update its policies and procedures to ensure that they 

address: 

a.		 Bid proposal certification of independent price determination 

language as required by 40 CFR 35.6550(b) (3). 

b.		 10 year record retention period as required by Title 40 CFR 

35.6705. 

c.		 Accident and catastrophic loss insurance as required by Title 40 

CFR 35.6590 (b). 

13-R-0206 6 
 

 

 

 

 

 

Agency and Recipient Comments 

Ollie Green & Company issued a draft report on August 23, 2012 and provided copies to IDEQ, 

Region 10 and OIG. In response to the draft report, we received written comments from IDEQ 

on September 17, 2012. IDEQ agreed with 3 of the 4 findings cited but did not address the 

recommendations in its response. Region 10 provided its written response to the draft report on 

September 11, 2012 stating that it had no objections to the findings, and agrees that IDEQ needs 

to address the recommendations presented in the draft report. We conducted the final exit 

conference on September 19, 2012 via teleconference with IDEQ, Region 10 and OIG to obtain 

verbal comments to the draft report. 

IDEQ agreed with finding 1 (IDEQ Did Not Require Contractors to Include Certification of 

Independent Price Determination Language in Their Bid Proposals) in its written response and 

specified the language proposed for its Request for Proposals (RFP), Contracts and Contracts 

Manual. IDEQ agreed with finding 2 (IDEQ Contracts Did Not Require A 10 Year Records 

Retention Period) and said that it had incorporated the required 10 year retention language in its 

standard RFQ, Contracts and Contracts Manual. IDEQ also agreed with finding 3 (IDEQ Did 

Not Require Its Contractors to Have Accident and Catastrophic Loss Insurance Coverage) and 

said that it would require contractors to have the Accident and Catastrophic Insurance Coverage 

required by Title 40 CFR 35.6590b. IDEQ said that its insurance carrier was not able to identify 

the type of insurance required by Title 40 CFR 35.6590b and requested additional clarification 

about the type of insurance required. Region 10 officials indicated that the required coverage 

may be contained within the contractor’s General Liability Package but would research further 

and provide an answer as soon as possible. IDEQ, Region 10 and OIG agreed with the 

recommendations made for findings 1, 2, and 3. 

IDEQ disagreed with finding number 4 (IDEQ Did Not Sign-Off on Three Pavement Projects 

Invoiced by Contractors). IDEQ agreed that the asphalt work was not included on the internal 

checklist used during the audit, but said that there were other checks and balances in place to 

ensure that the asphalt work had been done and properly inspected before payment was made. 

IDEQ also indicated that the checklist used to ensure work had been inspected and signed off on 

had been revised to include asphalt work. Based on IDEQ’s written and verbal response, OIG 

recommended that finding 4 be taken out of the report. Ollie Green and Company concurred 

with this recommendation and removed finding 4 from the draft report. 

Ollie Green & Company Response 

IDEQ’s written and verbal responses to findings 1, 3, 4, show that IDEQ has taken the 

appropriate actions to address the recommendations. The response provided for finding 1 show 

that IDEQ’s proposed language for RFPs, Contracts and Contract Manual satisfies the 

Independent Price Determination Language requirement. Therefore recommendation 1 is closed. 

The response provided for finding 2 shows that IDEQ has revised its RFQs, Contracts and 

Contracts Manual to incorporate the 10 year retention requirement. However, this 

recommendation remains open as IDEQ did not modify the current contracts to include the 

required 10 year retention period. The response provided for finding 3 shows that IDEQ is 

13-R-0206 7 
 

 

 

 

making an effort to identify the Accident and Catastrophic Insurance Coverage required by Title 

40 CFR 35.6590b. Region 10 has agreed to research this matter further and to provide guidance 

to IDEQ. Therefore, recommendation 3 remains open. IDEQ disagreed with finding 4 and 

provided other evidence that indicated that the work had been done properly and that other 

checks and balances were in place to ensure that asphalt work had been inspected and signed off 

on. Based on this information and OIG’s recommendation, finding 4 was taken out of the report. 

Therefore recommendation 4 is closed. IDEQ has agreed to update its RFQs, Contracts and 

Contracts Manual to include language to ensure that the requirements of recommendations 5a 

and 5b were included. However, IDEQ did not address the requirements of recommendation 5c 

in its response. Therefore recommendations 5a and 5b are closed and 5c remains open. We 

agree with IDEQ’s initial corrective actions to address the requirements of recommendations 1, 

3, 4,5a and 5b cited in the draft report. IDEQ will need to include its proposed corrective action 

plan in its response to the final report. 

13-R-0206 8 
 

 

 

 

 

 

 

Appendix – A - IDEQ Response to Draft Report 

September 17, 2012 

Ollie Green, MBA CPA, Managing Partner 

Ollie Green & Company, CPA’s 

1300 South Fourth St, STE 100 

Louisville, KY 40208 

Re: Recovery Act audit of EPA Cooperative Agreement No. 26-96099601 

Dear Mr. Green: 

The Idaho Department of Environmental Quality (DEQ) accepts the “Draft” audit report sent to us on 

August 23, 2012, and offers the following responses to the findings identified within the report. 

Finding – IDEQ Did Not Require Contractors to Include Certification of Independent Price 

Determination Language in Their Bid Proposals 

DEQ agrees with the finding and has incorporated the following language into its standard RFP, Contracts 

and Contracts Manual: 

The offeror certifies that: 

1.	 The prices in this offer have been arrived at independently, without, for the purpose of restricting 

competition, any consultation, communication, or agreement with any other offeror or competitor 

relating to: 

i. Those prices, 

ii. The intention to submit an offer, and 

iii. The methods or factors used to calculate the prices offered. 

2.	 The prices in this offer have not been and will not be knowingly disclosed by the offeror, directly 

or indirectly, to any other offeror or competitor before bid opening (in the case of a sealed bid 

solicitation) or contract award (in the case of a negotiated solicitation) unless otherwise required 

by law; and, 

3.	 No attempt has been made or will be made by the offeror to induce any other concern to submit 

or not to submit an offer for the purpose of restricting competition. 

13-R-0206 9 
 

 

 

 

 

 

Finding – IDEQ Contracts Did Not Require A 10 Year Records Retention Period 

DEQ agrees with the finding and has incorporated the following language into its standard RFP, Contracts 

and Contracts Manual: 

The CONTRACTOR shall maintain books, records, documents and other evidence directly 

pertinent to performance of EPA funded work under this CONTRACT in accordance with 

generally accepted accounting principles and practices consistently applied, and in accordance 

with 40 CFR 31.36(i)(10) and (11), in effect on the date this CONTRACT is signed by both 

parties. Records shall be retained for a period of ten (10) years after final payment is made and 

all other pending matters are closed. If any litigation, claim, negotiation, audit or other action 

involving the records has been started before the expiration of the ten-year period, the records 

must be retained until completion of the actions and resolution of all issues which arise from it, 

or until the end of the regular ten-year period, whichever is later. 

Finding – IDEQ Did Not Require Its Contractors to Have Accident and Catastrophic Loss Insurance 

Coverage 

DEQ agrees with the finding and will require Accident and Catastrophic Insurance Coverage, as and when 

required by Title 40 CFR 35.6590 (b). 

Finding – IDEQ Did Not Sign-Off On Three Pavement (Asphalt) Projects Invoiced by Contractors 

DEQ disagrees with the finding. While initially the asphalt work was not included on the DEQ’s internal 

checklist, the work was reviewed and approved prior to payment. In addition, DEQ does confirm 

completion of all asphalt work in the final record drawing that is completed for each property. While Title 

40 CFR Part 31.36 (a) (2) requires grantees and sub-grantees to maintain a contract administration system 

which ensures that contractors perform in accordance with terms, conditions and specifications of their 

contracts or purchase orders, it does not define specifically how that is to be done. DEQ feels that in this 

situation, the level of oversight and approval process more than adequately meets the requirement. 

Finally, DEQ has revised the property file check list to include a line item for asphalt which is the form of 

pavement used at the site. 

If you or your staff has any further questions, please contact Dave Sande, CPA, Financial Officer. 

Sincerely, 

Curt A. Fransen 

Director 

c: Dave Sande, DEQ-Fiscal Office 

13-R-0206 10 
 

 

 

 

 

 

 

 

 

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 

1 

2 

3 

4 

6 

6 

6 

6 

Require IDEQ to review and gain an understanding 

of the requirements of 40 CFR 35.6550(b) (3) and 

ensure that all current and future bid proposals 

contain CIPD language. 

Require IDEQ to ensure that all contracts issued 

under this CA include the 10 year record retention 

period as required by Title 40 CFR 35.6705. 

Require IDEQ to ensure that current and future 

contractors are covered by accident and 

catastrophic loss insurance as required by Title 40 

CFR 35.6590 (b). 

Require IDEQ to update its policies and procedures 

to ensure that they address: 

a. Bid proposal certification of independent price 

determination language as required by 

40 CFR 35.6550(b) (3). 

b. 10 year record retention period as required 

by Title 40 CFR 35.6705. 

c. Accident and catastrophic loss insurance as 

required by Title 40 CFR 35.6590 (b). 

C 

O 

O 

O 

Regional Administrator, 

Region 10 

Regional Administrator, 

Region 10 

Regional Administrator, 

Region 10 

Regional Administrator, 

Region 10 

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-R-0206
	

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Distribution 

Regional Administrator, Region 10 

Agency Follow-Up Official (the CFO) 

Agency Follow-Up Coordinator 

Director, Grants and Interagency Agreements Management Division 

Audit Follow-Up Coordinator, Region 10 

Audit Follow-Up Coordinator, Office of Grants and Debarment 

Director, Idaho Department of Environmental Quality 

13-R-0206