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Internal Controls Needed to 

Control Costs of Superfund 

Technical Assessment & 

Response Team Contracts, 

as Exemplified in Region 7

Report No. 15-P-0215 July 20, 2015

U.S. ENVIRONMENTAL PROTECTION AGENCY

OFFICE OF INSPECTOR GENERAL

Spending Taxpayer Dollars
Report Contributors: Janet Kasper

Michael Petscavage

David Penman

Anthony Grear

Abbreviations

CMAP Contracts Management Assessment Program

CO Contracting Officer

COR Contracting Officer’s Representative

EPA U.S. Environmental Protection Agency

FAR Federal Acquisition Regulation

G&A General and Administrative

IGCE Independent Government Cost Estimate

ODC Other Direct Cost

OIG Office of Inspector General

PM Program Management

PO Project Officer

SOW Statement of Work

START Superfund Technical Assessment & Response Team Contracts

TOPO Task Order Project Officer

Are you aware of fraud, waste or abuse in an

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OIG_Hotline@epa.gov

More information at www.epa.gov/oig/hotline.html.

EPA Office of Inspector General

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 15-P-0215

July 20, 2015

Why We Did This Audit

The purpose of this audit was 

to determine whether the 

U.S. Environmental Protection 

Agency’s (EPA’s) Region 7 is 

monitoring its Superfund 

Technical Assessment & 

Response Team (START) 

contract to ensure compliance 

with contract terms and to 

ensure the costs billed are in 

accordance with the terms and 

conditions of the contract.

Region 7 awarded the START 

contract in June 2013. The 

contract contains a 3-year base 

period with a 2-year option, and 

has a maximum value of 

$54,174,363. With large 

spending comes a higher risk 

of fraud, waste and abuse.

This report addresses the 

following EPA goal or 

cross-agency strategy:

 Embracing EPA as a highperforming organization.

Send all inquiries to our public

affairs office at (202) 566-2391

or visit www.epa.gov/oig.

The full report is at:

www.epa.gov/oig/reports/2015/ 

20150720-15-P-0215.pdf

 

Internal Controls Needed to Control Costs of 

Superfund Technical Assessment & Response 

Team Contracts, as Exemplified in Region 7

 What We Found

The EPA spends hundreds of millions of dollars under 

START contracts. We found that Region 7 is not 

adequately reviewing contractor bills to ensure 

compliance with the START contract terms. Based on 

a limited sample of 10 invoices, we found $82,322 in 

unallowable billings. Additionally, we found that 

Region 7 is not adequately monitoring the contractor for compliance with the 

contract requirements. Specifically, we found that:

 Region 7 did not sufficiently review contractor invoices.

 Monthly progress reports did not meet contract requirements.

 Contractor billings included double-billed items and other unallowable items.

 Staffing plans were not being received as required.

 The region’s annual invoice reviews were lacking.

 Adjustment vouchers were not submitted timely.

 The region’s START Contracting Officer did not timely appoint 

Contracting Officer’s Representatives for the contract.

 Statements of Work were too general and Independent Government Cost 

Estimates lacked details.

 Contract clauses were incomplete, repetitive or contradictory.

 Recommendations and Planned Agency Corrective Actions

This report makes 26 recommendations. Most of the recommendations are to the 

Region 7 Administrator, but we do make two recommendations to the Assistant 

Administrator for Administration and Resources Management. Our 

recommendations require personnel to notify the contractor of required contract 

data not being received, use current guidance and tools to review contractor 

invoices, recover unallowable costs billed on the contract, and properly nominate 

and appoint contracting officer’s representatives on the contract. 

The EPA agreed with most of the recommendations and provided corrective 

actions and estimated completion dates. Where the agency did not agree with a

recommendation, it proposed an acceptable alternate corrective action. No final 

response from the agency is required because all recommendations are 

resolved.

U.S. Environmental Protection Agency

Office of Inspector General

At a Glance

Lack of oversight led 

to unallowable billings 

of $82,322 and 

noncompliance with 

contract terms and 

conditions.
July 20, 2015

MEMORANDUM

SUBJECT: Internal Controls Needed to Control Costs of Superfund Technical Assessment & 

Response Team Contracts, as Exemplified in Region 7

Report No. 15-P-0215

FROM: Arthur A. Elkins Jr. 

TO: Mark Hague, Acting Regional Administrator

Region 7

Karl Brooks, Acting Assistant Administrator

Office of Administration and Resources Management

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

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

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

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

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

The office responsible for implementing the recommendations is the Office of Acquisition Management 

within the Office of Administration and Resources Management.

Action Required

In accordance with EPA Manual 2750, your office provided acceptable and complete planned corrective 

actions in response to OIG recommendations. Therefore, all recommendations are resolved and no final 

response to this report is required. 

We will post this report to our website at http://www.epa.gov/oig.

UNITED STATES ENVIRONMENTAL PROTECTION AGENCY

WASHINGTON, D.C. 20460

THE INSPECTOR GENERAL
Internal Controls Needed to Control Costs of 15-P-0215

Superfund Technical Assessment & Response 

Team Contracts, as Exemplified in Region 7 

Table of Contents

Chapters

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

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

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

Related Reports......................................................................................... 2

Responsible Offices ................................................................................... 3

Scope and Methodology ............................................................................ 3

2 Region 7 Not Ensuring Costs Are Billed Correctly ........................................ 5

Region 7 Did Not Sufficiently Review Contractor Invoices.......................... 5

Monthly Progress Reports Did Not Meet Contract Requirements............... 7

Contractor Billings Included Double-Billed, Reclassified and 

Noncompliant Items ............................................................................. 8

Staffing Plans Not Being Received as Required ........................................ 11

Region’s Annual Invoice Reviews Lacking ................................................. 12

Adjustment Vouchers Not Submitted Timely .............................................. 14

Agency Response to Recommendations and OIG Evaluation.................... 16

3 EPA Did Not Monitor Contractor for Compliance With 

Terms and Conditions of Contract..................................................................... 17

Contracting Officer Did Not Timely Appoint CORs for the Contract ............ 17

SOWs Too General and IGCEs Lack Details ............................................. 18

Contract Clauses Incomplete, Repetitive or Contradictory ......................... 19

Agency Response to Recommendations and OIG Evaluation.................... 21

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

Appendices

A Monthly Progress Report Requirements and OIG Analysis .......................... 24

B Agency Response to Draft Report and OIG Evaluation ................................. 26

C Distribution ....................................................................................................... 32
15-P-0215 1

Chapter 1

Introduction

Purpose

The U.S. Environmental Protection Agency (EPA) spends hundreds of millions of 

dollars under Superfund Technical Assessment & Response Team (START)

contracts. The purpose of START contracts are to provide nationally consistent 

advisory and assistance services to EPA On-Scene Coordinators and other federal 

officials implementing the EPA’s responsibilities under the National Response 

System. With large spending comes a higher risk of fraud, waste and abuse. 

The Office of Inspector General (OIG) conducted an audit of the Region 7 START 

contract because of the high dollar value of the contract and because the contract 

had been recently awarded (June 2013). Our objectives were to determine whether:

 The EPA is monitoring the contractor for compliance with the terms and 

conditions of the contract.

 The costs billed are in accordance with the contract terms and conditions.

Background

Each year, thousands of emergencies involving oil spills or the release (or 

threatened release) of hazardous substances are reported in the United States. 

Emergencies range from small-scale spills to large events requiring prompt action 

and evacuation of nearby populations. The National Response System is the 

principal federal mechanism for responding to releases of hazardous substances and 

oil, utilizing a multi-layered network of individuals and teams for federal, state and 

local agencies, and industry. The EPA’s role under the National Response System 

is to respond to these emergencies within its area of jurisdiction.

To respond to these emergencies, the EPA established the START contracts. The 

START contracts provide technical support for site assessment, response, and

prevention and preparedness activities. This support includes gathering and 

analyzing technical information, preparing technical reports on oil and hazardous 

substance investigations, and technical support for cleanup efforts. According to 

data provided in September 2014, there were 19 START contracts with 

expenditures of $442.2 million and obligations of $509.5 million.

Region 7’s START Contract

The Region 7 START contract (EP-S7-13-06) was awarded on June 11, 2013, and 

includes a 3-year base period, with an option for 2 additional years. The contract 

has a maximum potential value of approximately $54.2 million. The contract is a
15-P-0215 2

fixed rates for services - indefinite delivery/indefinite quantity contract that issues 

task orders using a time-and-materials pricing arrangement. As of September 

2014, there were 77 task orders issued that incurred expenditures. The total 

amount expended up until that timeframe was $5,004,459. 

The contract contains fixed labor rates for specific categories. The contractor 

developed the fixed labor rates using average salary data, and then applied

indirect costs via its fringe, overhead and general and administrative (G&A) rates. 

Once the direct labor rates were calculated, the contractor developed its program 

management (PM) allocation. The PM allocation consisted of activities such as 

the development of staffing plans, contract level-required reports and 

subcontractor management. The PM allocation also included estimations on 

chemical protective clothing such as disposable Tyvek suits, gloves and respirator 

cartridges. The PM allocation was then applied to all labor rates.

The contract had a placement contracting officer (CO) who issued the solicitation 

and subsequent award. After award, the contract was assigned to another CO for 

administration. The overall contract is managed by a project officer (PO) and each 

task order has a task order project officer (TOPO) assigned who manages the

applicable task order.

Newly Issued Policy Supersedes Previous Polices and Guidance

On October 1, 2014, the EPA issued a flash notice stating that policy and 

guidance documents for acquisition management will be the Environmental 

Protection Agency Acquisition Regulations, Interim Policy Notices and the new 

EPA Acquisition Guide exclusively. The EPA Acquisition Guide combines the 

EPA’s Acquisition Handbook and Contracts Management Manual into one guide.

Because the new guidance was issued during the period of performance of the 

Region 7 START contract, we used both the previous and newly issued guidance

during the course of the audit.

Related Reports

The OIG has issued several reports on the management of Superfund contracts 

that identified issues similar to those in this report. However, these reports 

resulted in recommendations that were specific to the contracts reviewed. In EPA 

OIG Report No. 14-P-0109, Internal Controls Needed to Control Costs of

Emergency and Rapid Response Services Contracts, as Exemplified in Region 6

(http://www.epa.gov/oig/reports/2014/20140204-14-P-0109.pdf), issued 

February 4, 2014, the OIG reported that Region 6 personnel were not:

 Performing required annual invoice reviews.

 Monitoring contractor adjustment vouchers.
15-P-0215 3

In EPA OIG Report No. 13-P-0209, Opportunities for EPA-Wide Improvements 

Identified During Review of a Regional Time and Materials Contract

(http://www.epa.gov/oig/reports/2013/20130404-13-P-0209.pdf), issued April 4, 

2013, the OIG reported that Region 9 contracting personnel did not consistently: 

 Document review of the monthly progress reports.

 Review the qualifications of contractor staff.

 Issue memorandums appointing contracting officer’s representatives.

A third EPA OIG report, Report No. 11-P-0217, Hotline Allegations 

Unsubstantiated, but Region 7 Contract Administration and Award Issues 

Identified (http://www.epa.gov/oig/reports/2011/20110504-11-P-0217.pdf), issued 

May 4, 2011, found that Region 7 did not conduct an annual invoice review for a 

Superfund contract. Region 7’s implementation of the recommendation is 

discussed in Chapter 2.

Responsible Offices

The offices responsible for the implementation of the audit recommendations 

include Region 7’s Superfund Division and its Office of Policy and Management; 

and the Office of Acquisition Management within the Office of Administration 

and Resources Management.

Scope and Methodology

We conducted this performance audit from August 2014 to May 2015 in 

accordance with generally accepted government auditing standards, issued by the 

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

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

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

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

and conclusions based on our audit objectives.

To determine whether Region 7 was monitoring the contractor for compliance 

with the terms and conditions of the contract, we reviewed pre- and post-award 

documents such as the solicitation, the contractor’s proposal, internal reviews, the 

contract, and subsequent task orders. To determine whether the costs were being 

billed in accordance with the terms and conditions of the contract, we reviewed 

contractor-submitted invoices, a monthly progress report, and tasking documents 

associated with the invoices. We also reviewed the Federal Acquisition 

Regulation (FAR) and agency policy pertaining to contract administration and 

management to assess compliance with those internal controls.

To gain an understanding of the policies, procedures and controls in place for the 

START contract we interviewed agency staff from Region 7’s Superfund 

Division and its Office of Policy and Management; staff from Region 4’s 
15-P-0215 4

Superfund Division (regarding crossover work done under a Region 7 contract); 

staff from the Office of Emergency Management within the Office of Solid Waste 

and Emergency Response; and staff from the Office of Acquisition Management 

within the Office of Administration and Resources Management. In addition, we 

interviewed the contractor’s Accounts Receivable Manager, its Finance Manager 

and the Controller at the contractor’s location to regarding supporting 

documentation and to billing procedures.

To make our determinations, we used a judgmental sampling technique for 

invoice and task order selection to select a total of 10 invoices. The criteria used 

in the selection process were based on the 10 highest invoiced amounts, ensuring 

that only one invoice per task order was selected for review. We also reviewed the 

subsequent task order file for each of the invoices we selected. The following 

invoices and subsequent task orders were selected: 

Table 1: Task order and invoices sampled

Task Order Invoice Number Invoiced Amount

4 3 $30,964.87 

37 8 45,765.12 

4059 1 48,371.19 

47 8 59,848.37 

48 10 61,932.09 

22 6 62,717.63 

58 2 69,311.07 

2 5 86,160.81 

38 7 103,796.39 

1 12 165,351.32 

Subtotal $734,218.86 

Source: OIG analysis of contract data.
15-P-0215 5

Chapter 2

Region 7 Not Ensuring

Costs Are Billed Correctly

Region 7 did not ensure that costs under its START contract were billed in 

accordance with contract terms and conditions. Specifically, we found that:

 Contractor invoices were not sufficiently reviewed.

 Monthly progress reports did not meet contract requirements.

 Invoices contained items that were double-billed or were unallowable.

 Staffing plans were not received as required.

 An annual invoice review was not done timely and lacked supporting 

documents.

 Adjustment vouchers were not submitted timely.

The START contract contains numerous clauses that stipulate the terms and 

conditions associated with the contract. The issues identified in this audit 

generally occurred because Region 7 personnel were not familiar with the 

contract’s terms and conditions, did not conduct the necessary reviews, or did not 

receive necessary documentation from the contractor. As a result, Region 7 was 

unable to adequately review invoices and other documentation to determine 

whether costs were allowable, allocable and reasonable. In total we identified 

$82,322 of billed costs that were not allowable. This amount represents a small 

portion of unallowable costs being billed.

Region 7 Did Not Sufficiently Review Contractor Invoices

The review of invoices is a critical function impacting the management of public 

funds. Each year the EPA pays out more than $1.5 billion dollars to contractors1

and, per EPA guidance, POs have primary responsibility for verifying compliance 

with invoice requirements. The Invoice Review & Approval Desk Guide contains 

checklists that help those responsible in the process perform an adequate review. 

Accordingly, employees involved in invoice reviews must (1) review contract 

invoices thoroughly, (2) process invoices in a timely manner and (3) maintain 

records of their invoice reviews and actions taken as a result of the reviews.

Submitted Invoices Not in Compliance With Contract Terms

Region 7’s START contract specifically states that in order for an invoice to be 

considered properly submitted, the invoice must meet contract requirements. The 

 

1

Payment to a contractor implies work is progressing according to the contract and performance must be monitored 

through the reviews of the work plans, project or staffing plans, monthly progress reports, and invoices to assure the

government receives what it has paid for.
15-P-0215 6

contract provides specific instructions on how the contractor shall prepare a 

contract-level invoice or request for contract financing payment. It also lists 

categories of cost for which schedules are required as supporting documentation.

During our review of invoices, we determined that the PO and TOPOs did not 

adequately review contractor invoices on the Region 7 START contract. For all 

10 invoices we reviewed, the required supporting schedules for subcontract costs, 

other direct costs (ODCs), equipment and travel were not provided. These 

schedules provide the details (i.e., quantities, unit pricing) that would allow the 

POs and TOPOs to perform an adequate review of the costs being billed. In 

addition, Region 7 staff did not use prescribed checklists that would have 

facilitated effective invoice reviews.

Table 2: OIG analysis of invoice data submitted

Invoice Preparation Requirements Submitted

Direct Labor – identify by labor category the number of hours, fixed hourly 

rates and total dollars billed for the period in the invoice.

Yes

Subcontracts - by subcontractor, provide detailed supporting schedules of 

each element of cost as provided herein for prime contract costs.

No

Other Direct Costs - identify by item the quantities, unit prices and total 

dollars billed. 

No

Indirect Cost Rates – identify by cost center, the indirect cost rate, the 

period and the cost base to which it is applied.

Yes

Consultants – by consultant, detailed supporting schedules of each 

element of cost.

N/A

Contractor Acquired Equipment - identify by item the quantities, unit 

prices and total dollars billed.

No

Contractor Acquired Software – identify by item the quantities, unit prices 

and total dollars billed.

N/A

Travel - identify by trip, the number of travelers, the duration of travel, the 

point of origin, destination, purpose of trip, transportation by unit price, per 

diem rates on daily basis, and total dollars billed.

No

Source: Region 7 START Contract Attachment J and OIG analysis.

The invoices were not in compliance with contract terms because agency staff 

responsible for invoicing functions were not familiar with the contract terms. As a 

result, the staff were generally unaware of the specific invoicing requirements as 

well as the checklists available for invoice reviews. 

Region 7 Unable to Determine Whether Costs Are Accurate and 

Reasonable

Performing adequate invoice reviews is a critical function that must be performed 

well for the stewardship of taxpayer dollars. The omitted schedules would allow a 

reviewer to verify or question costs being submitted. Without these schedules, 

Region 7 cannot adequately review the invoices and determine whether the costs 

are accurate and reasonable.
15-P-0215 7

The contractor’s loaded labor rates include a program management factor that

includes costs for invoice preparation. Therefore, Region 7 paid the contractor to 

provide these schedules but was not receiving them. The contractor’s proposal 

estimated that the costs associated with invoice preparation would be 

approximately $19,000 annually. We are unable to determine an exact amount 

associated with the schedule preparation since the invoice preparation costs are 

included in the loaded labor rates as part of the program management factor, and 

because the schedules are only a portion of the invoice preparation costs.

Recommendations

We recommend that the Regional Administrator, Region 7:

1. Require the PO and TOPOs assigned to the Region 7 START contract use 

the checklists contained in the EPA’s Invoice Review & Approval Desk 

Guide.

2. Require the PO to notify the contractor regarding the required schedules 

and ensure that all are received with the contractor’s invoices.

Monthly Progress Reports Did Not Meet Contract Requirements

Almost all EPA contracts require that contractors submit a monthly progress report 

along with an invoice. The monthly progress report serves the following purposes:

 Assists in monitoring technical progress.

 Assists in reviewing invoices and monitoring the financial status of the 

project by comparing hours and costs against the technical activity. 

 Assists in monitoring the hours used by labor category and comparing it 

against the technical activity and costs being invoiced. 

 Supports an audit trail of work performed.

According to EPA policy, the PO has primary responsibility for verifying 

compliance with monthly progress report requirements. 

Region 7 Is Paying for Monthly Progress Reports Even Though the 

Reports Lack Details Outlined in the Contract

The contractor is not submitting monthly progress reports in accordance with 

contract requirements. In reviewing the progress report for August 2014, we 

determined that 14 out of the 22 items required in the monthly progress report,

such as percentage of tasks completed and list of outstanding actions, were not 

being provided.

2 The preparation of the monthly progress reports was included in 

 

2

See Appendix A for a complete listing of the 22 required items and our analysis of those items using the August 

2014 progress report.
15-P-0215 8

the program management allocation, which was applied to the loaded labor rates 

in the contract as a percentage of the costs associated with its preparation.

Therefore, Region 7 is paying for the 14 items not being provided in the monthly 

progress reports. The contractor’s proposal estimated the costs associated with 

contract level required reports, of which the monthly progress report is one of

many required. However, we were unable to isolate the exact amount associated 

with the progress report since it is one of numerous required reports and the 

preparation costs are included in the loaded labor rates as part of the program 

management factor. Because the PO was not familiar with the terms and 

conditions of the contract, the PO did not know the preparation of the reports was

included in the loaded labor rates and also was unaware of all the required items 

detailed in the contract for monthly progress reports. As a result, Region 7 is not 

receiving valuable information regarding contract performance.

Recommendation

We recommend that the Regional Administrator, Region 7:

3. Require the PO to notify the contractor of the required monthly progress 

report elements, and ensure that the contractor begins submitting all 

required elements.

Contractor Billings Included Double-Billed, Reclassified and 

Noncompliant Items 

Our review of 10 invoices revealed that contractor billings included double-billed 

items, reclassified items and billings for employees that did not meet contract 

requirements. According to the EPA’s Invoice Review & Approval Desk Guide, 

dated July 2014, TOPOs are responsible for reviewing the allocability, 

allowability and reasonableness of invoiced costs, and compliance with contract 

terms and approved rates. The PO is responsible for reviewing the overall contract 

invoice to ensure contract compliance, including recalculating amounts and 

verifying indirect rates and contract ceilings. POs also provide assistance to 

TOPOs with invoice review responsibilities. This assistance includes providing 

TOPOs with the latest rate and cost information. The desk guide provides 

checklists for the POs and TOPOs to use during invoice reviews.

Double-Billings

We found four instances of double-billing totaling approximately $1,320. The 

amounts relate to the purchase of Tyvex suits, gloves and air cartridges that the 

contractor had already included as part of its program management factor and had 

been added to the loaded labor rates. Therefore, these items were already paid for 

as part of the loaded labor rates and should not have been billed again as an ODC.
15-P-0215 9

Reclassified Items

The contractor was billing costs under different categories than it was 

accumulating them in its accounting system. The different categories of costs that 

were being reclassified were travel, ODCs, equipment and subcontracts. 

Differences occurred when costs were reclassified from or to the subcontracts 

category, since subcontracts do not receive G&A per the contractor’s accounting 

practices, while other categories do have G&A applied to them. For the 10

invoices we reviewed, we found five instances (all on one invoice) where costs 

were moved from or to the subcontract category.

Table 3: Reclassification of subcontract costs

Description of item

Classified in 

accounting system Billed as Amount

Subcontractor A Materials/Equipment Subcontracts $131.83

Subcontractor B Materials/Equipment Subcontracts 9,490.95

Subcontractor C Subcontractor Equipment 2,674.00

Subcontractor C Subcontractor Equipment 1,817.11

Subcontractor C Subcontractor Equipment 430.00

Source: OIG analysis of contractor data.

The contractor was billing Subcontractor C as equipment based on the rationale 

that the subcontractor does not provide labor. However, FAR 3.502-1 defines a 

subcontract as a contract or contractual action entered into by a prime contractor 

or subcontractor for the purposes of obtaining supplies, materials, equipment or 

services of any kind under the prime contract. Subcontractor is defined in the 

FAR section, in part, as any person, other than the prime contractor, who offers to 

furnish or furnishes any supplies, materials, equipment or services of any kind 

under a prime contract or a subcontract entered in connection with such a 

contract. In our opinion, the contractual relationship between the contractor and 

subcontractor meets the definition of a subcontract per FAR 3.502-1 and should 

have been billed as a subcontractor and not as equipment. Furthermore, the 

subcontractor was proposed as a “subcontractor” in the prime contractor’s 

proposal and consequently, should be billed as such. As a result of the 

reclassification of Subcontractor C, we determined that Region 7 paid $2,236 of 

unallowable G&A costs.

Billings for Employees Not Meeting Contract Requirements

Two of the eight employees we reviewed who were billed on the contract did not 

meet the qualification requirements as outlined in the contract. The contract 

administration category requires a college degree and 5 years of experience. The 

program manager category requires a bachelor’s degree and 10 years of 

experience in field-related activities, a Certified Hazardous Materials Manager 

certification, and a Professional Engineer or Professional Geologist license. We 

found one contract administration employee who did not have a college degree 

and one program manager who did not have a required certification and license 
15-P-0215 10

for the Professional Engineer or Professional Geologist positions and Certified 

Hazardous Materials Manager designation. The amounts billed for these 

employees was $73,971 as of February 4, 2015.

Lack of Awareness and Adequate Review Led to Mistakes

Region 7 is not adequately reviewing invoices to ensure costs billed are reasonable 

and in accordance with contract terms and conditions, and not reviewing the 

qualifications of contractors being billed on the START contract. The TOPOs and 

the PO we interviewed were not aware of the Invoice Review & Approval Desk 

Guide and were not aware of the invoice review checklists included in the guide. In 

addition, the PO was not familiar with the terms of the contract and the schedules 

that were required to be submitted with each invoice. Since the EPA was not 

receiving the supporting schedules containing detailed information on subcontract 

costs, other direct costs, equipment and travel, it did not have the information it 

needs to identify billing issues like those described above.

These conditions also occurred because the contractor does not appear to have a 

specific policy with regard to the classification of subcontract costs, and does not 

have adequate controls regarding billing costs in accordance with its accounting 

system and practices. A discussion with the contractor’s Controller revealed that 

the different classifications are occurring because the financial manager making 

changes for billing purposes is not following through and requesting to have the 

items reclassified in the accounting system.

Because the contractor is not reclassifying costs within its accounting system to 

match its billed costs, the amounts billed could not be reconciled to the backup data 

since the contractor is making manual adjustments for billing purposes. While the 

differences were not material, the differences were enough that we do not believe 

they were due to rounding. Moreover, the fact that the amounts cannot be precisely 

reconciled casts doubt about the overall accuracy of the contractor’s billings.

Recommendations

We recommend that the Regional Administrator, Region 7:

4. Require the CO to recover the $1,320 related to the double-billing of 

Tyvex suits, gloves and air cartridges, and review all other billings on the 

contract to identify other double-billings and recover any identified costs. 

5. Require the CO to require the contractor to begin billing Subcontractor C 

immediately as a subcontractor, consistent with how the costs were 

proposed and the definition of a subcontractor per the FAR.

6. Require the CO to recover the $2,236 of unallowable G&A costs related to 

Subcontractor C and review all billings from November 2014 to the 

present and recover any additional G&A billed to the government. 
15-P-0215 11

7. Ensure that the two contractor employees who do not meet the contract 

qualifications no longer work on the START contract in positions they are 

not qualified for.

8. Require the PO to review the qualifications of all personnel who have 

been billed on the contract to ensure they meet contract qualifications, and 

report any that do not meet the qualifications to the CO. 

9. Require the CO to recover the $73,971 of billed costs associated with the 

unqualified employees as of February 4, 2014, as well as any amounts 

billed for these employees after that date. The CO should also recover any 

costs associated with unqualified personnel identified by the PO in 

implementing Recommendation 8.

10. Provide training to the PO and TOPOs on the EPA’s Invoice Review & 

Approval Desk Guide.

We recommend that the Assistant Administrator for Administration and 

Resources Management:

11. Require the Office of Acquisition Management to perform a Financial 

Monitoring Review on the contract to review in detail the contractor’s 

internal billing practices and cost classification policies and procedures.

Staffing Plans Not Being Received as Required

Staffing plans are developed for project management purposes and involve the 

selecting, assembling and assignment of work to a project team that has the 

appropriate skill sets to meet the deliverables identified during the project 

initiation stage. The staffing plan also provides for any non-labor resources such 

as tools, equipment or processes required by the project team to undertake the 

assigned tasks. In reviewing our sample of task orders under the START contract, 

we determined that Region 7 has not been asking for or receiving staffing plans in 

accordance with contract requirements. Under clause G-2 of the contract, the 

contractor is required to acknowledge receipt of each order and prepare and 

forward to the ordering officer within 10 calendar days the proposed staffing plan 

for accomplishing the assigned task within the period specified. 

Region 7 Paying for But Not Receiving Staffing Plans Due to General 

Unawareness of Contract Requirements 

The PO and CO administering the contract were unaware that the contractor was 

required to submit staffing plans when Region 7 orders services. Instead of 

receiving the required plans, the region simply accepts the skill mix the contractor 

provides. Furthermore, the costs associated with the preparation of the staffing 
15-P-0215 12

plans were already being paid for because those costs were included in the 

contract’s loaded labor rates as part of the program management allocation. 

As a result of not receiving the staffing plans, the region is not able to determine 

whether the contractor’s skill mix is appropriate to accomplish the tasks ordered, 

or whether the tasks could be accomplished using junior-level positions. For 

example, the contractor’s original proposal estimated that one junior-level labor 

category (Gen IT Tech, Jr. Tech) would be used 8 percent of the time, but that 

labor category was not been used at all. Instead, the contractor had been using the 

higher-costing senior level category. Therefore, the contractor has the liberty to

provide higher-paying labor categories for tasks that lower-priced labor categories 

could possibly perform. 

Additionally, by not requesting—and subsequently not receiving—the staffing 

plans, Region 7 allowed the contractor to earn additional profits from June 2013

to October 2014 without performing services. Because the costs associated with 

the staffing plan preparation are included in the loaded labor rates, it is difficult to 

determine the exact cost associated with the staffing plans. Based on the 

contractor’s proposal, we estimate that Region 7 paid $4,795 to the contractor for 

staffing plans that were not received during year one of the contract.

Recommendations

We recommend that the Regional Administrator, Region 7:

12. Ensure that Region 7 staff receive and review the staffing plan from the 

contractor in accordance with the contract.

13. Require the CO to recover $4,795 related to staffing plans paid for but not 

received in year one of the contract.

14. Calculate the costs paid out for staffing plans that were not received for 

year two and recover that amount.

Region’s Annual Invoice Reviews Lacking

The CO did not conduct an annual invoice review for the START contract during 

year one of the contract. The contract was awarded in June 2013, and our audit 

began in August 2014, indicating that at least one annual invoice review should 

have been performed by the beginning of our audit. After starting the audit, 

Region 7 performed an annual invoice review and provided the completed 

checklist along with the invoice; however, when we requested the file to evaluate 

the adequacy of the review, the CO could not provide supporting documents that a 

thorough review had been conducted. The CO stated he did not request backup 

information from the contractor to perform his review, and only used the invoice 

itself. Since the invoice did not contain many of the required schedules—such as a 
15-P-0215 13

listing of the ODCs, equipment, etc. (see Region Did Not Sufficiently Review 

Contractor Invoices above)—an adequate review would not have been possible.

The lack of annual invoice reviews on Region 7 contracts has been identified in the 

past in both an OIG audit and an EPA Contract Management Assessment Program 

(CMAP) review. EPA OIG Report No. 11-P-0217, Hotline Allegations 

Unsubstantiated, but Region 7 Contract Administration and Award Issues 

Identified,

3

issued May 4, 2011, reported annual invoice reviews were not performed 

for the base and option period of contract EP-R7-08-15. Similarly, a CMAP review 

of Region 7’s contracting office, performed in June 2013, noted issues with annual 

invoice reviews. Specifically, the CMAP review of Region 7’s files revealed a 

vulnerability in contract administration based on the fact that none of the four files 

assessed contained documentation that the annual invoice reviews were completed. 

The Contracts Management Manual, Section 11.2, which was in effect through 

September 2014, states that the CO is responsible for conducting periodic 

monitoring of processed invoices to ensure the contractor and contracting 

officer’s representatives are fulfilling their roles properly. This periodic 

monitoring must be at the level of frequency necessary to ensure all invoice 

elements are charged properly. Periodic monitoring may include at least one 

detailed review of an invoice on each contract each year. However, for many 

contract types, one review may not be sufficient. According to the policy, in these 

instances, if more frequent monitoring is required to ensure proper invoice 

approval, the CO must conduct additional invoice reviews.

In October 2014, the EPA instituted the EPA Acquisition Guide by combining the 

Acquisition Handbook and the Contracts Management Manual. The guide,

Section 32.9.1, as well as the EPA’s Invoice Review and Approval Desk Guide,

recommend that the CO perform these reviews on at least a quarterly basis.

The OIG determined that Region 7’s management is not emphasizing annual 

invoice reviews and holding contracting officers accountable for performing 

them. In response to the OIG audit report issued in 2011, Region 7 stated that it 

would develop and implement a process designed to ensure that COs conduct 

annual invoice reviews, and Region 7 modified its Quality Assurance Plan 

Checklist to include a confirmation of the CO’s annual invoice review. We 

requested evidence of the Quality Assessment Plan reviews, but Region 7 could 

not provide evidence that the reviews were performed.

The CMAP review recommended that Region 7 ascertain whether the root cause of 

the lack of annual invoice reviews is a matter of not correctly filing or not 

conducting the reviews. The review mandated that if the issue is determined to be a 

matter of not correctly filing the reviews, Region 7 shall develop standard operating 

procedures to ensure that invoice reviews are included in the official contract file. 

The review continued that if the issue is a matter of not conducting the reviews, 

 

3 http://www.epa.gov/oig/reports/2011/20110504-11-P-0217.pdf. 
15-P-0215 14

Region 7 shall conduct training on the proper procedures for annual invoice 

reviews with an emphasis on why the reviews are important. Region 7 conducted 

the training in April 2014, but the lack of annual invoice reviews appears to be a 

recurring issue for Region 7.

The lack of annual invoice reviews increases the risk that overbillings may occur 

and not be detected timely. As noted earlier, our review of invoices noted the 

numerous issues that likely would be discovered if the CO conducted the annual 

invoice reviews.

Recommendations

We recommend that the Regional Administrator, Region 7:

15. Conduct training on the proper procedures for performing annual invoice 

reviews.

16. Require the CO for the Region 7 START contract to perform quarterly 

invoice reviews as recommended in the EPAAG and the Invoice Review 

& Approval Desk Guide.

17. Perform a review of all contracts administered by Region 7, evaluate the 

risks associated with them, and implement quarterly CO invoice reviews 

of contracts deemed to be of a higher risk.

18. Develop and implement a management internal control to ensure CO 

invoice reviews are being conducted.

We recommend that the Assistant Administrator for Administration and 

Resources Management:

19. Conduct a follow-up CMAP review of Region 7 to ensure corrective 

actions have been implemented.

Adjustment Vouchers Not Submitted Timely

Adjustment vouchers reflect the negotiated indirect cost rate between the prime 

contractor and cognizant federal agency. Once the indirect cost rate is negotiated, 

prime contractors submit vouchers that reflect the difference between the billed 

indirect costs and the indirect costs resulting from the negotiated agreement. Per 

EPA policy, the contractor is required to submit these vouchers within 60 days 

from the date of the signed agreement. The policy also establishes procedures and 

identifies the roles and responsibilities of EPA staff when processing indirect cost 

rate agreements. For example, financial analysis COs are responsible for 

distributing the indirect rate agreements to both contractors and COs. In turn, COs 

are responsible for ensuring POs receive a copy of the indirect cost rate 
15-P-0215 15

agreement, and POs are responsible for notifying COs if they do not receive the 

adjustment voucher within 60 days of the signed agreement. At that point in the 

process, the CO, once informed that the adjustment voucher has not been 

received, is responsible for follow-up action with the contractor.

During the course of our audit, we determined that the required adjustment 

voucher for the START contract was submitted 238 days after the required 60-day 

timeframe for newly negotiated billing rates. The total amount of the adjustment 

voucher was approximately $559, which the contractor owed to the government. 

Table 4: Adjustment voucher – days late calculation

Date of signed rate 

agreement

Date due for 

submission

Date submission 

received Days late

2/27/14 4/28/14 12/22/14 238 days

Source: OIG analysis of EPA data.

Insufficient Controls Led to Untimely Submittals 

The adjusting voucher was not submitted timely due to a lack of controls in the 

overall process. For example, there is no formal tracking system to ensure COs 

provide the negotiated billing rates to the POs, or to track whether the contractor 

has submitted an adjustment voucher within the 60-day timeframe. We 

determined that neither the CO nor PO notified the contractor that the adjustment 

voucher was past due. In fact, the PO was not even aware of his responsibility to 

monitor the receipt of adjustment vouchers. Additionally, the CO did not provide 

the newly negotiated rate letter to the PO and, as a result, there was no way for the 

PO to have known that the billing rates had changed.

There appears to be a systemic breakdown in the EPA’s overall management of 

this process, as highlighted in two previously issued EPA OIG audit reports.

4

Both reports noted that adjustment vouchers are not being submitted timely. As a 

result, Region 7, is allowing contractors to have an interest-free loan when money 

is owed to the government. 

Recommendations

We recommend that the Regional Administrator, Region 7:

20. Develop a tracking system to ensure that the CO distributes the indirect 

rate agreement to the PO and that the contractor’s adjustment vouchers are 

received timely.

 

4 EPA OIG Report No. 10-P-0075, EPA Does Not Always Receive Adjustment Vouchers from Contractors

(http://www.epa.gov/oig/reports/2010/20100308-10-P-0075.pdf), March 8, 2010; and EPA OIG Report No. 

14-P-0109, Internal Controls Needed to Control Costs of Emergency and Rapid Response Services Contracts as 

Exemplified in Region 6 (http://www.epa.gov/oig/reports/2014/20140204-14-P-0109.pdf), February 4, 2014. 
15-P-0215 16

21. Notify all Region 7 POs of adjustment voucher policies and procedures, 

emphasizing the POs’ responsibility in the process.

Agency Response to Recommendations and OIG Evaluation 

Region 7 and the Office of Administration and Resources Management agreed to 

take corrective action in response to all recommendations except for 

Recommendations 11, 16, and 17. The Office of Administration and Resources 

Management partially agreed to Recommendation 11, while Region 7 partially 

agreed to Recommendation 16 and 17. Both Region 7 and the Office of 

Administration and Resources Management provided a proposed modification to 

the recommendations along with the corrective actions and planned completion 

dates. We believe that the proposed corrective actions, along with the planned 

completion dates, meet the intent of the recommendations. The complete agency 

response to the draft audit report is in Appendix B.
15-P-0215 17

Chapter 3

EPA Did Not Monitor Contractor for Compliance 

With Terms and Conditions of Contract

EPA Region 7 did not monitor the START contractor for compliance with the 

terms and conditions of the contract. Specifically, we found that:

 The CO did not appoint contracting officer’s representatives (CORs)

5

for 

task orders timely.

 The statements of work (SOWs) were too general and Independent 

Government Cost Estimates (IGCEs) lacked details.

 The contract’s clauses were incomplete, repetitive or contradictory.

The FAR and various EPA guidelines—including the Contracts Management 

Manual—provide guidance for contract administration. However, regional staff 

used unpromulgated contract clauses and did not always apply the guidance when 

administering START contract. As a result, Region 7 is vulnerable to 

misinterpretations of contract clauses and does not have IGCEs that can be 

verified and validated by a third party. Further, without appointing CORs to act 

on behalf of the CO, the region is not safeguarding its contractual interests.

Contracting Officer Did Not Timely Appoint CORs for the Contract

To perform the duties of a COR, the potential COR’s immediate supervisor 

submits a “Nomination of the Contracting Officer's Representatives” form to the 

CO. The CO is to then respond to the nomination in writing by either appointing 

the nominee as a COR or stating why the nominee was not appointed. Once 

appointed, the COR must have a copy of the CO’s appointment letter and other 

documents describing his or her duties and responsibilities in his or her file. 

As of August 2014, there were 79 task orders issued under Region 7’s START 

contract, with 30 staff members designated as task order CORs. In reviewing the 

contract and project files, we found that 13 of the 30 staff members performing 

task order COR duties were not nominated. Further, the CO never appointed any 

of the 30 staff members, even though 17 of them had been formerly nominated as 

early as June 2013. The CO indicated the 30 staff members acting as task order 

CORs were never formerly appointed because there was a delay in the process. 

At the contract level, there were three contract-level CORs who were officially 

appointed. However, one COR’s appointment letter was not in the project file as 

required by the FAR because the COR was unaware of the FAR requirement. 

 

5 COR is a broad term used to refer to POs and TOPOs.
15-P-0215 18

By not appointing CORs to act on his behalf, the CO is not adequately 

safeguarding the interests of the United States. Additionally, the CORs may not 

know the extent and limitations of their authority to act on behalf of the CO, and 

also may not understand that they are personally liable for unauthorized acts. 

Recommendations

We recommend that the Regional Administrator, Region 7:

22. Require the CO to identify the CORs assigned to the START contract and 

ensure that they are properly nominated and appointed. 

23. Develop and implement controls to ensure that future nominees are 

appointed in a timely fashion.

24. Disseminate the file requirements for maintaining a CORs file for each 

contract, emphasizing that the file must include a copy of the CO’s letter 

of designation and other documents describing the CORs’ duties and 

responsibilities.

SOWs Too General and IGCEs Lack Details

The SOW is the central part of the procurement. It is a written description of the 

contractual requirements for supplies or services that the government requires 

from the contractor. It delineates the tasks, describes essential technical needs or 

requirements that the contractor must fulfill, provides the schedule the contractor 

must meet, sets forth the required deliverables, and provides the standards that the 

government will use to determine that the requirements have been met. 

Additionally, the SOW is the basis for the preparation of the IGCE. The IGCE is 

based on the individual elements of cost estimated for each of the components and 

sub-components of the SOW.

The narrative for six of the 10 task orders we reviewed were general in nature. 

In our opinion, the scopes lacked the needed details for the contractor to perform 

the tasks without considerable additional guidance. For example, one task order 

referred to a small section of the contract’s overall scope and then lists vague 

tasks such as conducting regular inspections, collecting samples as needed, 

developing reports as directed, and performing other activities as directed. 

The SOW’s descriptions are vague because the program office prefers to have 

general descriptions so that revisions to the SOW do not have to be made when 

requirements change. By writing these vague scopes, the program staff can stay 

within the scope at all times and include additional unforeseen tasks. However, 

due to the lack of scope specificity, it is our opinion that the contractor cannot 

develop a reasonable staffing plan for the work being required under the START 
15-P-0215 19

contract. Further, the lack of a detailed scope can cause communication issues 

with contractors and increase costs due to disruptions in the project’s schedule.

IGCEs Lack Pertinent Assumptions and Descriptions for Calculations

EPA’s Guide for Preparing Independent Government Cost Estimates, dated 

June 2010, provides guidance to EPA program offices on how to prepare IGCEs. 

Section 3.15 states that estimates should be documented to show all parameters,

assumptions, descriptions, methods and calculations used to develop the IGCE. 

The documentation should identify sources for data, explain why particular 

methods and data sets were chosen, and why these choices are reasonable. The 

documentation should also allow any user to trace the data, calculations, modeling 

assumptions, and rationale back to the source documents for verification and 

validation. We found that Region 7 is not documenting the rationale and 

assumptions used in developing its IGCEs for tasks under the START contract. 

In reviewing 10 IGCEs, we determined that all 10 lacked the supporting rationale, 

assumptions and methods on how the calculations were developed. By not 

including the rationale, assumptions and methods used for developing the IGCE, 

it is difficult for a third party to verify and validate the IGCE. 

Recommendation

We recommend that the Regional Administrator, Region 7:

25. Provide training to Region 7 program staff on IGCE guidance and how to

write a SOW.

Contract Clauses Incomplete, Repetitive or Contradictory

A contract clause is a specific provision or section within a written contract. Each 

clause addresses a specific aspect related to the overall subject matter of the 

agreement and contains or makes reference to general contract clauses, such as 

termination for default, termination for convenience, changes, payments, and 

inspection. Other clauses are more unique to the contract and include data or 

information such as the incorporation of contractor plans and reports of work.

In reviewing Region 7’s START contract, we determined that several contract 

clauses contained blank fields or missing data that should have been populated 

with such information as current G&A rates, minimum and maximum ordering 

amounts, the effective period of the contract, and consent to subcontractors. The 

FAR instructs that fill-in information be inserted in the provision or clause.

In addition to the lack of information in the contract, there were several clauses 

that were repetitive. For example, clauses G-1 and G-10 were essentially the same 

except that G-1 is an unpromulgated clause while G-10 is an official agencywide 

clause. Both of these clauses were for submission of invoices.
15-P-0215 20

In addition to the unnecessary duplication, some clauses were contradictory in 

nature. For example, clause G-2 (an EPA Acquisition Regulation clause) and G-8 

(an unpromulgated clause) were contradictory because G-2 states that the CO may 

order services and in the event of an emergency as warranted and an On Scene 

Coordinator may also order services. However, G-2 does not specify who is a 

warranted On Scene Coordinator and does not provide a listing. On the other 

hand, clause G-8 specifically states that no On Scene Coordinator can order

services unless there is a catastrophic event, and it provides a listing of On Scene 

Coordinators via a URL (although the URL is inactive). We noted other 

inconsistencies. For example, G-2 refers to delivery orders while G-8 refers to 

both task orders and delivery orders. Region 7’s START contract is a task order 

contract since the requirement is for services and not the delivery of supplies. The 

FAR clearly differentiates between task orders and delivery orders; it defines a 

delivery order as an order that provides for supplies during the period of the 

contract, and defines a task order as an order that provides for the performance of 

tasks during the period of the contract. Since both clauses G-2 and G-8 refer to 

delivery orders, both clauses are incorrect.

Additionally, one of the requirements under clause G-2 is for the contractor to 

submit staffing plans. Staffing plans are developed for project management 

purposes and involve the selecting, assembling and assignment of work to a 

project team that has the appropriate skill set to meet the deliverables identified 

during the project initiation stage. The staffing plan also provides for any 

non-labor resources such as tools, equipment or processes required by the project 

team to undertake the assigned tasks. However, because a delivery order is for 

purchasing supplies, the requirement of a staffing plan under this clause is 

illogical. In our opinion, the requirement of the contractor submitting staffing 

plans should have been incorporated into clause G-8. 

Review Process and Rush to Award a Factor in Clauses Being 

Repetitive, Contradictory and Incomplete

The awarding CO stated that there was not much time to prepare the contract

since the previous contract had expired and needed to be awarded quickly. For the 

repetitive and contradictory clauses, we were told that Region 7 selected EPA 

Acquisition Regulation clauses as well as unpromulgated clauses because the 

unpromulgated clauses can be modified based on the acquisition’s unique 

requirements, whereas EPA Acquisition Regulation clauses cannot.

6

 

6 The Office of Administration and Resources Management’s Office of Acquisition Management has identified the 

issues with clauses and has an ongoing initiative to centralize all clauses in the EPA Acquisition System. 
15-P-0215 21

Vulnerabilities With Contract Could Potentially Have Performance 

Issues 

A contract clause is a specific provision or section within a written contract. Each 

clause in a contract addresses a specific aspect related to the performance of the 

contract. Contract clauses are aimed at clearly defining the duties, rights and 

privileges that each party has under the contract terms. By awarding contracts that 

have contradictory, repetitive and missing data, contractors and Region 7 staff are 

vulnerable to misinterpretations and, consequently, may experience inadequate

contract performance.

Recommendation

We recommend that the Regional Administrator, Region 7

26. Require the CO to review the contract and include all missing information,

eliminate repetitive clauses and make corrections to inaccurate clauses.

Agency Response to Recommendations and OIG Evaluation 

Region 7 agreed to take corrective action in response to all recommendations and 

provided acceptable completion dates. Region 7 has also implemented corrective 

actions for Recommendations 22, 24, and 25. We believe that all of the proposed 

corrective actions, along with the planned completion dates, meet the intent of the 

recommendations. The complete agency response to the draft audit report is in 

Appendix B.
15-P-0215 22

Status of Recommendations and 

Potential Monetary Benefits

RECOMMENDATIONS

POTENTIAL MONETARY 

BENEFITS (in $000s)

Rec. 

No.

Page 

No. Subject Status1 Action Official

Planned 

Completion 

Date

Claimed 

Amount

Agreed-To 

Amount

1 7 Require the PO and TOPOs assigned to the Region 7 

START contract use the checklists contained in the 

EPA’s Invoice Review & Approval Desk Guide.

O Regional Administrator, 

Region 7

9/30/15

2 7 Require the PO to notify the contractor regarding the 

required schedules and ensure that all are received 

with the contractor’s invoices.

O Regional Administrator, 

Region 7

12/31/16

3 8 Require the PO to notify the contractor of the required 

monthly progress report elements, and ensure that the 

contractor begins submitting all required elements.

O Regional Administrator, 

Region 7

12/31/16

4 10 Require the CO to recover the $1,320 related to the 

double-billing of Tyvex suits, gloves and air cartridges, 

and review all other billings on the contract to identify 

other double-billings and recover any identified costs.

O Regional Administrator, 

Region 7

12/31/16 $1.3 $1.3

5 10 Require the CO to require the contractor to begin billing 

Subcontractor C immediately as a subcontractor, 

consistent with how the costs were proposed and the 

definition of a subcontractor per the FAR.

O Regional Administrator, 

Region 7

9/30/15

6 10 Require the CO to recover the $2,236 of unallowable 

G&A costs related to Subcontractor C and review all 

billings from November 2014 to the present and 

recover any additional G&A billed to the government.

O Regional Administrator, 

Region 7

12/31/16 $2.2 $2.2

7 11 Ensure that the two contractor employees who do not 

meet the contract qualifications no longer work on the 

START contract in positions they are not qualified for.

O Regional Administrator, 

Region 7

9/30/15

8 11 Require the PO to review the qualifications of all 

personnel who have been billed on the contract to 

ensure they meet contract qualifications, and report 

any who do not meet the qualifications to the CO.

O Regional Administrator, 

Region 7

12/31/16

9 11 Require the CO to recover the $73,971 of billed costs 

associated with the unqualified employees as of 

February 4, 2014, as well as any amounts billed for 

these employees after that date. The CO should also 

recover any costs associated with unqualified 

personnel identified by the PO in implementing 

Recommendation 8.

O Regional Administrator, 

Region 7

12/31/16 $74.0 $74.0

10 11 Provide training to the PO and TOPOs on the EPA’s 

Invoice Review & Approval Desk Guide.

O Regional Administrator, 

Region 7

9/30/15

11 11 Require the Office of Acquisition Management to 

perform a Financial Monitoring Review on the contract 

to review in detail the contractor’s internal billing 

practices and cost classification policies and 

procedures.

O Assistant Administrator 

for Administration and 

Resources Management

12/31/16

12 12 Ensure that Region 7 staff receive and review the 

staffing plan from the contractor in accordance with the 

contract.

O Regional Administrator, 

Region 7

12/31/16
15-P-0215 23

RECOMMENDATIONS

POTENTIAL MONETARY 

BENEFITS (in $000s)

Rec. 

No.

Page 

No. Subject Status1 Action Official

Planned 

Completion 

Date

Claimed 

Amount

Agreed-To 

Amount

13 12 Require the CO to recover $4,795 related to staffing 

plans paid for but not received in year one of the 

contract.

O Regional Administrator, 

Region 7

12/31/16 $4.8 $4.8

14 12 Calculate the costs paid out for staffing plans that were 

not received for year two and recover that amount.

O Regional Administrator, 

Region 7

12/31/16

15 14 Conduct training on the proper procedures for 

performing annual invoice reviews.

O Regional Administrator, 

Region 7

9/30/15

16 14 Require the CO for the Region 7 START contract to 

perform quarterly invoice reviews as recommended in 

the EPAAG and the Invoice Review & Approval Desk 

Guide.

O Regional Administrator, 

Region 7

12/31/16

17 14 Perform a review of all contracts administered by 

Region 7, evaluate the risks associated with them, and 

implement quarterly CO invoice reviews of contracts 

deemed to be of a higher risk.

O Regional Administrator, 

Region 7

12/31/16

18 14 Develop and implement a management internal control 

to ensure CO invoice reviews are being conducted.

O Regional Administrator, 

Region 7

12/31/16

19 14 Conduct a follow-up CMAP review of Region 7 to 

ensure corrective actions have been implemented.

O Assistant Administrator 

for Administration and 

Resources Management

9/30/15

20 15 Develop a tracking system to ensure that the CO 

distributes the indirect rate agreement to the PO and 

that the contractor’s adjustment vouchers are received 

timely.

O Regional Administrator, 

Region 7

9/30/15

21 16 Notify all Region 7 POs of adjustment voucher policies 

and procedures, emphasizing the PO’s responsibility in 

the process.

O Regional Administrator, 

Region 7

9/30/15

22 18 Require the CO to identify the CORs assigned to the 

START contract and ensure that they are properly 

nominated and appointed.

C Regional Administrator, 

Region 7

6/30/15

23 18 Develop and implement controls to ensure that future 

nominees are appointed in a timely fashion.

O Regional Administrator, 

Region 7

9/30/15

24 18 Disseminate the file requirements for maintaining a 

CORs file for each contract, emphasizing that the file 

must include a copy of the CO’s letter of designation 

and other documents describing the CORs’ duties and 

responsibilities.

C Regional Administrator, 

Region 7

3/31/15

25 19 Provide training to Region 7 program staff on IGCE 

guidance and how to write a SOW.

C Regional Administrator, 

Region 7

3/31/15

26 21 Require the CO to review the contract and include all 

missing information, eliminate repetitive clauses and

make corrections to inaccurate clauses.

O Regional Administrator, 

Region 7

6/30/15

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

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

U = Recommendation is unresolved with resolution efforts in progress.
15-P-0215 24

Appendix A

Monthly Progress Report Requirements

and OIG Analysis

Contract

Reference Requirement Provided? 

F.6 (a) ...If the work is ordered using work assignments or delivery orders, 

include the estimated percentage of task completed during the 

Reporting period for each work assignment or delivery order.

No

F.6 (b) Specific discussions shall include difficulties encountered and 

remedial action taken during the reporting period, and anticipated 

activity with a schedule of deliverables for the subsequent reporting 

period.

No

F.6 (c) The Contractor shall provide a list of outstanding actions awaiting 

Contracting Officer authorization, noted with the corresponding work 

assignment, such as subcontractor/consultant consents, overtime 

approvals, and work plan approvals.

No

F.6 (d)(1) For the current reporting period, display the amount claimed. Yes 

F.6 (d)(2) For the cumulative period and the cumulative contract life display: the 

amount obligated, amount originally invoiced, amount paid, amount 

suspended, amount disallowed, and remaining approved amount. 

The remaining approved amount is defined as the total obligated 

amount, less the total amount originally invoiced, plus total amount 

disallowed.

Yes 

F.6 (d)(3)(i) A list of employees, their labor categories, and the numbers of hours 

worked for the reporting period.

Yes 

F.6(d)(3)(ii) For the current reporting period, display the expended direct labor 

hours and costs broken out by EPA contract labor hour category for 

the prime contractor and each subcontractor and consultant.

Yes 

F.6(d)(3)(iii) For the cumulative contract period and the cumulative contract life 

display: the negotiated, expended and remaining direct labor hours 

and costs broken out by EPA contract labor hour category for the 

prime contractor, and each subcontractor and consultant.

No

F.6(d)(3)(iv) Display the estimated direct labor hours and costs to be expended 

during the next reporting period.

No

F.6(d)(4) Display the current dollar ceilings in the contract, net amount 

invoiced, and remaining amounts for the following categories: Direct 

labor hours, total estimated cost, award fee pool (if applicable), 

subcontracts by individual subcontractor, travel, program 

management, and Other Direct Costs (ODCs).

No

F.6(d)(5) Unbilled allowable costs. Display the total costs incurred but unbilled 

for the current reporting period and cumulative for the contract.

No

F.6(d)(6) Average cost of direct labor. Compare the actual average cost per 

hour to date with the average cost per hour of the approved work 

plans for the current contract period.

No

F.6(e)(1) For the current period, display the amount claimed. Yes 
15-P-0215 25

Contract

Reference Requirement Provided? 

F.6(e)(2) For the cumulative period display: amount shown on workplan, or 

latest work assignment/delivery order amendment amount 

(whichever is later); amount currently claimed; amount paid; amount 

suspended; amount disallowed; and remaining approved amount. 

The remaining approved amount is defined as: the workplan amount 

or latest work assignment or delivery order amount (whichever is 

later), less total amounts originally invoiced, plus total amount 

disallowed.

Yes 

F.6(e)(3)(i) A list of employees, their labor categories, and the number of hours 

worked for the reporting period.

Yes 

F.6(e)(3)(ii) For the current reporting period, display the expended direct labor 

hours and costs broken out by EPA contract labor hour category for 

the prime contractor and each subcontractor and consultant.

Yes

F.6(e)(3)(iii) For the current reporting period, cumulative contract period, and the 

cumulative contract life display: the negotiated, expended and 

remaining direct labor hours and costs broken out by EPA contract 

labor hour category for the prime contractor and each subcontractor 

and consultant.

No

F.6(e)(3)(iv) Display the estimated direct labor hours and costs to be expended 

during the next reporting period.

No

F.6(e)(3)(v) Display the estimates of remaining direct labor hours and costs 

required to complete the work assignment or delivery order.

No

F.6(e)(4) Unbilled allowable costs. Display the total costs incurred but unbilled 

for the current reporting period and cumulative for the work 

assignment.

No

F.6(e)(5) Average cost of direct labor. Display the actual average cost per hour 

with the cost per hour estimated in the workplan.

No

F.6(e)(6) A list of deliverables for each work assignment or delivery order 

during the reporting period. 

No
15-P-0215 26

Appendix B

Agency Response to Draft Report and OIG Evaluation

June 17, 2015

MEMORANDUM

SUBJECT: Response to Office of Inspector General Draft Report No. OA-FY14-0354

Internal Controls Needed to Control Costs of Superfund Technical Assessments & 

Response Team Contracts, as Exemplified in Region 7, dated May 19, 2015

FROM: Mark Hague

Acting Regional Administrator

TO: Janet Kasper

Director, Contracts and Assistance Agreement Audits

Thank you for the opportunity to respond to the draft findings and recommendations in the subject 

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

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

have provided high-level intended corrective actions and estimated completion dates. For those report 

recommendations with which the agency partially agrees, we have proposed modifications to the 

recommendations and provided high-level intended corrective actions and estimated completion dates. 

Agency’s Overall Position 

The agency agrees or partially agrees with OIG’s recommendations. 

No. Recommendation High-Level Intended Corrective Action Estimated 

Completion 

by Quarter 

and FY

1. Require the PO and TOPOs 

assigned to the Region 7 START 

contract use the checklists 

contained in the EPA's Invoice 

Review and Approval Desk Guide.

Region 7 agrees with this recommendation and 

will require the PO and TOPOs assigned to the 

START contract to use the checklists contained 

in the March 13, 2015 Invoice Review and 

Approval Desk Guide. 

4

th quarter 

FY 2015

2. Require the PO to notify the 

contractor regarding the required 

schedules and ensure that all are 

Region 7 agrees with this recommendation and 

will notify the contractor of the missing 

schedules, listed in Attachment J. Region 7 will 

validate future receipt of the supporting 

1

st quarter 

FY 2016
15-P-0215 27

received with the contractor's 

invoice.

schedules for subcontract costs, other direct 

costs (ODCs), equipment and travel through 

internal reviews conducted as part of the FMFIA 

process.

3. Require the PO to notify the 

contractor of the required monthly 

progress report elements, and 

ensure that the contractor begins 

submitting all required elements. 

Region 7 agrees with this recommendation and 

notified the contractor of the required monthly 

progress reports elements through issuance of 

contract modification #12, with an effective 

date of April 6, 2015. Region 7 will ensure the 

contractor submits all required elements 

through detailed reviews of the monthly 

progress reports.

1

st quarter 

FY 2016

4. Require the CO to recover the 

$1,320 related to the double-billing 

of Tyvex suits, gloves and air 

cartridges, and review all other 

billings on the contract to identify 

other double-billings and recover 

any identified costs. 

Region 7 agrees with this recommendation and 

will work to recover the $1,320 related to the 

double billing of Tyvex suits, gloves and air 

cartridges identified by the OIG. Region 7 will 

require the contractor to review its supporting 

documentation for all ODC's billed on the 

contract from its inception to the present. The 

contractor will be required to identify all 

instances where Tyvex suits, gloves and air 

cartridges were billed as ODC's, and repay that 

amount to EPA. The contractor will be required 

to certify that all double-billings have been 

identified and repaid.

1

st quarter 

FY 2016

5. Require the CO to require the 

contractor to begin billing 

Subcontractor C immediately as a 

subcontractor, consistent with how 

the costs were proposed and the 

definition of a subcontractor per 

the FAR.

Region 7 agrees with this recommendation and 

is preparing a letter directing the contractor to 

begin billing Subcontractor C as a 

subcontractor, consistent with how the costs 

were proposed and the definition of a 

subcontractor per the FAR.

4

th quarter 

FY 2015

6. Require the CO to recover the 

$2,236 of unallowable G&A costs 

related to Subcontractor C and 

review all billings from November 

2014 to the present and recover 

any additional G&A billed to the 

government. 

Region 7 agrees with this recommendation and 

will work to recover the $2,236 of unallowable 

G&A costs billed to EPA through October 2014, 

related to Subcontractor C. Region 7 will also 

review the contractor's billings from November 

2014 to the present and work to recover any 

additional unallowable G&A costs billed to EPA 

related to Subcontractor C. 

1

st quarter 

FY 2016

7. Ensure that the two contractor 

employees that do not meet the 

Region 7 agrees with this recommendation and 

is preparing a letter that requires the two 

4

tht quarter 

FY 2015
15-P-0215 28

contract qualifications, no longer 

work on the START contract in 

positions they are not qualified for. 

contractor employees OIG identified, who do 

not meet the contract qualifications, to no 

longer work on the START contract in positions 

for which they are not qualified. 

8. Require the PO to review the 

qualifications of all personnel who 

have been billed on the contract to 

ensure they meet contract 

qualifications, and report any that 

do not meet the qualifications to 

the CO.

Region 7 agrees with this recommendation and 

will require the contractor provide a report 

identifying all employees billed under the 6 Key 

Personnel identified in the contract. Region 7 

will require the contractor evaluate each 

individual against the qualifications and 

educational requirements cited in the contract. 

The contractor will quantify the total costs 

billed for each employee who did not meet the 

requirements for their position. The contractor 

will be required to certify that all other 

employees billed to the 6 Key Personnel 

identified in the contract did meet the 

qualifications and educational requirements 

and were appropriately charged to the 

contract. 

1

st quarter 

FY 2016

9. Require the CO to recover the 

$73,971 of billed costs associated 

with the unqualified employees as 

of February 4, 2014, as well as any 

amounts billed for these 

employees after that date. The CO 

should also recover any costs 

associated with unqualified 

personnel identified by the PO in 

implementing recommendation 8. 

Region 7 agrees with this recommendation and 

will work to recover the $73,971 of billed costs 

associated with the unqualified employees 

identified by the OIG, as of February 4, 2014. 

Region 7 will also work to recover any 

additional costs identified during the 

implementation of the corrective action 

identified for OIG Recommendation 8.

1

st quarter 

FY 2016

10. Provide training to the PO and 

TOPOs on the EPA's Invoice Review 

and Approval Desk Guide. 

Region 7 agrees with this recommendation and 

will provide training to the PO and TOPOs on 

the EPA Invoice and Approval Desk Guide.

4

th quarter 

FY 2015

11. OIG Recommendation 11 is 

addressed to OARM: Require the 

Office of Acquisition Management 

to perform a Financial Monitoring 

Review on the contract to review in 

detail the contractor's internal 

billing practices and cost 

classification policies and 

procedures. 

OARM/OAM partially agrees with this 

recommendation. OAM acknowledges the 

value in conducting FMRs, and has conducted 

three FMRs of this contractor since FY 2011. 

Based on similar findings among the three 

FMRs and the audit, OAM believes sufficient 

audit evidence exists to support the need for 

the Government to improve invoice reviews, 

monitoring, and oversight by program, 

technical, and contracting staff. Accordingly, 

instead of performing another FMR on the 

1

st quarter 

FY 2016
15-P-0215 29

contractor, OAM proposes to 

coordinate/collaborate with Region 7 on the 

implementation of improved procedures and 

processes in support of better invoice reviews, 

monitoring, and oversight on the part of the 

regional staff. Further, OAM will work to 

ensure procedures are in compliance with 

OAM’s March 13, 2015 Invoice Review Desk 

Guide, and during the July 2015 CMAT review, 

OAM will validate Region 7’s implementation of 

any new or revised invoice review policies and 

procedures.

12. Ensure that Region 7 staff receive 

and review the staffing plan from 

the contractor in accordance with 

the contract. 

Region 7 agrees with this recommendation and 

the contractor has been submitting staffing 

plans since October 2014. Receipt and review 

of staffing plans will be verified through 

implementation of the Internal Control Plan 

Addendum dated June 2015, and staffing plans 

will be reviewed for consistency with 

statements of work and independent 

government costs estimates. 

1

st quarter 

FY 2016

13. Require the CO to recover $4,795 

related to staffing plans paid for 

but not received in year one of the 

contract. 

Region 7 agrees with this recommendation and 

will work to recover $4,795 related to staffing 

plans paid for but not received in year one of 

the contract. 

1

st quarter 

FY 2016

14. Calculate the costs paid out for 

staffing plans that were not 

received for year two and recover 

that amount. 

Region 7 agrees with this recommendation and 

will calculate the costs paid out for staffing 

plans that were not received in year two (prior 

to October 2014), and will work to recover that 

amount.

1

st quarter 

FY 2016

15. Conduct training on the proper 

procedures for performing annual 

invoice reviews. 

Region 7 agrees with this recommendation and 

will provide training to the CO's on the proper 

procedures for performing annual invoice 

reviews. 

4

th quarter 

FY 2015

16. Require the CO for the Region 7 

START contract to perform

quarterly invoice reviews as 

recommended in the EPAAG and 

the Invoice Review and Approval 

Desk Guide. 

Region 7 partially agrees with this 

recommendation and proposes that the CO for 

the Region 7 START contract perform semiannual invoice reviews as required by the 

Internal Control Plan Addendum dated June 

2015. 

1

st quarter 

FY 2016
15-P-0215 30

17. Perform a review of all contracts 

administered by Region 7, evaluate 

the risks associated with them and 

implement quarterly CO invoice 

reviews of contracts deemed to be

of a higher risk. 

Region 7 partially agrees with this 

recommendation and proposes to review all 

contracts, evaluate their risks, and implement 

semi-annual CO invoice reviews of contracts 

deemed to be of a higher risk. 

1

st quarter 

FY 2016

18. Develop and implement a 

management internal control to 

ensure CO invoice reviews are 

being conducted. 

Region 7 agrees with this recommendation and 

has developed an Internal Control Plan 

Addendum dated June 2015, that addresses 

ensuring CO invoice reviews are performed 

timely.

1

st quarter 

FY 2016

19. OIG Recommendation 19 is 

addressed to OARM: Conduct a 

follow-up CMAP review of Region 7 

to ensure corrective actions have 

been implemented. 

OARM/OAM agrees with this recommendation 

and plans to conduct a follow-on CMAP review 

of Region 7 the week of July 13, 2015.

4

th quarter 

FY 2015

20. Develop a tracking system to 

ensure that the CO distributes the 

indirect rate agreement to the PO 

and that the contractor's 

adjustment vouchers are received 

timely. 

Region 7 agrees with this recommendation and 

developed a tracking system designed to ensure 

new indirect rate agreements are provided to 

the CORs within 5 days of the CO receipt and 

that adjustment vouchers are submitted in a 

timely manner. 

4

th quarter 

FY 2015

21. Notify all Region 7 POs of 

adjustment voucher policies and 

procedures, emphasizing the PO's 

responsibility in the process. 

Region 7 agrees with this recommendation and 

will notify Region 7 POs of adjustment voucher 

policies and procedures and clearly 

communicate the PO's responsibilities in the 

process. 

4

th quarter 

FY 2015

22. Require the CO to identify the 

CORs assigned to the START 

contract and ensure that they are 

properly nominated and 

appointed. 

Region 7 agrees with this recommendation and 

has identified the CORs assigned to the START 

contract and ensured they are properly 

nominated and appointed.

3

rd quarter 

FY 2015

23. Develop and implement controls to 

ensure that future nominees are 

appointed in a timely fashion. 

Region 7 agrees with this recommendation and 

highlighted this process is the Internal Control 

Plan Addendum dated June 2015. Compliance 

will be validated through implementation of the 

Internal Control Plan and utilization of the COR 

Contract File Checklist.

4

th quarter 

FY 2015

24. Disseminate the file requirements 

for maintaining a CORs file for each 

Region 7 agrees with this recommendation and 

disseminated the COR Contract File Checklist 

2

nd quarter 

FY 2015
15-P-0215 31

contract, emphasizing that the file 

must include a copy of the COs 

letter of designation and other 

documents describing the CORs 

duties and responsibilities. 

dated May 2012 to the regional CORs. This 

checklist specifically includes the COR 

nomination/ appointment form and the COR 

Appointment Memo. 

25. Provide training to Region 7 

program staff on IGCE guidance 

and how to write SOWs. 

Region 7 agrees with this recommendation and 

on January 29, 2015, provided contract training 

to the Superfund TOPOs. Training was given on 

developing quality Independent Government 

Costs Estimates and Statements of Work. 

2

nd quarter 

FY 2015

26. Require the CO to review the 

contract and include all missing 

information, eliminate repetitive 

clauses, and make corrections to 

inaccurate clauses. 

Region 7 agrees with this recommendation and 

issued contract modification #12, with an 

effective date of April 6, 2015, to add missing 

information to the contract, eliminate 

repetitive clauses, and to make corrections to 

inaccurate clauses. 

3

rd quarter 

FY 2015
15-P-0215 32

Appendix C

Distribution

Office of the Administrator

Assistant Administrator for Administration and Resources Management

Regional Administrator, Region 7

Agency Follow-Up Official (the CFO)

Agency Follow-Up Coordinator

General Counsel

Associate Administrator for Congressional and Intergovernmental Relations

Associate Administrator for Public Affairs

Director, Office of Acquisition Management, Office of Administration and 

Resources Management

Director, Office of Policy and Resource Management, Office of Administration and 

Resources Management

Deputy Director, Office of Policy and Resource Management, Office of Administration and 

Resources Management

Deputy Regional Administrator, Region 7

Assistant Regional Administrator for Policy and Management, Region 7

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

Audit Follow-Up Coordinator, Office of Acquisition Management, Office of Administration 

and Resources Management

Audit Follow-Up Coordinator, Region 7