Office of Inspector General

Audit Report

Surveys, Studies, Investigations,

and Special Purpose Grants

Report No. 2002-P-00005 

March 21, 2002
Inspector General Divisions Mid-Atlantic Division

Conducting the Audit: Philadelphia, PA

 

Eastern Division

Boston, MA

 

Central Division

Dallas, TX Office 

 

Northern Division

Chicago, IL

 

Regions Covered: Regions 1, 3, 4, 5, 6, 8, 9 and 10

EPA Offices Covered: Administration and Resources

Management

 

Air and Radiation

 

Enforcement and Compliance

Assurance

 

International Affairs

 

Policy

 

Prevention, Pesticides and

Toxic Substances

 

Research and Development

 

Solid Waste and Emergency Response

 

Water
March 21, 2002

MEMORANDUM

SUBJECT: Audit Report: 

Surveys, Studies, Investigations, and Special Purpose Grants

Report No. 2002-P-00005

FROM: Lisa White /s/ Lisa White

Project Manager

Mid-Atlantic Division (3AI00)

TO: Morris X. Winn, Assistant Administrator

 for Administration and Resources Management (3101)

Attached is our final audit report on the use of assistance agreements by the

Environmental Protection Agency (EPA) awarded under Catalog of Federal

Domestic Assistance (CFDA) number 66.606, “Surveys, Studies, Investigations, and

Special Purpose Grants.” This is one of a series of audits that shows the need for

improved EPA management of assistance agreements. The objectives of the audit

were to determine whether: (1) the results of the assistance agreements awarded

under CFDA 66.606 are useful and contribute to protecting human health and the

environment; (2) the same CFDA 66.606 assistance recipients were funded year

after year; and (3) CFDA 66.606 assistance agreements could have been awarded

under a program-specific CFDA number.

This audit report contains issues that describe problems the Office of Inspector

General (OIG) has identified and corrective actions the OIG recommends. This

audit report represents the opinion of the OIG. Final determinations on matters in

this report will be made by EPA managers in accordance with established EPA

audit resolution procedures. Accordingly, the issues contained in this report do not

necessarily represent the final EPA position, and are not binding upon EPA in any

enforcement proceeding brought by EPA or the Department of Justice. 

UNITED STATES ENVIRONMENTAL PROTECTION AGENCY

OFFICE OF INSPECTOR GENERAL

MID-ATLANTIC DIVISION

1650 Arch Street

Philadelphia, Pennsylvania 19103-2029

(215) 814-5800
ACTION REQUIRED

In accordance with EPA Order 2750, you are requested to provide a written

response within 90 days of the date of this report. A corrective actions plan for

agreed upon actions, including milestone dates, should be included. We have no

objections to the further release of this report to the public. If you or your staff

have any questions, please contact me or Carl Jannetti at (215) 814-5800. This

report will be available at http://www.epa.gov/oigearth/eroom.htm.
i Report No. 2002-P-00005

Executive Summary

Purpose

During a prior audit, we found that more than $617 million of the

Environmental Protection Agency’s (EPA’s) $1.3 billion in

discretionary assistance agreements was not awarded under a

program-specific Catalog of Federal Domestic Assistance (CFDA)

number. Instead, these agreements were awarded under CFDA

number 66.606 - “Surveys, Studies, Investigations, and Special

Purpose Grants.” This is a non-specific CFDA number used by all

program offices for miscellaneous projects. The purpose of this audit

was to determine whether:

! The results of the assistance agreements awarded under CFDA

66.606 are useful and contribute to protecting human health and

the environment.

! The same CFDA 66.606 assistance recipients were funded year

after year.

! CFDA 66.606 assistance agreements could have been awarded

under a program-specific CFDA number.

Results in Brief

EPA did not measure whether the CFDA 66.606 assistance agreements

it awarded achieved results that contribute to protecting human

health and the environment. Further, EPA frequently funded the

same assistance agreement recipients year after year. Also, EPA could

have awarded many of the agreements under a program-specific CFDA

number. One reason these deficiencies occurred is because program

offices generally focused on outputs – not the actual results achieved. 

Individual assistance agreement results must be planned and 

measured to determine the usefulness and success of the assistance

agreement. Consequently, EPA had no assurance that money used for

assistance agreements was awarded for projects that were useful in

achieving EPA’s mission of protecting human health and the

environment.
ii Report No. 2002-P-00005

During our review, we also noted several instances of apparent

conflicts of interest. These involved a nonprofit organization awarding

a contract to the company that created it, and another organization

using agreement funds to pay one of its own employees as a

consultant.

Recommendations

We made recommendations to EPA to require its personnel to award

assistance agreements with measurable results that contribute to

protecting human health and the environment, develop clear policy on

the use and purpose of assistance agreement amendments, and

provide EPA personnel with sufficient training on negotiating

assistance agreement work plans. We also recommended that EPA

take action on the noted instances of apparent conflicts of interest.

Agency Response and OIG Comment

EPA agreed to attempt to award assistance agreements with

measurable results, develop clear policy on the use and purpose of

amendments, and provide EPA personnel with sufficient training on

negotiating work plans. EPA also agreed to act on the noted instances

of apparent conflicts of interest.
iii Report No. 2002-P-00005

Table of Contents

Executive Summary ................................................. i

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

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

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

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

EPA Not Measuring CFDA 66.606 Agreement Results ...................... 5

Measures Needed to Achieve Desired Results ........................ 5

Results Not Being Measured ...................................... 7

EPA Made Awards Year After Year to Same Recipients .............. . 9

More Program-Specific Awards Can Be Made ....................... 10

Conclusion .................................................... 11

Recommendations .............................................. 11

Agency Response and OIG Comment .............................. 12

Apparent Conflicts of Interest Noted ................................... 15

Recommendations .............................................. 16

Agency Response and OIG Comment .............................. 16

 

Appendices ........................................................ 17

A: Details on Scope and Methodology .............................. 17

B: Agency Response ............................................ 19

C: Distribution List ............................................ 23
iv Report No. 2002-P-00005
1 Report No. 2002-P-00005

Introduction

The Catalog of Federal

Domestic Assistance is a

government-wide

compilation of Federal

programs, projects,

services, and activities

that provide assistance

or benefits to the

American public. 

Purpose

As a result of a prior audit, EPA’s Competitive Practices for Assistance

Awards, issued in May 2001, we found that EPA did not have written

policy requiring program offices to award their discretionary

assistance funding competitively. Further, we

found that more than $617 million of EPA’s

$1.3 billion in discretionary assistance

agreements was not awarded under a programspecific Catalog of Federal Domestic Assistance

(CFDA) number. Instead, these agreements

were awarded under CFDA number 66.606 -

“Surveys, Studies, Investigations, and Special

Purpose Grants.” This is a non-specific CFDA

number used by all program offices for

miscellaneous projects.

The purpose of this audit was to determine whether:

! The results of the assistance agreements awarded under CFDA

66.606 are useful and contribute to protecting human health

and the environment.

! The same CFDA 66.606 assistance recipients were funded year

after year.

! CFDA 66.606 assistance agreements could have been awarded

under a program-specific CFDA number.

Background

The Government Performance and Results Act (GPRA) was passed in

1993 to focus on the outcomes of government performance. The intent

was to improve government performance and hold Federal agencies

accountable for achieving program results.

According to the General Accounting Office’s (GAO’s) 1998 GPRA

Guide, program managers need to prepare performance plans with

detailed strategies that identify the links between outputs and
2 Report No. 2002-P-00005

outcomes. Outputs are the direct products and services delivered by a

program, while outcomes are the results of those products and services. 

The Guide also explains the importance of the link between budget

requests and performance planning efforts to improve federal program

effectiveness and public accountability. 

An assistance agreement is used to transfer money that supports or

stimulates an activity to accomplish a public purpose authorized by

Federal statute. During fiscal year 1999, EPA awarded more than

$4 billion in assistance agreements to state and local governments,

tribes, universities, non-profit recipients, and other entities. These

awards are administered under EPA’s CFDA programs, which are

comprised of 10 continuing environmental and 37 discretionary

assistance programs. Continuing programs make awards in

accordance with formulas prescribed by law or an agency regulation. 

Discretionary programs have the legislative authority to

independently determine the recipients and funding levels of financial

assistance awards. During fiscal year 1999, EPA awarded $2.7 billion

in continuing environmental assistance program agreements and

$1.3 billion in discretionary program agreements.

In 1997, EPA created CFDA 66.606 to provide program offices a place

for miscellaneous discretionary assistance awards. Program offices

fund these awards with discretionary money received in their budget

through the Environmental Programs and Management Account. The

narrative of this CFDA includes the following objectives:

! To support Surveys, Studies, Investigations, and Special

Purpose assistance associated with Air, Water Quality,

Hazardous Waste, Toxic Substances, and Pesticides. 

! To identify, develop, and demonstrate necessary pollution

control techniques to prevent, reduce, and eliminate

pollution.

! To evaluate the economic and social consequences of

alternative strategies and mechanisms for use by those in

economic, social, governmental, and environmental

management positions. 
3 Report No. 2002-P-00005

Scope and Methodology

During fiscal year 1999, EPA awarded 1,749 assistance agreements

under CFDA 66.606, totaling more than $617 million. Of that amount,

we determined that almost $300 million was earmarked funds and

$155 million was for construction grants. Both earmarked and

construction grant funds were excluded from our sample. For our

review, we used a nationwide statistical sample of 42 CFDA 66.606

assistance agreements, awarded by Headquarters and 8 EPA Regions. 

Our approach was designed to determine whether systemic problems

existed so that, if needed, a correction could be made through an

Agency-wide initiative. Details on our scope and methodology are in

Appendix A.
4
5 Report No. 2002-P-00005

EPA Not Measuring 

CFDA 66.606 Agreement Results

EPA did not measure whether the CFDA 66.606 assistance agreements

it awarded achieved results that contribute to protecting human

health and the environment. Further, EPA frequently funded the

same assistance agreement recipients year after year. Also, EPA could

have awarded many of the agreements under a program-specific CFDA

number. One reason these deficiencies occurred is because program

offices generally focused on outputs – not the actual results achieved. 

Consequently, EPA had no assurance that money used for assistance

agreements was awarded for projects that were useful and contributed

to achieving EPA’s mission of protecting human health and the

environment.

Measures Needed to Achieve Desired Results

Measures are often expressed as outputs, intermediate outcomes, and

end outcomes. Outputs are typically activities or products used to

attain an ultimate outcome, and do not directly measure results. End

outcomes are the program results that lead to improved protection of

human health and the environment, such as achieving safe drinking

water. Intermediate outcomes show progress toward achieving end

outcomes, and are often used when end outcomes are not immediately

clear, easily delivered, or quickly achieved. 

According to the EPA Project Officers’ Manual, a recipient is required

to include a work plan as part of the award application. A good work

plan is essential to receive a useful product and ensure recipient

success. Without one, assistance agreement outputs usually will be

vague and difficult to measure. It will also be difficult for project

officers to appropriately manage and monitor their assistance

agreements. According to EPA guidance, an effective narrative work

plan will:

Ç list expected outcomes of the grant,

Ç quantify outputs,

Ç link outputs to funding,
6 Report No. 2002-P-00005

Short-term 

Outcomes

Workshops

Studies

Reports

ü

ü

ü

Public Awareness 

Increased Knowledge

Improved Skills

Changes in Attitude

ü

ü

ü

ü

Environmental

and Human Health 

Improvement

Long-term

Outcomes

Work plans

Begin With the End in Mind

Inputs Outputs Short-term 

Outcome Actions

Policy changes

Public adherence to 

pollution control 

programs

Behavioral changes 

ü

ü

ü

Ç identify target dates and milestones,

Ç require periodic reporting, and

Ç explain how the activities will be accomplished.

In the planning phase of assistance agreements, it is important to

anticipate the expected outcomes so that activities are planned to

achieve behavioral changes that lead to desired programmatic or

environmental results. We recognize that outcome measurement is

difficult, especially for this type of miscellaneous award. However,

whenever possible, the short-term outcomes should be quantitatively

or qualitatively measured to demonstrate that the award contributed

to the long-term outcomes. This is accomplished by beginning with the

end in mind, as shown in the following chart:

For example, the Office of Air and Radiation awarded an assistance

agreement to a nonprofit organization in 1996 to provide an outreach

program to building code officials on indoor air quality features and to

develop building codes for homes, emphasizing radon-resistant

techniques. This agreement had planned outputs, such as a new code

manual and training for code officials on the benefits and

implementation of radon-resistant construction for their communities. 

The project officer demonstrated that the results of these outputs led to

the construction of radon-resistant homes in various communities,

which represented the assistance agreement outcomes.
7 Report No. 2002-P-00005

Did we accomplish what we planned? Did we

achieve the environmental results we desired? 

To answer these questions, we believe

assistance agreements need to be clear,

measurable and outcome-oriented.

Examples of Criteria

for a Flag:

T Water Quality - beaches meet

EPA’s water quality standards.

T Safety - lifeguards on duty, record

of emergency incidents.

T Services - easy and safe access,

working public telephones, public

parking.

Results Not Being Measured

The majority of assistance agreements we reviewed that were awarded

under CFDA 66.606 were for miscellaneous projects, such as outreach,

workshops, and conferences. 

These activities should have

been linked to measurable

assistance agreement

outcomes. The results

should be quantitatively or

qualitatively measured to

demonstrate that the award

was useful. However, almost half of the 42 assistance agreements

reviewed did not measure the project outcomes. Several examples

follow.

Ç The Office of Prevention, Pesticides and Toxic Substances awarded

$34,000 to a nonprofit organization for a conference in Oxford,

England, related to the development of safer chemicals. According

to the decision memorandum, the chemical industry would benefit

due to the shared knowledge of the participants. However, due to

the confidentiality of the discussions, no information from the

conference was published. Thus, the benefits of this conference

were unknown. By funding activities that cannot be shared, it is

impossible to determine whether the results contributed to the

protection of human health and the environment. EPA had funded

two additional assistance agreements on the same topic to the same

recipient totaling $110,000 combined.

Ç The Office of Water awarded two assistance agreements totaling

$80,000 to a nonprofit organization to support a public outreach

campaign on the importance of

clean beaches. The grantee

charged public beach

communities a $1,995

membership fee and awarded

the community a flag to fly at

its beach entrance to

symbolize, among other things,

clean water. This award did

not generate assistance

agreement outcomes that could

be measured to determine its
8 Report No. 2002-P-00005

contribution to protecting human health and the environment. 

Further, it was not clear how the program’s activities contributed to

the public taking additional steps to keep beaches clean. Also, EPA

has been using Water Quality Standards to conduct beach survey

activities, including beach closings and exposure to contaminated

recreational waters, 

which have been publicized on its web site since 1997.

Ç The Office of Water awarded a $60,000 assistance agreement in

1995 to a nonprofit organization to facilitate public participation in

the development of a Lakewide Management Plan. The seven

amendments that followed were essentially to continue the existing

project, and brought the cumulative total of the assistance

agreement to $332,000. The work plan for this agreement was

vague and did not list expected outcomes, quantify outputs, link

outputs to funding, or identify milestones. While this agreement

had outputs, such as forum meetings, its results were never

planned and measured. What benefits were achieved from these

forum meetings? What changed as a result of these funds? These

types of results need to be planned and measured to determine the

usefulness and success of an assistance agreement.

One reason these deficiencies occurred is because program offices

generally focused on outputs – not actual results achieved. Individual

assistance agreement outcomes must be planned and measured to

determine the usefulness and success of the assistance agreement. 

However, EPA program offices do not adequately measure the

outcomes generated from such awards. The outcomes that should

result from outputs are often overlooked or not even expected. For a

project to be effective, it is necessary to identify the usefulness of the

service or product and determine what has changed as a result of the

activities funded. 

When asked why outcomes are not identified in the planning phase of

assistance agreements, some project officers indicated they had not

been the project officer for the entire duration of the assistance

agreement. Therefore, they said they were unfamiliar with what was

initially negotiated with the agreement recipient. While we

understand staff changes are inevitable, project officers need to take

responsibility for the assistance agreements they are managing by

documenting outputs and outcomes, as well as how the results will be

measured. 
9 Report No. 2002-P-00005

$1,385,490,570

80%

$336,066,279

20%

Repeat Recipients One-Time Recipient

Funding for CFDA 66.606

Fiscal Years 1996-2000

EPA’s Grants Administration Division management said the program

offices determine which subobjectives within their accounting

structure the assistance agreement scope of work should benefit. 

While Program Result Codes connect the outputs to funding sources,

they do not address potential outcomes. Many subobjectives have

long-term strategies that may take more than 10 years to accomplish. 

It is for these assistance agreements, which are directly linked to

achieving the subobjectives, that planning and measuring the

outcomes is most important. 

EPA Made Awards Year After Year to Same Recipients

EPA awarded assistance agreement funds to the same recipients year

after year. Objectives

were often broad and

vague, and without clearly

defined expectations for

final results. 

Consequently, EPA

continuously amended

awards, sometimes for as

long as 6 years. The

amendments were usually

a combination of no-cost

time extensions or

additional funds for

different projects that

were not necessary to

complete the original

objectives. 

During our review, we found that 21 out of the 42 awards in our

sample had multiple amendments. To determine whether this was a

consistent practice, we reviewed a database of all awards made under

CFDA 66.606 for fiscal years 1996 through 2000. We found that

80 percent of the funding for CFDA 66.606 went to repeat recipients. 

By providing funding to the same organizations year after year, EPA is

creating the appearance of preferential treatment and limiting other

potential entities from providing similar, if not better, services. 

For example, EPA provided a nonprofit organization with an

assistance award for $50,000 to support a recycling forum. The eight

amendments that followed over the next 6 years were for activities –
10 Report No. 2002-P-00005

such as outreach efforts, publications, and workshops – that were not

part of the original proposal or needed to accomplish the objectives of

that same proposal. This brought the cumulative total of the

assistance agreement to $279,000. The fact that EPA amended the

award eight times demonstrates that EPA did not properly plan the

project and the benefits to be realized. In the CFDA 66.606 narrative,

all special projects are to be limited to 5 years, but this limitation is

not always followed. 

EPA’s Grants Administration Division personnel acknowledged that

many of the awards reviewed had amendments, but said appropriate

reasoning existed for their approval. They also said that, in some

instances, amendments were made due to circumstances that were not

anticipated at the time of the original award. While we agree that

unanticipated circumstances sometimes arise and amendments may be

needed occasionally, we do not believe this was generally the case. 

The amendments often were not necessary to complete the objectives of

the initial projects. This demonstrates poor planning in the pre-award

phase of assistance agreements, and makes it more difficult to

measure whether the agreements achieved desired outcomes.

Grants Administration Division personnel have agreed to ensure that

future amendments are adequately justified by the program offices. 

They said that, if necessary, they will develop a grants policy to

encourage program offices to submit “renewal” funding packages in

lieu of amending projects when it is evident that the amendment

modifies the intent of the initial project. 

More Program-Specific Awards Can Be Made

EPA funded many awards under CFDA 66.606 that could have been

awarded under program-specific CFDA numbers. For example, in

fiscal year 1999, the Office of Air and Radiation (OAR) awarded more

than $21 million under CFDA 66.606 because OAR does not have

program-specific CFDA numbers for discretionary funding. We believe

these awards could have been more appropriately placed under a

newly created CFDA number(s) for OAR because the explanatory

narrative for CFDA 66.606 is too broad. Creation of a new CFDA

number for OAR would clearly advertise OAR’s funding priorities to

the public and provide an accurate account of their total assistance

awards. We noted a similar situation in the Office of Water, which has

initiated corrective action.
11 Report No. 2002-P-00005

During the audit of EPA’s Competitive Practices for Assistance Awards,

issued May 2001, we noted that EPA’s CFDA process does not

adequately inform the public of potential funding opportunities or

provide the Agency with accurate funding information for particular

programs. In response to this audit, the Office of Grants and

Debarment issued a memorandum in October 2001 to Senior Resource

Officials. This memorandum indicated that during 2002, the Grants

Administration Division will determine whether CFDA 66.606 should

be broken down into several new program descriptions to enhance the

public’s awareness of funding opportunities. For this reason, this

current report does not include a recommendation concerning this

issue.

Conclusion

This report indicates that assistance agreements should have

measurable results. However, when it is not feasible to quantitatively

measure results, there should be at a minimum qualitative results

that demonstrate that the award was worthwhile. Without results,

EPA could be subject to accusations of waste in managing assistance

agreement funds.

Recommendations

We recommend that the Assistant Administrator for Administration

and Resources Management:

1. Require EPA personnel to award assistance agreements with

quantitative or qualitative measurable results that contribute to

protecting human health and the environment. 

2. Develop clear policy on the use and purpose of amendments for

assistance agreements so that personnel more carefully plan the

intended results of the original agreements.
12 Report No. 2002-P-00005

Agency Response and OIG Comment

Agency Response to Recommendation 1

The Office of Administration and Resources Management (OARM)

generally agreed with this recommendation. OARM suggested that

the OIG change both the recommendation and the wording in the

report to clarify that environmental results may be either quantitative

or qualitative in nature. The response indicated that given the current

state of outcome measurements, this may not be possible for every

project. The response cited a previous OIG review that stresses the

difficulties in obtaining and measuring environmental outcomes. 

The response further indicated that in asking project officers to

document outcomes for 66.606 projects, the OIG should recognize that

the requirements of the Paperwork Reduction Act and Office of

Management and Budget regulations may affect the Agency’s ability to

request recipients to conduct surveys and other information-collection

activities designed to measure the environmental results of their EPAfunded activities. 

The response also stated that while it is ultimately the responsibility

of the program offices to plan and measure the results of their

assistance agreements, OARM will work with the programs to improve

the Agency’s performance in this area. Specifically, they will revise

the work plan guidance in the Project Officers’ Manual to cover

environmental outcomes. They will also include the importance of

planning for environmental results in the Project Officer Training

courses and the new training initiative for managers. Finally, the

response indicated they will explore with the program offices the

possibility of having the decision memorandum outline the program’s

plan for measuring environmental results.

OIG Comment

While OARM generally agreed with the recommendation, they

suggested that the OIG revise the wording of the report and the

recommendation to indicate that environmental results may be either

quantitative or qualitative in nature to be consistent with the

conclusion. We agree that outcomes cannot be quantitatively

measured for every project, and added this to the report.
13 Report No. 2002-P-00005

We also agree with OARM that these miscellaneous awards may not

always result in a direct environmental improvement, such as cleaner

air. Nonetheless, for a project to be effective, it is necessary to identify

the usefulness of the service or product and determine what has

changed as a result of the activities funded. As described on page 6 of

our report, the short-term outcomes and outcome actions are what lead

to the long-term outcomes of environmental improvement. If the

Agency cannot measure the short-term results of the assistance

agreements awarded and how the results contribute to protecting

human health and the environment, then the Agency cannot

determine whether taxpayers’ dollars are being adequately spent.

Further, regarding potential barriers from the Paperwork Reduction

Act and Office of Management and Budget regulations, we believe the

measurement and monitoring of outcomes, if properly planned for, will

not place a burden on any party.

We agree with the revision to the Project Officers’ Manual guidance

and planned additions to the training courses. We strongly urge that

the decision memorandum be used to outline their plan for measuring

environmental results.

Agency Response to Recommendation 2

OARM agreed with the underlying intent of the recommendation. 

They agreed to work with the program offices to develop clear guidance

that distinguishes between the types of changes suitable for

amendments and those that should be handled by a funding renewal

package. OARM stated they believe they retain the flexibility to use

amendments, rather than paper-intensive renewal packages, to make

mid-course project adjustments or other appropriate changes.

OIG Comment

We agree that clear guidance on when to use amendments is needed. 

The response indicated our report suggests that amendments cannot

be used to make changes to the original objectives of a project, and

that multiple amendments can never be justified absent unanticipated

circumstances. That was not our contention. Our concern was that

many of the assistance agreements reviewed included work plans with

very broad objectives and no clearly defined results. As stated on

page 10, we agree unanticipated circumstances arise requiring the

need for amendments. However, we found that in many cases,
14

amendments were not awarded due to unforeseen circumstances but

rather for different activities when the current funds expired. Instead

of awarding a new assistance agreement, program offices simply

funded the project with an amendment.
15 Report No. 2002-P-00005

Apparent Conflicts of Interest Noted

During our review, we noted several instances of apparent conflicts of

interest that EPA needs to address. 

OAR awarded an assistance agreement and five amendments totaling

$210,000 to a nonprofit organization. The purpose of the assistance

agreement was to provide programs and announcements on

environmental health issues through Hispanic radio stations

nationwide. The assistance agreement recipient contracted with a

radio network for air time through sole-source contracts totaling

almost $60,000. However, we determined that the assistance

agreement recipient had been created as a nonprofit organization by

the radio network given the $60,000. A review of the members on the

Board of Directors for the two organizations disclosed that the same

individual serves as the Chairman and Treasurer for the nonprofit and

as the Chairman and Chief Executive Officer for the radio network. 

According to 40 Code of Federal Regulations Part 30.42:

No employee, officer, or agent shall participate in the

selection, award, or administration of a contract

supported by Federal funds if a real or apparent conflict of

interest would be involved. Such a conflict would arise

when the employee, officer, or agent, any member of his or

her immediate family, his or her partner, or an

organization which employs or is about to employ any of

the parties indicated herein, has a financial or other

interest in the firm selected for an award.

We also found that EPA awarded $26,000 to a nonprofit organization

for its effort to increase the use of clean energy resources to reduce air

pollution and greenhouse gas emissions. The recipient used $24,650,

or 95 percent of the funds, to pay one of its own employees as a

consultant. Office of Management and Budget Circular A-122,

Attachment B, paragraph 39, prohibits the costs of professional

consultant fees rendered by persons who are employees of the

organization that received the award.
16 Report No. 2002-P-00005

Recommendation

3. We recommend that the Assistant Administrator for

Administration and Resources Management perform an on-site

review of the recipient awarding contracts to the radio network

that created it to determine whether the recipient complied with

40 Code of Federal Regulations Part 30.

Agency Response and OIG Comment

Agency Response to Recommendation 3

The response indicated that the Office of Grants and Debarment is in

the process of evaluating the findings, in consultation with affected

program officials, and has decided to conduct an on-site review of the

first recipient, which has an ongoing assistance relationship with EPA. 

For the second recipient, the Office of Grants and Debarment may

request the OIG to conduct an audit of all costs before instituting a

recovery action. 

OIG Comment

We agree with the Agency’s response. We determined that the

assistance agreement to the second recipient has been closed. 

Therefore, we deleted the portion of the recommendation in the report

that related to recovering those costs.
17 Report No. 2002-P-00005

Appendix A

Details on Scope and Methodology

This audit included tests of the program records and other auditing

procedures we considered necessary. We performed this audit in

accordance with the Government Auditing Standards, issued by the

Comptroller General of the United States. We also conducted this

audit according to the guidelines and procedures established in the

Office of Inspector General Audit Process Handbook. 

We reviewed management controls and procedures specifically related

to our objectives. However, we did not review the internal controls

associated with the input and processing of information in EPA’s

Grants Information Control System or any other automated records

system. We also reviewed EPA’s fiscal years 2000 and 2001 Assurance

Letters prepared to comply with the Federal Managers’ Financial

Integrity Act, and noted no weaknesses that address the issues noted

in this report.

We reviewed the Government Performance and Results Act of 1993. 

We obtained and reviewed other audits and reports that addressed

GPRA issues within the Agency. We reviewed the Catalog of Federal

Domestic Assistance, and EPA guidance regarding assistance

agreements. 

We interviewed managers from the Grants Administration Division to

learn about the history of CFDA 66.606. We conducted interviews and

teleconferences with key personnel from Headquarters and Regional

program offices to learn how the awards were managed. We reviewed

the project files maintained by the program officials to determine

whether the awards had adequate work plans, useful outputs, and

measurable outcomes. We obtained copies of the program decision

memoranda and other pertinent award information.

We selected a statistical sample of 42 assistance agreements. 

Following is a breakdown by program of the agreements reviewed.
18 Report No. 2002-P-00005

Office Total Number of Awards

Enforcement and Compliance Assurance 2

Research and Development 1

Solid Waste and Emergency Response 3

Prevention, Pesticides and Toxic Substances 3

International Affairs 2

Policy 2

Air and Radiation 16

Water 13

 Total 42

Our fieldwork was conducted from August 1, 2001 to December 7,

2001. On October 25, 2001, we provided a finding outline with

recommendations to personnel in OARM. Generally, they agreed with

our recommendations and we incorporated their response into our

draft report. We issued the draft report on January 28, 2002 and held

an exit conference with OARM on March 15, 2002. OARM’s comments

and our evaluation are summarized at the end of each section, and the

complete response is provided in Appendix B.

Prior Audit Coverage

On May 21, 2001, EPA OIG issued an audit report titled: EPA’s

Competitive Practices for Assistance Awards (2001-P-00008). This

audit disclosed that EPA did not have a policy that requires program

officials to award discretionary assistance funding competitively. The

OIG recommended that EPA issue a policy stating that program offices

compete their assistance agreements to the maximum extent possible,

and ensure there are sufficient written justifications to support noncompetitive awards. The OIG also recommended that EPA develop

and implement CFDA program guidance and training to help ensure

that EPA personnel record correct CFDA program numbers for their

assistance awards and update the Catalog of Federal Domestic

Assistance with current program information.
19 Report No. 2002-P-00005

Appendix B

Agency Response

March 5, 2002

MEMORANDUM

SUBJECT: Response to Draft Audit Report: Surveys, Studies,

Investigations, and Special Purpose Grants 

Assignment No. 2001-000772

FROM: Morris X. Winn /s/

Assistant Administrator

TO: Carl A. Jannetti

Divisional Inspector General for Audit

Mid-Atlantic Division 

Office of Inspector General (3AI00)

This is to provide the response of the Office of Administration and Resources 

Management (OARM) to the Office of Inspector General’s (OIG) draft audit report (draft report)

on assistance agreements awarded under Catalog of Federal Domestic Assistance (CFDA)

number 66.606. As noted in the draft report, the objectives of the audit were to determine

whether: 1) 66.606 assistance agreements achieved results contributing to the protection of

human health and the environment; 2) the same 66.606 assistance recipients were funded year

after year; and 3) 66.606 agreements could have been awarded under a program-specific CFDA

number. During its review of 66.606 agreements, the OIG also identified instances of apparent

conflicts of interest that the Agency needs to address.

66.606 is a non-program specific CFDA number that includes a broad range of

miscellaneous assistance agreements. OARM understands that the 66.606 audit was prompted in

part by the results of a prior OIG audit on “EPA’s Competitive Practices for Assistance Awards.” 

In the prior audit, the OIG found that a large portion of EPA’s discretionary grant funds were

awarded non-competitively under 66.606. In addition, the prior audit found that in many cases,

potential recipients were not adequately informed of funding opportunities due to the Agency’s

use of 66.606 as opposed to program-specific CFDA numbers. 

I am pleased to note that OARM has taken steps to address competition in assistance

agreements which should help resolve a number of the concerns raised in the draft report.
20 Report No. 2002-P-00005

Specifically, OARM has initiated the directives clearance process for a proposed EPA Order

entitled “Policy for Competition in Assistance Agreements.” The Order will identify categories of 

assistance agreements and dollar levels for which competition is required, establish standard

procedures for competitive awards, and require properly supported written justifications for noncompetitive awards.

Additionally, as acknowledged in the draft report, the Office of Grants and Debarment

(OGD), through an October 2001 memorandum to Senior Resource Officials, has instituted a

process to improve the accuracy of the Agency’s CFDA program descriptions. Moreover, OGD

is working with the program offices to review the use of 66.606 and generally replace it with

program-specific CFDA numbers. Taken together, these actions should increase the pool of

potential new recipients, expand the public’s knowledge of EPA funding opportunities, and

increase the number of awards with program-specific CFDA numbers.

The draft report contains a number of recommendations addressed to the Assistant

Administrator for OARM. We have the following comments on those recommendations.

Recommendation 1:

Require EPA personnel to award assistance agreements with measurable results that

contribute to protecting human health and the environment. 

OARM Response:

OARM generally agrees with this recommendation. In carrying out EPA’s fiduciary

obligations, it is critically important that 66.606 agreements funded with taxpayers’ dollars

contribute to the Agency’s mission of protecting human health and the environment. We would

suggest, however, that the wording of the recommendation be revised to indicate that

environmental results may be either quantitative or qualitative in nature. This change will make

the recommendation consistent with the Conclusion paragraph on page 11, which notes that it

may not be feasible in some cases to quantitatively measure results for 66.606 projects. 

We would also recommend a similar change to the discussion on pages 5-8 of the draft

report. This discussion implies that for all 66.606 projects, the Agency will be able to

quantitatively measure both short-term outcomes, short-term outcome actions, and long-term

outcomes. Given the current state of outcome measurement, this may not be possible for every

project. See Office of Inspector General Special Review, EPA’s Progress in Using the

Government Performance and Results Act to Manage for Results (citing the difficulties in

obtaining and measuring environmental results). Further, in asking project officers to document

outcomes for 66.606 projects, the OIG should recognize that the requirements of the Paperwork

Reduction Act and Office of Management and Budget regulations may affect the Agency’s ability

to request recipients to conduct surveys and other information-collection activities designed to

measure the environmental results of their EPA-funded activities. 
21 Report No. 2002-P-00005

While it is ultimately the responsibility of the program offices to plan and measure the

results of their assistance agreements, OARM will work with the programs to improve the

Agency’s performance in this area. Specifically, chapter 3 of the Project Officer Training Manual

“Managing Your Financial Assistance Agreement - Project Officers Responsibilities” provides

that an effective narrative/workplan :

! Will list expected outputs

! Quantify outputs;

! Link outputs to funding;

! Identify target dates and milestones;

! Require periodic reporting; and

! Explain how will the activities be accomplished.

In response to the draft report, OGD will revise this workplan guidance to cover

environmental outcomes. OGD will also include in its Project Officer Training courses and its

new training initiative for managers a discussion on the importance of planning for environmental

results. In addition, OGD will explore with the program offices the possibility of having the

decision-memorandum for awards outline the program’s plan for measuring environmental results. 

Recommendation 2:

Develop clear policy on the use and purpose of amendments for assistance agreements so

that personnel more carefully plan the intended results of the original agreements. 

OARM Response:

OARM agrees with the underlying intent of this recommendation, namely that the Agency

should be careful about using amendments for changes that bear no relationship to the original

project scope of work. Accordingly, OGD will work with the program offices to develop clear

guidance that distinguishes between the types of changes suitable for amendments and those that

should be handled by a funding renewal package. Moreover, the new EPA Order on competition

contains requirements that will prevent amendments from being used to circumvent the

competitive award process.

At the same time, OARM recommends that the OIG revise or clarify the discussion on

amendments on pages 9-10 of the report in two respects. 

First, the statement on page 9 that multiple amendments to 66.606 awards create the

appearance that recipients are extensions of the federal government should be deleted in light of

the requirements of the Federal Grant and Cooperative Agreement Act. Under the legal standards

in that statute, 66.606 recipients are carrying out a non-federal public purpose rather than

providing services for the direct use of the federal government. As such, and assuming a proper

assistance relationship, they should not be viewed as agents or representatives of the federal

government, regardless of the number of amendments to their assistance agreements. 
22 Report No. 2002-P-00005

Second, the draft report appears to suggest: (1) that amendments cannot be used to make

changes to the original objectives of a project; and (2) that multiple amendments to an award can

never be justified absent unanticipated circumstances. If that is the OIG’s position, we would

like to discuss it with you prior to the issuance of the final audit report. Consistent with the

government-wide grant regulations on project changes, we believe the Agency retains the

flexibility to use amendments, rather than paper-intensive renewal packages, to make mid-course

project adjustments or other appropriate changes. Further, multiple amendments may be justified,

for example, where a recipient conducts a broad range of studies involving numerous program

offices. In that case, it may be more efficient for the Agency to fund the work through

amendments as opposed to awarding a separate assistance agreement for each study. 

Recommendation 3:

Take action on all apparent conflicts of interest noted in the report. Specifically,

the OIG suggests that: a. OARM perform an on-site review of the recipient

awarding contracts to the radio network that created it to determine whether the

recipient complied with 40 C.F.R. Part 30; and b. Recover the costs incurred by

the recipient to pay one of its employees, which was prohibited by the Office of

Management and Budget Circular, A-122.

OARM Response:

OGD is in the process of evaluating the OIG’s findings, in consultation with affected

program officials. As suggested by the OIG, OGD has decided to conduct an on-site review of

the first recipient, which has an ongoing assistance relationship with the Agency. With regard to

the second recipient, OGD may request the OIG to conduct an audit of all costs before instituting

a recovery action. 

Besides our comments on the draft report’s recommendations, we note that the OIG did

not distribute the draft report beyond OARM. In the future, we would ask that the OIG also

provide copies of grant-related draft reports addressed to OARM for response to affected

program offices. This will facilitate our coordination with the programs on draft reports as well

our efforts to provide you with a timely response, and help to further highlight the importance of

grants management issues to the Agency.

Thank you for the opportunity to comment on the draft report. If you or your staff have

any questions or need additional information, please contact Howard Corcoran at (202) 564-1903

or Marty Monell at (202) 564-5387.

cc: Dave O’Connor Senior Resource Officials

Grants Customer Relations Council Sandy Womack-Butler

Jane Moore
23 Report No. 2002-P-00005

Appendix C

Distribution List

Office of Inspector General

Inspector General (2410)

EPA Headquarters

Assistant Administrator for Policy (1805)

Assistant Administrator for Air and Radiation (6101)

Assistant Administrator for Enforcement and 

 Compliance Assurance (2201A)

Assistant Administrator for International Activities (2610R)

Assistant Administrator for Prevention, Pesticides, and 

 Toxic Substances (7101)

Assistant Administrator for Research and Development (8101R)

Assistant Administrator for Solid Waste and Emergency Response (5105)

Assistant Administrator for Water (4101)

Comptroller (2731A)

Agency Followup Official (the CFO)(2710A)

Agency Audit Followup Coordinator (2724A)

Associate Administrator for Congressional and Intergovernmental 

 Relations (1301A)

Director, Office of Regional Operations (1108A)

Associate Administrator for Communications, Education, and 

 Media Relations (1101A)

Director, Office of Grants and Debarment (3901R)

Director, Grants Administration Division (3903R)

Director, Office of Executive Support (1104)

Regional Offices

Senior Resource Officials (Regions 1-10)

Regional Audit Follow-up Coordinators (Regions 1-10)