U.S. ENVIRONMENTAL PROTECTION AGENCY 

OFFICE OF INSPECTOR GENERAL 

Catalyst for Improving the Environment 

Audit Report 

EPA’s Terms and Conditions 

as Well as Process to Award 

Recovery Act Interagency 

Agreements Need Improvement 

 Report No. 11-R-0016 

 November 16, 2010 
Report Contributors: Kimberly Crilly 

 Randy Holthaus 

 Janet Kasper 

Kevin Lawrence 

 Madeline Mullen 

 Matthew Simber 

 Wendy Swan 

Abbreviations 

CERCLA Comprehensive Environmental Response, Compensation, and Liability Act of 1980 

EPA U.S. Environmental Protection Agency 

IA Interagency Agreement 

IHS Indian Health Service (U.S. Department of Health and Human Services) 

OFPP Office of Federal Procurement Policy (Office of Management and Budget) 

OIG Office of Inspector General 

OSWER Office of Solid Waste and Emergency Response 

Cover photo:	 Empty drums at the Price Landfill Superfund site in Pleasantville, New Jersey; 

EPA awarded $16,300,000 in Recovery Act funds to the U.S. Army Corps of 

Engineers for remedial action at this site. (EPA OIG photo) 
 

 

 

 

U.S. Environmental Protection Agency 11-R-0016 

November 16, 2010 Office of Inspector General 

At a Glance 

Catalyst for Improving the Environment 

Why We Did This Review 

We conducted this audit to 

examine the U.S. 

Environmental Protection 

Agency’s (EPA’s) use of 

interagency agreements (IAs) 

for American Recovery and 

Reinvestment Act of 2009 

activities. Specifically, we 

sought to determine whether 

Recovery Act IAs identified 

clear lines of responsibility 

and whether EPA awarded 

Recovery Act IAs based on 

sound business decisions. 

Background 

EPA uses IAs when it acquires 

goods and services from other 

federal agencies. From 

February 17, 2009, through 

June 30, 2010, EPA awarded 

$278 million of Recovery Act 

funding through IAs under the 

Superfund and Drinking 

Water State Revolving Fund 

programs for project 

management services. 

For further information, 

contact our Office of 

Congressional, Public Affairs 

and Management at 

(202) 566-2391. 

To view the full report, 

click on the following link: 

www.epa.gov/oig/reports/2011/ 

20101116-11-R-0016.pdf 

EPA’s Terms and Conditions as Well as Process to Award
 

Recovery Act Interagency Agreements Need Improvement 

What We Found 

EPA did not clearly describe its responsibilities in the terms and conditions of the 

Recovery Act-funded IAs we reviewed. As stated in federal guidance and EPA’s 

internal policies, an IA should identify both the requesting and servicing agencies’ 

responsibilities. EPA stated that defining its roles and responsibilities in IAs was 

unnecessary because its role was clearly defined in EPA policy and guidance. 

However, because EPA did not clearly define its responsibilities within its 

Recovery Act IAs and supporting documents, it did not effectively establish 

accountability for implementing those agreements. 

We found that decision memoranda and matrices for EPA Recovery Act IAs met 

the requirements set forth in EPA policies, but we believe that additional detail 

would be beneficial. Specifically, for the Recovery Act IAs we reviewed, EPA’s 

award documentation did not include an analysis of the costs of alternatives to 

establishing an IA to award and manage a Superfund cleanup construction 

contract. EPA issued several policy documents that required personnel to consider 

experience, capability, and cost when entering into an IA. We believe EPA could 

improve its processes by considering the cost and level of effort associated with 

the procurement, management, and oversight of construction contracts for all 

Superfund cleanup contracting delivery options. Such analysis would ensure that 

EPA has selected the most efficient and effective method from a technical, 

resource, and cost perspective.

 What We Recommend 

We recommend that EPA amend the terms and conditions for Recovery Act IAs 

under the Superfund and Drinking Water State Revolving Fund programs and 

revise its standard terms and conditions for use in future IAs to include EPA’s 

roles and responsibilities. We also recommend that EPA prepare a program 

evaluation of levels of effort and the cost of the processes associated with 

procuring, managing, and overseeing Superfund construction contracts, and use 

this program evaluation to develop a strategy for determining the best value for 

delivering Superfund construction contracts. In response to the draft report, EPA 

concurred with recommendations 2-1 through 2-3 and agreed to take corrective 

action. EPA asked us to modify recommendation 3-1 and provided a revised 

recommendation; we accepted the suggested revision and added a second 

recommendation to ensure implementation. 
 

 

 

UNITED STATES ENVIRONMENTAL PROTECTION AGENCY 

WASHINGTON, D.C. 20460 

THE INSPECTOR GENERAL 

November 16, 2010 

MEMORANDUM 

SUBJECT:	 EPA’s Terms and Conditions as Well as Process to Award 

Recovery Act Interagency Agreements Need Improvement 

 Report No. 11-R-0016 

FROM: Arthur A. Elkins, Jr. 

Inspector General 

TO:	 Mathy Stanislaus, Assistant Administrator 

Office of Solid Waste and Emergency Response 

Peter S. Silva, Assistant Administrator 

Office of Water 

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 estimated cost of this report, calculated by multiplying the project’s staff days and expenses 

by the applicable daily full cost billing rates in effect at the time, is $490,756. 

Action Required 

The Office of Water concurred with the draft report recommendations and completed corrective 

action as of October 28, 2010. Therefore, we will close recommendations 2-2 and 2-3 upon 

issuance of this report and no further response is required. For the remaining recommendations, 

the Office of Solid Waste and Emergency Response (OSWER) is required to provide a written 

response to this report within 90 calendar days, in accordance with EPA Manual 2750. OSWER 

should include a corrective actions plan for agreed-upon actions, including milestone dates. 

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

commenting on that response. OSWER’s response should be provided in an Adobe PDF file that 

complies with the accessibility requirements of section 508 of the Rehabilitation Act of 1973, as 
amended. The final response should not contain data that should not be released to the public; if 

the OSWER response contains such data, OSWER should identify the data for redaction or 

removal. We have no objections to the further release of this report to the public. We will post 

this report to our website at http://www.ega.gov/oig. 

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

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

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

 

 

 

 

 

 

 

 

 

EPA’s Terms and Conditions as Well as Process to Award 

Recovery Act Interagency Agreements Need Improvement 

11-R-0016 

Table of Contents 

Chapters 

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

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

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

 Noteworthy Achievements........................................................................... 3 

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

 Prior Audit Coverage ................................................................................... 4 

2 EPA Should Update Interagency Agreement Terms and Conditions............ 5 

Guidance Requires IAs to Include Each Agency’s Role.............................. 5 

EPA’s Role Not Described .......................................................................... 6 

EPA Defined Its Role in Policy Rather Than Within the IA.......................... 8 

Clearly Defined EPA Roles in IAs Would More Effectively 

 Establish Accountability......................................................................... 9 

 Recommendations ...................................................................................... 9 

Agency Response and OIG Comments ...................................................... 9 

3 EPA’s Superfund IA Award Documentation Met Requirements, but
 

Improvements Can Be Made ............................................................................. 10 

Policies Establish IA Award Documentation Requirements ........................ 10 

EPA Met Its Requirements, but Improvements Are Needed ....................... 12 

EPA Should Consider the Cost of Alternatives ........................................... 13

 Recommendations ...................................................................................... 14
 

Agency Response and OIG Comments ...................................................... 14 

Status of Recommendations and Potential Monetary Benefits.............................. 16 

Appendices 

A Superfund and Drinking Water State Revolving Fund Recovery Act IAs .... 17 

B Recovery Act-Funded Superfund Site Projects and Managing Entities ....... 18 

C Agency Responses to Draft Report.................................................................. 19
 

D Distribution ......................................................................................................... 29
 
 

Chapter 1

Introduction 

Purpose 

As of June 30, 2010, the U.S. Environmental Protection Agency (EPA) had 

awarded $278 million of American Recovery and Reinvestment Act of 2009 

funding through interagency agreements (IAs) under the Superfund and Drinking 

Water State Revolving Fund programs. 

We conducted this audit to examine EPA’s use of IAs for Recovery Act activities. 

Specifically, we sought to determine whether: 

1. EPA Recovery Act IAs identified clear lines of responsibility, and 

2. EPA awarded Recovery Act IAs based on sound business decisions. 

Background 

EPA awards an IA when the recipient is another federal agency and that agency is 

providing goods or services to EPA. When it issues an IA, EPA is the “requesting 

agency” and the recipient is the “servicing agency.” The servicing agency can 

directly perform the work EPA requested, or the servicing agency can contract out 

the work on EPA’s behalf. 

EPA’s Use of Recovery Act Funding 

The Recovery Act provided EPA $7.2 billion to stimulate the national economy, 

create and retain jobs, and invest in environmental protection and other 

infrastructure. The act included $600 million for the Superfund program and 

$2 billion for the Drinking Water State Revolving Fund program. To meet 

Recovery Act objectives and achieve the Agency’s environmental mission, EPA 

awarded Recovery Act funding under these two programs through several 

vehicles, including IAs, contracts, and cooperative agreements. From 

February 17, 2009, through June 30, 2010, EPA distributed $278 million in 

Recovery Act funds through IAs for these two programs (Table 1). 

11-R-0016 1 
 

 

 

Table 1: EPA IA Funding by Program 

Environmental Program IA Funded Amount 

Superfund $ 247,721,750 

Drinking Water 30,000,000 

Total $ 277,721,750 

Groundwater sampling wells. 

(EPA OIG photo) 

Source: EPA’s Integrated Financial Management System 

(as of June 30, 2010). 

Superfund Program 

The Superfund program’s goal is to clean up uncontrolled hazardous 

waste sites that pose risks to human health and the environment. The 

program was authorized under the Comprehensive Environmental 

Response, Compensation, and Liability Act of 1980 (CERCLA). EPA has 

several funding vehicles available for Superfund cleanups and must 

decide which vehicle is best for a site. EPA’s choices for funding 

remediation projects include IAs, contracts, and cooperative agreements. 

The chief difference among these vehicles is the entity charged with 

awarding and managing the cleanup construction contract. Site cleanup 

construction contracts can be awarded and managed by EPA, an EPA 

contractor, another federal agency (through an IA), or a State (through a 

cooperative agreement). EPA awarded Recovery Act funds through EPA 

contracts, cooperative agreements with the States, and IAs with the U.S. 

Army Corps of Engineers (Corps) and the U.S. Department of the 

Interior. 

Drinking Water State Revolving Fund Program 

Tribal set-asides account for up to 1.5 percent of the Recovery Act’s 

allocation for EPA’s state revolving fund. EPA transferred $30 million 

through an IA to the U.S. Department of Health and Human Services’ 

Indian Health Service (IHS). These funds will be used to improve the 

infrastructure of drinking water systems that serve Indian tribes and 

Alaska Native Villages. 

Office of Federal Procurement Policy IA Guidance 

On June 6, 2008, the Office of Management and Budget, Office of Federal 

Procurement Policy (OFPP), issued IA guidance titled Improving the 

Management and Use of Interagency Acquisitions. The purpose of this guidance 

is to help agencies achieve the greatest value from interagency acquisitions and 

(1) make sound business decisions to support the use of interagency acquisitions, 

and (2) strengthen the management of assisted acquisitions. The guidance 

emphasizes the importance of delineating clear lines of responsibility when 

developing IAs with respect to establishing requesting and servicing agencies’ 

11-R-0016 2 
 

roles for acquisition planning, contract administration, final inspection and 

certification, and other responsibilities. 

Noteworthy Achievements 

The Recovery Act presented EPA with new challenges, including using the funds 

quickly and incorporating new terms and conditions. The act required that all 

funds be obligated by September 30, 2010. By September 30, 2009, EPA awarded 

all Recovery Act IAs for the Superfund and Drinking Water State Revolving Fund 

programs – 1 year before the deadline. The Agency also ensured that IAs included 

the specific terms and conditions established by the Office of Management and 

Budget’s Recovery Act implementing guidance. These terms and conditions 

addressed the period during which funds are available, new reporting 

requirements, and the Buy American and wage rate provisions. 

At the same time EPA was awarding Recovery Act funds, it was consolidating IA 

management into two service centers. Even with the consolidation, EPA was able 

to process all the funding packages before the obligation deadline in the act. 

Scope and Methodology 

We conducted this performance audit in accordance with generally accepted 

government auditing standards. Those standards require that we plan and perform 

the audit to obtain sufficient, appropriate evidence to provide a reasonable basis 

for our findings and conclusions based on our audit objectives. We believe that 

the evidence obtained provides a reasonable basis for our findings and 

conclusions based on our audit objectives. 

We conducted our audit work from July 2009 to May 2010. We interviewed EPA 

Headquarters staff in the Office of Water, Office of Solid Waste and Emergency 

Response (OSWER), and the Office of Administration and Resources 

Management. We met with personnel from Region 2, Region 10, and the 

Interagency Agreement Shared Service Center. We also interviewed staff from 

OFPP, IHS, and the Corps. 

We reviewed 5 of the 17 Recovery Act IAs that EPA awarded as of July 29, 2009. 

Of the 17 IAs, 15 were with the Corps and 2 were with IHS. We selected a 

random sample of 4 IAs that EPA Region 2 awarded to the Corps because 8 of 15 

Corps IAs were in Region 2. Our sample methodology ensured that we would 

select two new IAs and two existing IAs that EPA amended. We used IDEA 

software to select this random sample. We also selected one IA with IHS under 

the Drinking Water State Revolving Fund Program, bringing the total to five. The 

5 IAs we selected represented 34 percent of the total dollar value of the IAs EPA 

had awarded as of the start of our review. We selected the sample using EPA 

databases and determined that the reliability of the data they contained was 

sufficient for our audit work. We did not project the audit results to the universe 

11-R-0016 3 
 

 

 

 

 

of IAs. See Appendix A for further details on the Recovery Act-funded IAs we 

reviewed.1 

We reviewed EPA policies and procedures for IA management. We identified and 

tested EPA’s internal controls related to our objectives and determined that EPA 

had a number of management controls for Recovery Act IAs. However, we 

identified a weakness in internal control – namely, EPA’s roles and 

responsibilities being included in the agreements – and reported that condition in 

Chapter 2. 

Prior Audit Coverage 

In EPA OIG Report No. 2007-P-00021, EPA Can Improve its Managing of 

Superfund Interagency Agreements with U.S. Army Corps of Engineers, issued 

April 30, 2007, we stated that EPA should better justify and support its decisions 

to enter into Superfund IAs with the Corps. In that report, we recommended that 

EPA include cost estimates and a cost analysis of alternatives when awarding IAs 

to the Corps. We also noted in the report that EPA should improve its monitoring 

of IAs with the Corps to better manage cost, timeliness, and quality. In response, 

EPA updated policy and conducted annual reviews of Corps IA justifications. On 

August 8, 2007, the OIG issued a memorandum to the Agency and closed all but 

one recommendation; the OIG closed the remaining recommendation in April 

2008. EPA also submitted a Fiscal Year 2009 report to Congress regarding its 

review of the Agency’s cost analysis practices in determining the best approach 

for conducting Superfund work. During this review, we followed up on EPA’s 

actions in response to the prior report recommendations. 

1 When we took the sample on July 29, 2009, EPA had awarded 17 Recovery Act IAs in the Superfund and State 

Revolving Fund programs. As of June 30, 2010, EPA had awarded 19 Recovery Act IAs in the Superfund and 

Drinking Water State Revolving Fund programs. Those agreements are listed in Appendix A, and the total amount 

funded is reported earlier in this chapter. 

11-R-0016 4 
 

 

Chapter 2

EPA Should Update Interagency Agreement 

Terms and Conditions 

EPA did not clearly describe its responsibilities in the terms and conditions of the 

Recovery Act-funded IAs we reviewed. OFPP guidance and EPA’s internal 

policies state that an IA should identify both the requesting and servicing 

agencies’ responsibilities. EPA stated that defining its roles and responsibilities in 

IAs was unnecessary because its role was clearly defined in EPA policy and 

guidance related to IAs. Because EPA did not clearly define its responsibilities 

within its Recovery Act IAs and supporting documents, it did not effectively 

establish its accountability for implementing those agreements. 

Guidance Requires IAs to Include Each Agency’s Role 

OFPP guidance, Improving the Management and Use of Interagency Acquisitions, 

states that IA terms and conditions should include the requesting and servicing 

agencies’ responsibilities and respective roles. This guidance applies to all 

agreements initiated after October 1, 2008. Agencies are to define their respective 

roles to ensure effective IA management and use. The guidance also states that 

requesting and servicing agencies should work together to define their respective 

roles in the IA to effectively establish accountability. 

EPA guidance requires IAs to identify the roles and responsibilities of both 

agencies. EPA’s 2008 Interagency Agreement Policies, Procedures, and 

Guidance Manual requires that each agency’s responsibilities be identified, 

including the frequency of and procedures for EPA IA reviews. Also, the 

EPA/USACE Superfund Interagency Agreement Desk Manual, dated 

January 2009, specifies that EPA should include both agencies’ roles and 

responsibilities in IAs. 

All three of the guidance documents apply to EPA’s Recovery Act Superfund IAs 

with the Corps. However, only EPA’s Interagency Agreement Policies, 

Procedures, and Guidance Manual applies to the Recovery Act IA with IHS. 

While the guidance documents vary, all maintain that IAs should include the 

signatories’ roles and responsibilities. 

11-R-0016 5 
 

EPA’s Role Not Described 

EPA did not clearly describe its responsibilities in the terms and conditions of the 

Recovery Act-funded IAs we reviewed. We reviewed four Recovery Act-funded 

IAs between EPA and the Corps for Superfund site cleanups and one Recovery 

Act-funded IA between EPA and IHS for Drinking Water State Revolving Fund 

water infrastructure projects. While the terms and conditions may differ from 

program to program, EPA uses standard terms and conditions for all IAs within 

each of those programs. In all five IAs we reviewed, the IA terms and conditions 

included the role and responsibilities for either the Corps or IHS, but EPA’s role 

and responsibilities were not defined. 

Superfund IA Terms and Conditions 

The Superfund IAs with the Corps we reviewed did not identify EPA’s role and 

responsibilities in three key areas the OFPP guidance identified. Those areas 

were: 

 Procuring contracts and developing the statement of work 

 Monitoring construction and operations and maintenance activities 

 Final inspection and certification 

Specific examples of the terms and conditions for these IAs follow. 

Procuring contracts and developing the statement of work. The term and 

condition regarding how contracts would be procured and how the statement of 

work would be developed did not specify EPA’s role in the process. The scope of 

work included with the terms and conditions in one IA we reviewed stated that the 

Corps will be responsible for: 

Procuring the services of a remedial action contractor to perform 

the soil remedial action at the former Imperial Oil facility. This 

entails the development of the technical statement of work and 

awarding the contract to a private firm(s). 

This term and condition did not describe the Agency’s role in procuring 

contractors or developing statements of work. OFPP guidance recommends that 

requesting agencies develop the statement of work with the servicing agency to 

ensure clearly defined requirements. Since the statement of work defines what the 

contractor is going to do at the site, and EPA is responsible for the cleanup, EPA 

should describe its participation in developing the statement of work. 

Monitoring construction and operations and maintenance activities. The term 

and condition regarding monitoring construction and operations and maintenance 

activities stated that EPA would coordinate with the Corps, but did not specify 

11-R-0016 6 
 

 

what EPA would do. The statement of work in one IA stated that the Corps will 

be responsible for: 

Providing oversight and monitoring of construction in coordination 

with the EPA Remedial Project Manager (RPM) to ensure 

compliance with all contract requirements. In addition, the [Corps] 

will provide weekly updates and meetings on the site to discuss 

construction progress, problems, or any other pertinent issues. 

EPA did not include a description of the actions it would take to coordinate 

oversight and monitoring of the project. OFPP guidance recommended that 

requesting agencies include in their IAs activities to conduct appropriate 

oversight. EPA should describe its participation in overseeing and monitoring 

construction, as well as any meetings it will attend. 

Final inspection and certification. The term and condition pertaining to the final 

inspection and certification of completed projects was equally vague as to EPA’s 

role and part in the process. The statement of work in one IA stated that the Corps 

will be responsible for: 

. . . conducting final inspection and certification of the completed 

remedial action in coordination with the EPA RPM. 

EPA has ultimate responsibility for Superfund site cleanup. EPA’s Interagency 

Agreement Policies, Procedures, and Guidance Manual requires it to identify the 

responsibilities of each party. OFPP guidance recommends that requesting 

agencies “ensure deliverables are received and quality is acceptable.” EPA should 

include a description of the actions it would take for final inspection and 

certification. 

Drinking Water State Revolving Fund IA Terms and Conditions 

We reviewed one of two Recovery Act IAs that EPA established with IHS for 

water infrastructure projects on tribal lands and Alaska Native Villages. We noted 

that the servicing agency’s role is clearly defined, but EPA’s roles and 

responsibilities were not. 

One IHS term and condition stated that EPA shall be: 

. . . formally notified of and invited to participate in the conceptual 

design meeting, the final plans and specification review . . . 

This term and condition did not describe whether the Agency would participate in 

the conceptual design meeting or the final plans and specification review, or 

whether it would participate in any changes to the statement of work. EPA’s 

Interagency Agreement Policies, Procedures, and Guidance Manual requires that 

11-R-0016 7 
 

EPA identify its participation in design and planning activities. EPA should have 

articulated in the IA whether its role in the conceptual design meeting and final 

plans and specification review is one of comment or approval. 

The scope of work attached to the IA with IHS stated: 

The IHS will provide quarterly, project-specific financial and 

progress reports using the existing progress report format, which 

will include, at a minimum, actual expenditures and milestones 

achieved to date . . . IHS will make available to the EPA 

Headquarters a progress report through an automated reporting 

feature in its Sanitation Tracking and Reporting System (STARS). 

This term and condition did not describe how EPA would use these reports. EPA 

should have articulated how it will use these reports to ensure project progress 

and financial accountability. For example, EPA could describe steps it would take 

to address late reports and stalled projects. 

The IHS scope of work also stated: 

The EPA shall be formally notified of and invited to participate in 

the . . . final inspection for projects in which EPA funds are 

utilized. IHS shall notify EPA at least 10 business days prior to 

these events to allow optimal participation. 

This term and condition did not state whether EPA would participate in the final 

inspection. EPA should have stated how it would respond to any such invitation. 

EPA Defined Its Role in Policy Rather Than Within the IA 

The Agency stated that defining EPA’s roles and responsibilities in IAs was 

unnecessary because its role was clearly defined in the relevant EPA policy and 

guidance. EPA defined many of its Superfund IA roles and responsibilities in its 

Superfund desk manual. EPA defined its roles and responsibilities for overseeing 

IHS IAs in its Oversight Protocol of Tribal Projects Executed through an 

Interagency Agreement with the Indian Health Service Funded by the 2009 

American Recovery and Reinvestment Act. Although EPA’s roles and 

responsibilities were presented in these policy and guidance documents, the 

Agency’s roles and responsibilities in Recovery Act IAs were not clearly defined 

because the IAs did not reference these policies or the responsibilities defined 

therein. 

11-R-0016 8 
 

Clearly Defined EPA Roles in IAs Would More Effectively Establish 

Accountability 

Because EPA did not clearly define its role in implementing Recovery Act IAs, it 

did not effectively establish its accountability for implementing those agreements. 

EPA did a good job of defining its role in its policies and procedures. However, 

the Agency should have defined those responsibilities within the IAs. When 

EPA’s role is not included in IAs, the Agency may incur higher costs and possible 

delays due to duplication of effort or misunderstanding of various agencies’ roles. 

Recommendations 

We recommend that the Assistant Administrator for Solid Waste and Emergency 

Response: 

2-1. Revise standard terms and conditions for future IAs with the Corps to 

include EPA’s roles and responsibilities and amend Recovery Act IAs 

with the Corps as they are modified. 

We recommend that the Assistant Administrator for Water: 

2-2. Amend the terms and conditions in Recovery Act IAs with IHS to include 

EPA’s roles and responsibilities in the areas of design and planning, 

construction monitoring, and final project inspection. 

2-3. Revise standard terms and conditions for future IAs with IHS to include 

EPA’s roles and responsibilities in the areas of design and planning, 

construction monitoring, and final project inspection. 

Agency Response and OIG Comments 

OSWER concurred with the recommendations and made a suggestion regarding 

only updating the terms and conditions for modified Recovery Act IAs. OSWER 

agreed to amend the standard terms and conditions by October 30, 2010. The OIG 

agreed with the suggestion and amended the recommendation. 

The Office of Water concurred with recommendations 2-2 and 2-3 and completed 

corrective action as of October 28, 2010. The OIG believes that the revised terms 

and conditions meet the intent of the recommendations and we will close these 

recommendations upon issuance of this report. No further response from the 

Office of Water is required. 

11-R-0016 9 
 

 

Chapter 3

EPA’s Superfund IA Award Documentation Met 

Requirements, but Improvements Can Be Made 

We found that decision memoranda and matrices for EPA Recovery Act IAs met 

the requirements set forth in EPA policies, but we believe that additional detail 

would be beneficial. Specifically, for the Recovery Act IAs we reviewed, EPA’s 

award documentation did not include an analysis of the costs of alternatives to 

establishing an IA to award and manage a Superfund cleanup construction 

contract. EPA issued several policy documents that required personnel to consider 

experience, capability, and cost when entering into an IA. When entering into IAs, 

OSWER considered the cost of the Corps’ awarding and managing the cleanup. 

OSWER stated that it performs a “best value decision” based on a number of 

considerations that emphasize technical and resource requirements. We believe 

EPA could improve its process by considering the cost of alternative methods 

when deciding how best to fund the management of Superfund cleanups. Such 

analysis would ensure that EPA has selected the most efficient and effective 

method from a technical, resource, and cost perspective. 

Policies Establish IA Award Documentation Requirements 

EPA issued several policy documents regarding IA justification. The policies vary 

in how they address the issue of cost. Some policies state that EPA is to consider 

the cost of the other federal agency’s management of the IA. Another policy states 

that IA decisions are to be based on whether the IA will be an efficient approach, 

considering both time and cost. Recent congressional language in the Duncan 

Hunter National Defense Authorization Act for Fiscal Year 2009, Section 865, 

included a requirement that regulations be updated to include a determination that 

the IA is the best procurement vehicle. 

EPA issued Interim Policy Notice 08-04 to ensure that Agency officials made 

sound business decisions when considering IAs. This policy notice states that all 

IAs over $200,000 awarded under statutory authority other than the Economy Act 

are subject to a best-interest determination that considers the servicing agency’s 

authority, experience, expertise, and the reasonableness of its fees. 

EPA also issued Grants Policy Issuance 02-01, which requires EPA offices to 

document why they will be using an IA and to consider time and cost for all IAs 

submitted after January 31, 2002. This policy issuance requires a statement that 

the cost of the proposed work is reasonable, considering efficiency, based on an 

independent estimate of cost or other appropriate cost information EPA 

developed. The policy states: 

11-R-0016 10 
 

 

 

 

An approving office must document the reasons why it wants to 

use an IA and include the reasons in the decision memorandum. In 

general, the decision should be based on a finding that the IA will 

be an efficient approach, considering both time and cost. 

OSWER Policy 9200.1-83 2 requires regional offices to develop a decision 

memorandum to document the analysis and decisions regarding use of the Corps 

for Superfund work. Regional offices must complete a decision matrix that lists 

several factors to consider, including whether: 

 Sufficient EPA resources are available for the acquisition of remedial 

design or remedial action support. 

 Sufficient EPA resources are available to provide a significant or 

extensive federal presence, if needed, at the site. 

 Particular experience such as with large, complex construction projects is 

desirable. 

	 The Corps, another federal agency, a State, or an EPA contractor such as a 

remedial action contractor has unique or particularly relevant experience 

working at the site or a similar site. 

The policy also requires that EPA regional offices document and discuss all 

vehicles considered: 

The decision memorandum and matrix should document all 

vehicles considered (e.g., Corps, other Federal agencies, EPA 

contractors such as RAC [remedial action contractors], or 

contracting options through state agencies), and discuss the various 

factors and basis for the selection of Corps to conduct the work. 

These policies assist EPA in making sound business decisions that support EPA’s 

selection of an IA to conduct remedial actions that are protective of human health, 

as required by CERCLA. 

In the Duncan Hunter National Defense Authorization Act for FY 2009, Congress 

requested an update to the Federal Acquisition Regulation. This update will 

require agencies to determine that an IA is the best procurement alternative. 

Agencies must include sufficient documentation in that determination to ensure an 

adequate audit. When this update is complete, EPA will have to update its 

policies. 

2

 OSWER 9200.1-83, Policy for Issuing Superfund Interagency Agreements for Assigning Superfund Remedial 

Design or Remedial Action Work to the U.S. Army Corps of Engineers and Other Federal Agencies, issued April 3, 

2008. 

11-R-0016 11 
 

EPA Met Its Requirements, but Improvements Are Needed 

We found that decision memoranda and matrices for EPA Recovery Act IAs met 

the requirements set forth in EPA policies. The decision memoranda we reviewed 

showed that EPA selected IAs with the Corps based on the Corps’ capabilities and 

experience, and the reasonableness of its fees. EPA documented all of the factors 

it considered, and included explanations for some of its decisions. EPA also 

estimated the Corps’ cost for managing and overseeing construction. 

During our review, we noted that OSWER policy required regional offices to 

consider alternatives to an IA in its IA award documentation. The two new 

Recovery Act-funded IAs in our sample included the following statement when 

discussing EPA’s decision to use an IA: 

Options were evaluated for the assignment and execution of the 

work specified in the statement of work of this IA through various 

available vehicles, including USEPA contractors and the US Army 

Corps of Engineers. After consideration of each factor, EPA has 

selected the Corps for the construction . . . 

While this discussion meets the requirements of the OSWER policy, we believe 

the policy should also require regional offices to analyze the costs of alternatives 

to awarding and managing the remedial activities at a site. A prior EPA OIG 

report included a similar conclusion and a recommendation about this issue. After 

the OIG report, the U.S. House of Representatives included language in the 2008 

House Appropriations Report (HR 110-87) stating the need to analyze the cost of 

alternatives. The 2008 House Report stated: 

. . . the Agency needs to develop its own independent cost 

estimates of the [Corps] work and conduct cost analysis of 

alternatives prior to determining whether or not to engage the 

[Corps]. 

After the OIG and U.S. House of Representatives reports, OSWER updated 

Policy 9200.1-83. This policy required staff to consider the cost for the Corps to 

award and manage remedial activities, but did not go as far as to require a cost 

analysis of alternatives. 

EPA has several choices when determining who will manage cleanups, and 

regions differed in the choices they made when awarding Recovery Act funds. 

Region 2 more than other regions awarded IAs to the Corps. Region 2 selected the 

Corps for cleanups at 9 of 11 Recovery Act-funded Superfund sites. Figure 1 

illustrates the Recovery Act vehicles used in Region 2 (New York and New 

Jersey shown in blue). Red stars represent sites the Corps manages, and black dots 

represent sites an EPA contractor manages. (See map in Appendix B for Recovery 

Act funding for all Superfund sites.) 

11-R-0016 12 
 

Figure 1: Region 2 Cleanup IAs 

Source: U.S. Department of the Interior National Atlas Website and 

EPA EnviroMapper database. 

EPA stated that a cost analysis of alternative funding vehicles is not 

necessary because it performs a “best value decision” based on a number 

of considerations, including cost, and that basing decisions solely on least 

cost criteria is not in the best interest of the government. Staff in EPA’s 

Office of Superfund Remediation and Technology Innovation explained 

that EPA decided many years ago that it was inherently more efficient to 

work with another federal agency that had construction management 

experience than expand EPA’s expertise in the area. The partnership with 

the Corps provides EPA with the flexibility to target the right funding 

vehicle (i.e., an IA, a contract, or EPA-managed contract) to the situation. 

While EPA has stated that the Corps is more efficient, it does not have 

documentation to support that the Corps is cost effective. 

EPA Should Consider the Cost of Alternatives 

EPA did not consider the cost of alternatives to an IA with the Corps. As a result, 

the Agency could not demonstrate that the use of an IA to award and manage 

remedial activities was cost effective. Site cleanup construction contracts can be 

awarded and managed by EPA, an EPA contractor, another federal agency 

(through an IA), or a State (through a cooperative agreement). When making the 

decision to award an IA to the Corps, EPA considers technical and resource 

requirements and the cost of the Corps’ management of the IA. However, the 

Agency does not consider alternative methods, such as using an EPA contractor, 

11-R-0016 13 
 

 

when cost could be a significant factor. According to an Agency official, cost 

could be a significant factor for consideration in some circumstances, but there 

are instances in which other factors, such as technical and resource 

considerations, must take precedent. We believe that EPA should consider the 

cost of alternatives when other factors have not precluded the decision. 

EPA should firmly establish that its choice of funding vehicles for Superfund 

cleanups is based on sound business decisions. We believe that EPA could 

improve its processes by considering the cost and level of effort associated with 

the procurement, management, and oversight of construction contracts for all 

Superfund cleanup contracting delivery options. This strategy would address 

Congress’s concern that EPA should use not only the most timely but also the 

most cost-effective mechanism to complete cleanups. EPA should periodically 

review its process to develop and maintain current cost estimates and address the 

changing trends and needs of the Superfund program. 

Recommendations 

We recommend that the Assistant Administrator for Solid Waste and Emergency 

Response: 

3-1. Prepare a program evaluation of levels of effort and the cost of the 

processes associated with procurement, management, and oversight of the 

construction contract for projects delivered by the Corps, EPA, or 

remedial action contractors to support decisionmaking in selecting the 

method of obtaining construction delivery services. 

3-2. Use this program evaluation to provide transparency and aid in developing 

a contracting strategy that will allow the EPA regional offices to make 

informed decisions when determining the best value for delivering 

Superfund construction projects. 

Agency Response and OIG Comments 

In its response to the draft report, OSWER stated that it recognizes the benefit of 

evaluating levels of effort and associated costs to procure, manage, and oversee a 

construction contract for different construction delivery mechanisms. However, 

OSWER believes that when selecting the Corps, a comparison of costs for each 

possible funding vehicle is not practical or useful on an individual IA basis. The 

suggested alternative is the program evaluation currently underway to analyze 

practices and resources related to having different entities (EPA, contractors, 

Corps) to procure, manage, and oversee construction. OSWER stated that this 

evaluation may provide transparency and aid in developing a contracting strategy 

that will allow the regions to make informed decisions when determining the best 

value for delivering Superfund construction projects. 

11-R-0016 14 
 

OSWER explained that projects require different levels of technical, procurement, 

and project management expertise. A major factor in selecting the contracting 

vehicle is whether EPA has sufficient and skilled resources to oversee the 

remedial action. EPA also considers project-specific requirements, such as the 

construction delivery schedule and whether an expedited construction contract is 

needed. These factors are considered when choosing the contracting vehicle, and 

the determination of best value is documented in the decision memorandum. 

OSWER did not agree with the original draft recommendation, but proposed an 

alternative action. Recommendation 3-1 reflects the OSWER proposal, with an 

additional requirement for considering cost of various contracting vehicles during 

the program evaluation. We also added recommendation 3-2 to require OSWER 

to use the results of the program evaluation to develop a contracting strategy. 

In responding to the final report, OSWER should provide a milestone date for 

completing its evaluation and an action plan, with a milestone date, for addressing 

recommendations 3-1 and 3-2. 

11-R-0016 15 
 

 

 

 

 

 

 

 

Status of Recommendations and 

Potential Monetary Benefits 

POTENTIAL MONETARY 

RECOMMENDATIONS BENEFITS (in $000s) 

Rec. 

No. 

Page 

No. Subject Status1 Action Official 

Planned 

Completion 

Date 

Claimed 

Amount 

Agreed To 

Amount 

2-1 

2-2 

2-3 

3-1 

3-2 

9 

9 

9 

14 

14 

Revise standard terms and conditions for future IAs 

with the Corps to include EPA’s roles and 

responsibilities and amend Recovery Act IAs with 

the Corps as they are modified. 

Amend the terms and conditions in Recovery Act 

IAs with IHS to include EPA’s roles and 

responsibilities in the areas of design and planning, 

construction monitoring, and final project 

inspection. 

Revise standard terms and conditions for future IAs 

with IHS to include EPA’s roles and responsibilities 

in the areas of design and planning, construction 

monitoring, and final project inspection. 

Prepare a program evaluation of levels of effort and 

the cost of the processes associated with 

procurement, management, and oversight of the 

construction contract for projects delivered by the 

Corps, EPA, or remedial action contractors to 

support decisionmaking in selecting the method of 

obtaining construction delivery services. 

Use this program evaluation to provide 

transparency and aid in developing a contracting 

strategy that will allow the EPA regional offices to 

make informed decisions when determining the 

best value for delivering Superfund construction 

projects. 

O 

C 

C 

O 

U 

Assistant Administrator 

for Solid Waste and 

Emergency Response 

Assistant Administrator 

for Water 

Assistant Administrator 

for Water 

Assistant Administrator 

for Solid Waste and 

Emergency Response 

Assistant Administrator 

for Solid Waste and 

Emergency Response 

10/30/10* 

10/28/10 

10/28/10 

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

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

U = recommendation is undecided with resolution efforts in progress 

* Although the milestone for Recommendation 2-1 has passed, the Agency has not provided the OIG with the documentation needed to verify implementation of 

the recommendation. 

11-R-0016 16 

1 
 

 

 

Appendix A 

Superfund and Drinking Water State Revolving Fund Recovery Act IAs 

Cooperating 

Agency 

IA 

Number 

IAs W

IA 

Amount 

e Reviewed 

Purpose 

Corps DW96941836 $20,000,000 Remedial Action – Vineland Chemical Company – 

Operable Unit 3 – Vineland, NJ 

Corps DW96941935 $22,000,000 Remedial Action – Welsbach & General Gas Mantle Site – 

Camden County, NJ 

Corps DW96942175 $16,300,000 Remedial Action – Price Landfill – Operable Unit 2 – 

Egg Harbor and Pleasantville, NJ 

Corps DW96942176 $25,260,750 Remedial Action - Imperial Oil/Champion Chemical – 

Operable Unit 3 – Morganville, NJ 

HIS 

U.S. Department 

of the Interior 

DW75957660 

DW14953927 

$30,000,000 

IAs We Di

$400,000 

Drinking water infrastructure projects for Indian tribes and 

Alaska Native Villages 

d Not Review 

Remedial Action – Eureka Mills Superfund site – 

Eureka Mills, UT 

Corps DW96940355 $13,703,000 Remedial construction work at the Hatheway and Patterson 

Superfund site – Patterson, NJ 

Corps DW96940356 $8,000,000 Non-Time-Critical Removal Action for the Elizabeth Mine 

Superfund site – Strafford, VT 

Corps DW96940357 $34,500,000 Remedial work at the New Bedford Harbor Superfund site – 

New Bedford Harbor, MA 

Corps DW96941843 $6,000,000 Remedial Action Welsbach & General Gas Mantel – 

Operable Unit 1 – Camden County, NJ 

Corps DW96942093 $27,000,000 Remedial Action for Slag Area and Sediments at the 

Roebling Steel Superfund site – Operable Units 3/5 – 

Florence Township, NJ 

Corps DW96942133 $5,000,000 Remedial Action for Operable Unit 2 at the Horseshoe 

Road Superfund site – Sayreville, NJ 

Corps DW96942166 $30,000,000 Soil Remediation for Operable Unit 2 – Cornell Dubilier 

Electronics Superfund site – South Plainfield, NJ 

Corps DW96942177 $3,000,000 Remedial Action for Operable Unit 1 – Monitor Devices/ 

Intercircuits, Inc. Superfund site – Lakewood Industrial Park 

– Monmouth County, NJ 

Corps DW96942178 $3,958,000 Remedial Action - Operable Unit 2 – Emmell's Septic 

Landfill Superfund site – Galloway Township, Atlantic 

County, NJ 

Corps DW96953858 $700,000 Remedial Design – Eureka, UT 

Corps DW96953896 $25,400,000 Remedial Action – Eureka, UT 

Corps DW96957691 $1,500,000 Demolition of equipment and structures at Operable Units 2 

and 4 – Wycoff/Eagle Harbor Superfund site – Bainbridge 

Island, WA 

Corps DW96957692 $5,000,000 Remedial Action – contaminated yards – 

Ruston and North Tacoma, WA 

Total: $277,721,750 

Source: EPA’s Integrated Financial Management System (as of June 30, 2010). 

Note: The table reflects all EPA Recovery Act IA awards as of June 30, 2010, under the Superfund and 

Drinking Water State Revolving Fund programs. 

11-R-0016 17 
Recovery Act-Funded Superfund Site Projects and Managing 

Recovery Act Superfund site construction contract awarded to and managed by: 

Another federal agency EPA contractor EPA EPA and a State Combination of site managers (Appropriate symbols from above are both present) 

Number of sites 

13 

21 

8 

5 

Source: U.S. Department of the Interior National Atlas Website and EPA EnviroMappe

4 

11-R-0016 
 

 

Appendix C 

Agency Responses to Draft Report 

OCT – 4 2010 

MEMORANDUM 

SUBJECT: Response to OIG Draft Audit Report, EPA Terms and Conditions and Process to 

Award Recovery Act Interagency Agreements Need Improvement 

FROM: Mathy Stanislaus 

Assistant Administrator 

TO: Melissa Heist, Assistant Inspector General 

 Office of Audit 

Thank you for the opportunity to review and respond to the Office of Inspector General 

(OIG) draft audit report, EPA Terms and Conditions and Process to Award Recovery Act 

Interagency Agreements Need Improvement dated August 25, 2010. We appreciate the 

continued dialogue and openness that the OIG team has afforded Office of Solid Waste and 

Emergency Response (OSWER) during the course of this audit. 

The comments below represent a response from OSWER with coordination and comment 

from the Office of Administration and Resources Management (OARM). The Office of Water is 

responding separately. First, we would like to address each of the recommendations and provide 

information about planned or initiated actions related to those recommendations. Second, we 

provide additional comments to ensure that the final audit report contains accurate information. 

OIG RECOMMENDATIONS AND OSWER RESPONSE 

OIG Recommendation 2-1: Amend the terms and conditions in Recovery Act Interagency 

Agreements (IAs) with the Corps to include EPA’s roles and responsibilities. 

OSWER Response: 

OSWER suggests modifying this recommendation to read “Amend the terms and 

conditions in new or modified Recovery Act Interagency Agreements ....” In light of existing 

policy, guidance, and training for EPA Remedial Project Managers (RPM), and project officer 

roles during the implementation of design and construction, amending existing IAs is of limited 

value and would involve expending limited resources. OSWER intends to update standard terms 

and conditions pertaining to EPA’s role in procuring contracts and developing the statement of 

work; monitoring construction and operations and maintenance activities; and final inspection 

and certification. Once updated, the standard terms and conditions will be incorporated into 

Recovery Act IAs as they are amended. 

11-R-0016 19 
 

 

OIG Recommendation 2-2: Revise standard terms and conditions for future IAs with the Corps 

to include EPA’s roles and responsibilities. 

OSWER Response: 

To meet the intent of the OFPP guidance, Improving the Management and Use of 

Interagency Acquisitions, and to provide documented EPA accountability, OSWER is 

committing to drafting standard terms and conditions outlining EPA’s roles in the IA 

implementation process. OSWER is coordinating with the Corps and our Regional program 

offices to develop generic terms and conditions pertaining to EPA’s role in procuring contracts 

and developing the statement of work; monitoring construction and operations and maintenance 

activities; and final inspection and certification. 

OSWER plans to have these generic terms and conditions drafted by October 30, 2010. 

Once drafted, these terms and conditions will be added to the standard Superfund terms and 

conditions for Superfund IAs that are used for all new IAs and existing IAs, as they are amended. 

OIG Recommendation 3-1: When cost is a viable consideration in selecting the funding 

vehicle, require that EPA offices compare the total cost of each funding vehicle as part of the 

decision matrix. The decision matrix should be supported by sufficient documentation as to how 

the costs were compared. If cost is not a viable consideration, the decision matrix should 

document why it is not. 

OSWER Response 

OSWER recommends replacing recommendation 3-1 with a recommendation for a more 

comprehensive comparison of construction delivery options: 

3-1 Prepare a program evaluation of levels of effort and processes associated with 

procurement, management and oversight of the construction contract for projects delivered by 

the Corps, EPA or Remedial Action Contractors to support decision making in selecting the 

method of obtaining construction delivery services. 

OSWER recognizes the benefit of evaluating levels of effort and associated costs to 

procure, manage, and oversee a construction contract for different construction delivery 

mechanisms. However, OSWER believes when selecting the Corps, a comparison of costs for 

each possible funding vehicle is not practical or useful on an individual IA basis. The suggested 

alternative is the program evaluation currently underway to analyze practices and resources 

related to having different entities (EPA, contractors, Corps) to procure, manage and oversee 

construction. This evaluation may provide transparency and aid in developing a contracting 

strategy that will allow the Regions to make informed decisions when determining the best value 

for delivering Superfund construction projects. 

Additional Explanation: 

11-R-0016 20 
 

Each Superfund construction project is unique. Some projects are relatively 

straightforward while other projects are more complex. Projects require different levels of 

technical expertise, procurement expertise, or project management expertise. The evaluation of 

these considerations is fundamental in determining which construction delivery mechanism is 

best suited for the project. 

 When EPA Regions are determining how to deliver a construction project, the Regions 

evaluate who will procure, manage, and oversee the construction contract. The Regions have 

several options: in-house procurement, use an Architecture/Engineering Firm (Remedial Action 

Contractor), use EPA Emergency Removal and Response (ERRs) contractor, use the State 

through a Cooperative Agreement (CA), or use the Corps. When determining which vehicle is 

most appropriate for a specific construction project, EPA evaluates the Regional EPA resources 

required to deliver the project and the project/site characteristics. 

 The EPA Superfund remedial program and contract staff required and the relative level of 

effort necessary to deliver the construction project depends on the delivery vehicle as well as the 

size, scope and duration of the construction project. For project-specific contracts procured inhouse, EPA Regions evaluate whether there are sufficient and skilled EPA resources and 

sufficient time available for those resources to provide government construction cost estimating 

expertise, contract procurement, contract management, and construction management and 

oversight. In evaluating which contract instruments are used, our ongoing analysis has found 

this is a major factor in determining which vehicle is used. When EPA contracts out these 

services, EPA staff and resources are required to manage and oversee the Remedial Action 

Contractor, the ERRs contractor or the Corps delivery of these services. The Corps, however, 

conducts the procurement and oversight steps that would be performed by contractors or EPA 

staff depending on the vehicle. (See Attachment 1) In addition to an evaluation of EPA 

resources, EPA also evaluates whether existing Regional contract resources have sufficient 

capacity or contract ceiling to provide procurement, management and oversight functions 

necessary to deliver the size, scope and duration of the construction project. 

 In addition to determining whether the necessary EPA resources and contract capacity are 

available, EPA considers project-specific characteristics. When delivering a construction 

project, construction delivery schedule constraints or expedited procurement of the construction 

contract may be necessary. As such, EPA may require a delivery vehicle that will provide 

expedited procurement of the construction contract. In addition, some construction projects 

require relocation or real estate acquisitions, and EPA may require a delivery vehicle that can 

provide such these services. Furthermore, EPA projects vary in size and complexity. Size and 

complexity provide characterization and design challenges that may lead to project-specific 

uncertainties. These uncertainties result in project risks that, if realized, may result in a 

significant change to project schedule and/or project cost. When evaluating these project risks, 

EPA may require a construction delivery vehicle that provides both construction and contract 

management expertise and flexibility. 

 The factors discussed above are the considerations that are evaluated and used to determine 

which construction delivery vehicle is the best value for the government. When EPA chooses 

11-R-0016 21 
 

the Corps as the delivery vehicle, the determination of best value is documented in the decision 

memorandum. 

 Once the best value determination is made and if EPA chooses to contract out construction 

delivery services, EPA prepares an Independent Government Cost Estimate (IGCE) for the 

construction project to ensure that the resulting contract or IA is cost-effective. In its 

Independent Government Cost Estimate guide, the Office of Acquisition Management (OAM) 

defines an IGCE as “the Government’s detailed projection of what a reasonably prudent business 

person should pay to obtain the best value for a product or service, including priorities and 

assumptions current at the time the estimate was made”. EPA requires IGCEs before entering 

into both contracts and IAs. The EPA - prepared IGCE evaluates the levels of effort and 

associated costs deemed necessary to procure, manage, and oversee the construction contract. It 

also references the construction contract cost estimate from the design, which was finalized and 

agreed upon by EPA when the final design was submitted. Therefore, the construction contract 

cost will be the same for an IGCE prepared for either a contract or an IA. The IGCE is then 

compared to the cost proposed by the contractor of the Corps for their staff efforts. Discussions 

and negotiations are based off of this IGCE estimation process. The final contractor or Corps 

costs are a result of this process. Once the contract or IA is awarded, the Corps or contractor then 

competes, negotiates and awards the construction contract on behalf of EPA. 

OTHER OSWER COMMENTS: 

At a Glance 

1. We recommend modifying the last two sentences in the “What We Found” section as 

follows: 

We believe EPA could improve its process by considering the cost and level of effort associated 

with procurement, management and oversight of the construction contract for all Superfund 

clean-up contract delivery options. of alternative methods when deciding how best to fund the 

management of Superfund clean-ups . Such analysis would ensure that EPA has selected the 

most efficient and effective method from a technical, resource, and cost perspective. 

2. The last sentence in the “What We Recommend” section does not seem consistent with 

the recommendation in the text. The statement leads the reader to believe that you are 

recommending a cost analysis for all IAs. The recommendation, as it currently reads in Chapter 

3, does not state this. We recommend that you consider our response to Recommendation 3-1 

above and ensure that both the overview and the Chapter 3 recommendation are consistent. 

Chapter 1 

Comment 1

 On page 2, under “Superfund Progam” the last sentence states: 

11-R-0016 22 
 

“EPA awarded Recovery Act funds through EPA contracts, cooperative agreements with the 

State, and IAs with the U.S. Army Corps of Engineers (the Corps) and the U.S. Department of 

Health and Human Services.” 

Superfund stimulus dollars were not obligated to the U.S. Department of Health and Human 

Services. They were awarded to the Corps and the Department of the Interior. We recommend 

that you correct this reference. 

Comment 2 

On page 4, under the “Prior Audit Coverage” heading, we recommend you add an additional 

sentence to clarify Congress’s acceptance that EPA met the cost requirement requested by 

preparing an IGCE and comparing EPA’s estimate to the servicing agency’s estimate. 

Chapter 3 

Comment 1 

On page 11, you reference CERCLA by providing the following language: 

“ ..... select a remedial action that is protective of human health and the environment, that is 

cost-effective, and that utilizes permanent solutions and alternative treatment technologies or 

resource recovery technologies to the maximum extent practicable” 

The quotation comes from CERCLA section 9621 which discusses the selection of a remedy. 

This section of CERCLA further states that: 

“In evaluating the cost effectiveness of proposed alternative remedial actions, the President shall 

take into account the total short- and long-term costs of such actions, including the costs of 

operation and maintenance for the entire period during which such activities will be required.” 

The cost effectiveness discussed in this context refers to the remedy selection process and does 

not define “cost effectiveness” in the context of construction delivery services. As such, we 

recommend that this CERCLA quote be omitted since it is out of context. 

Comment 2 

Page 12: The third paragraph cites the 2007 OIG report recommendation and 2008 House 

Report recommendation for a “cost analysis of alternatives prior to determining whether or not to 

engage the [Corps].” 

In Chapter 1, under “Prior Audit Coverage”, it states (related to the 2007 audit): 

“On August 8, 2007, the OIG issued a memo to the Agency and closed all but one 

recommendation; the OIG closed the remaining recommendation in April 2008”. 

11-R-0016 23 
 

 

 

This language reiterates that OSWER responded to the OIG with its corrective actions and the 

OIG accepted the response. The acceptance is documented by the OIG closing out all 

recommendations. OSWER’s response to the recommendation cited above was to complete an 

IGCE for the Corps staff time needed to procure, manage and oversee the construction contract. 

Furthermore, in response to the House Report, EPA submitted a response stating that we meet 

the cost requirement by preparing an IGCE and comparing EPA’s estimate to the servicing 

agency’s estimate. This was accepted by the House. 

Based on the facts stated above, the items are resolved and we recommend striking reference to 

the previous OIG recommendation since it is closed and the OIG accepted OSWER’s corrective 

action. 

Comment 3 

Page 12, last paragraph: We suggest the following revision: 

EPA has several choices when determining who will manage cleanups, and regions differed in 

the choices they made when awarding Recovery Act funding. (See map in Appendix B.) 

Region 2 more than other regions had a preference toward awarded IAs with the Corps. Region 

2 selected the Corps for cleanups at 9 of 11 Recovery Act funded Superfund sites. While 

OSWER has stated that the Corps is a cost effective approach, it does not have the detailed 

documentation to support that position. The following map illustrates the Recovery Act vehicles 

used in Region 2 (New York and New Jersey shown in blue). Red stars represent sites the Corps 

manages, and black dots represent sites a contractor manages. 

Comment 4 

Page 12, fourth paragraph: We recommend striking the following sentence: 

“For the Recovery Act IAs we reviewed, the procurement/assistance costs were a substantial 

portion of the IA”. 

From our discussion above in Recommendation 3-1, the construction contract cost estimate is a 

deliverable from the design. This estimate is the cost documented in the 

“procurement/assistance” portion of the IA. As argued above, this number is a fixed estimate for 

the construction contract and will be the same for any construction delivery vehicle. Once the 

delivery vehicle is chosen as the best value for procuring, overseeing, and managing the 

construction contract, the construction contract itself is then competed in the open marketplace 

and awarded as a separate contract. 

As such, we recommend that this sentence be omitted. 

11-R-0016 24 
 

Comment 5 

Page 13, chapter title: “EPA Could Not Demonstrate Using an IA was Cost Effective.” As 

stated above in OSWER’s response to recommendation 3-1, OSWER believes that by definition, 

an IGCE provides detailed documentation to support the position that the USACE is a costeffective option. 

OSWER recommends that this title be changed. 

Comment 6 

Page 14, last paragraph before “Recommendation” section: EPA disagrees with the statement 

that a cost analysis for all viable funding vehicles, not just Corps’ management of an IA, is 

needed in order to firmly establish the choice of the Corps is a sound business decision. 

OMB defines the following factors as criteria for making a sound business decision for noneconomy agreements: authority, experience, expertise, ability, performance, and reasonableness 

of fees. We believe that these criteria have been met and that a sound business decision to use 

the Corps, by definition, was done. Furthermore, the OIG agreed on page 12 (first sentence) 

that: 

“The decision memoranda we reviewed showed that EPA selected IAs with the Corps based on 

the Corps’ capabilities and experience, and the reasonableness of its fees”. 

We recommend that this paragraph be modified. In it’s place, perhaps the OIG can have a 

discussion on a Superfund program evaluation of costs to procure, manage, and oversee 

construction contractors to support the modified recommendation 3-1 suggested above. 

Thank you for the opportunity to review the draft report. If you have any questions 

regarding our comments please contact Kate Garufi at 703-603-8827 or Johnsie Webster, 

OSWER Audit Liaison at 202-566-1912. 

Attachment 1 

cc: Lisa Feldt, OSWER 

Barry Breen, OSWER 

Renee Wynn, OPM 

James Woolford, OSRTI 

Robin Richardson, OSRTI 

Cheryl Upton, OSRTI 

Elizabeth Southerland, OSRTI 

David Cooper, OSRTI 

John Smith, OSRTI 

Barbara McDonough, OSRTI 

Emily Johnson, OSRTI 

Kate Garufi, OSRTI 

11-R-0016 25 
 

Attachment 1 – Superfund Construction Delivery Options 

11-R-0016 26 
 

 

 

 

SEP 27 2010 

OFFICE OF 

WATER 

MEMORANDUM 

SUBJECT: Draft Office of Inspector General (OIG) Audit Report: 

EPA's Terms and Conditions and Process to Award Recovery Act Interagency 

Agreements Need Improvement 

(Project No . OA-FYgg-q919, August 25, 2010) 

FROM: Peter S. Silva, Regional Administrator 

TO: Melissa Heist, Assistant Inspector General 

Office of Audit 

On August 25, 2010, the Office of Inspector General (OIG) released a report entitled 

“EPA's Terms and Conditions and Process to Award Recovery Act Interagency Agreements 

Need Improvement." I thank you for acknowledging the efforts of EPA's Tribal drinking water 

program and our partner agency the Indian Health Service (IHS) to ensure that all funds under 

the State Revolving Fund (SRF) drinking water tribal set-aside were obligated ahead of the 

September 30, 2010, deadline in the American Recovery and Reinvestment Act. 

We concur with your report recommendation to amend the terms and conditions in the 

Recovery Act Interagency Agreement (IA) with IHS to include EPA's roles and responsibilities 

in the areas of design and planning, construction monitoring, and final project inspection 

(Recommendation No. 2-3). We are acting on this recommendation and will provide you with a 

copy of the amended Recovery IA when completed. Text of the proposed additions is included 

as an attachment to this memorandum. 

We also concur with your recommendation to revise the standard terms and conditions 

for future IAs with IHS to include descriptions of EPA's roles and responsibilities in the areas of 

design and planning, construction monitoring, and final project inspection (Recommendation No. 

2-4). We have addressed this recommendation. The terms and conditions for the future IAs with 

IHS are also included in the attachment. The revised terms and conditions for future IAs with 

IHS have been provided to the Interagency Agreement Shared Service Center (IASSC) West for 

incorporation into the Integrated Grants Management System (IGMS) standard conditions for 

IAs with IHS. 

If you have any questions concerning the contents of this memorandum, you may contact 

me or have your staff contact Ron Bergman, Chief, Drinking Water Protection Branch, Office of 

Ground Water and Drinking Water, at (202) 564-3823. 

Attachment 

Armina Nolan, Manager, IASSC West 

Denise Benjamin Sermons, Deputy Director, Office of Grants and Debarment 

11-R-0016 27 

cc 
 

 

Attachment 

EPA IHS IA Language Additions to Address EPA's IG Recommendations included 

in EPA IG Report # OA-FY09-0919 (August 25, 2010) 

EPA OIG Recommendation: 

2-3 Amend the terms and conditions in Recovery Act IAs with IHS to include EPA's roles and 

responsibilities in the areas of design and planning, construction monitoring, and final 

project inspection. 

Proposed Additions under EPA Contributions in Recovery Act IA: 

12. Where appropriate, EPA Regions shall provide comments to IHS Area Offices on the 

design and planning documents associated with projects funded by the IA within 30 days 

of receiving said documents. 

13. EPA Regions shall monitor construction progress with: data from the IHS database, 

discussions with the IHS Area Offices and field site visits as necessary to ensure the 

level of expended funds is reasonable given the reported milestone dates. 

14. The EPA Regions will participate in the final project inspection, resources permitting. At 

project completion, the EPA Region will review the final technical and financial reports 

provided by the IHS Area Office and will initiate the necessary EPA closeout process. 

15. The EPA Regions will acknowledge and respond to IHS Area Offices invitations to 

participate in project activities within 10 days of receipt. 

EPA OIG Recommendation: 

2-4 Amend the terms and conditions for future IAs with IHS to include EPA's roles and 

responsibilities in the areas of design and planning, construction monitoring, and final 

project inspection. 

Additions under EPA Contributions in future IAs with IHS: 

7. Where appropriate, EPA Regions shall provide comments to IHS Area Offices on the 

design and planning documents associated with projects funded by the IA within 30 days 

of receiving said documents. 

8. EPA Regions shall monitor construction progress with: data from the IHS database, 

discussions with the IHS Area Offices and field site visits as necessary to ensure the 

level of expended funds is reasonable given the reported milestone dates. The EPA will 

consult with the IHS Area Office quarterly to discuss project status. 

9. The EPA Regions will participate in the final project inspection, as deemed necessary 

and resources permitting. At project completion, the EPA Region will review the final 

technical and financial reports provided by the IHS Area Office and will initiate the 

necessary EPA closeout process. 

10. The EPA Regions will acknowledge and respond to IHS Area Offices invitations to 

participate in project activities within 10 days of receipt. 

11-R-0016 28 
 

Appendix D

Distribution 

Office of the Administrator 

Assistant Administrator for Solid Waste and Emergency Response 

Assistant Administrator for Water 

Assistant Administrator for Administration and Resources Management 

Regional Administrator, Region 2 

Agency Followup Official (the CFO) 

Audit Followup Coordinator 

General Counsel 

Associate Administrator for Congressional and Intergovernmental Relations 

Associate Administrator for External Affairs and Environmental Education 

Director, Office of Grants and Debarment, Office of Administration and Resources Management 

Audit Followup Coordinator, Office of Solid Waste and Emergency Response 

Audit Followup Coordinator, Office of Water 

Audit Followup Coordinator, Office of Administration and Resources Management 

Audit Followup Coordinator, Region 2 

11-R-0016 29