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Semiannual Report to Congress October 1, 1995 through March 31, 1996

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Semiannual Report to Congress

October 1, 1995 through March 31, 1996

The report listed below is an electronic rendering of the official printed document. It has been formatted for electronic presentation and may not contain all the charts, figures, or other graphical information in the official report.

Fraud Prevention and Management Improvements

This section describes several activities of the Office of Inspector General to promote economy and efficiency and to prevent and detect fraud, waste, and abuse in the administration of EPA programs and operations. This section includes information required by statute, recommended by Senate report, or deemed appropriate by the Inspector General.

Review of Legislation and Regulations

Section 4(a)(2) of the Inspector General Act of 1978, as amended, directs the Office of Inspector General to review existing and proposed legislation and regulations relating to Agency programs and operations to determine their effect on economy and efficiency and the prevention and detection of fraud and abuse. During this semiannual period, we reviewed three legislative and 36 regulatory items. The most significant items reviewed are summarized below.

H.R. 2086 - Local Empowerment and Flexibility Act of 1996

We shared the Agency's concern with the bill's provisions for waiver of environmental protections contained in law or regulation. We supported inclusion of a provision to prohibit the waiver of any provision enforcing environmental protection.

We pointed out that the waiver provisions were confusing, appeared contradictory and, if retained, should be strengthened by requiring the head of the affected agency to approve waivers for all matters under his/her responsibility.

We also supported prohibiting waivers for any requirement of the Budget and Accounting Procedures Act of 1950, the Cash Management Improvement Act of 1990, the Chief Financial Officers' Act of 1990, the Federal Grant and Cooperative Agreement Act of 1977, the Government Management Reform Act of 1994, the Office of Federal Procurement Policy Act of 1983, the Single Audit Act of 1984, and any amendments to these laws.

Proposed Revisions of the Federal Acquisition Regulation (FAR)

We disagreed with the proposal under FAR Case 93-009 to eliminate the provision requiring an offeror to disclose contingent fee arrangements, provide a contingent fee representation and agreement, and submit a statement of contingent and other fees. Such arrangements are inherently risky for the government because the agent's fee is unknown at the time of the award and increases during the contract. We recommended retaining existing FAR provisions concerning disclosure of contingent fees.

The proposed rule under FAR Case 93-10 would make most protest-related costs unallowable. As written, only those costs incurred by an "interested party" to defend against a protest would be allowable. We responded that the term "interested party" needed to be more clearly defined and disagreed that the costs incurred by a protestor should be unallowable, regardless of the outcome of the protest. We recommended that the proposed rule be revised to specify that protest costs are (1) reimbursable to a protestor who wins a protest because of inappropriate actions on the part of the contractor or the government during the award of the protested contract, and (2) unallowable when incurred by a party to defend against a protest when not requested by the contracting officer.

OPM's Proposed Rule On Suitability, National Security Positions, and Personnel Investigations

The provision to delete the reinvestigation requirement for public trust positions concerns us because EPA has a number of high-risk public trust positions, including criminal investigators, auditors, and those responsible for establishing Agency policy. To provide for assurance of the personal integrity of those occupying high-risk public trust positions, we recommended retaining the reinvestigation requirement.

Management Integrity Advisor (MIA) Roles and Responsibilities

At the request of the Comptroller, we commented on a draft document proposing to establish MIAs who would assist EPA's Senior Resource Officials (SRO) in implementing the Federal Managers' Financial Integrity Act. We recommended that the document specify that the MIA should report directly to the SRO, allowing the MIA to function without the undue influence of others and providing for sufficient access to personnel and information resources. Further, offices should understand that the MIA function is a primary duty and will not be as effective if burdened by collateral duties of equal importance. We also proposed enhancements to the MIA's duties, including recommending that the MIA should (1) refer conditions of significant weakness or possible impropriety to the OIG for review or consultative assistance as needed, (2) review changes to policy and procedures to ensure that controls are sufficiently described, and (3) stay abreast of developments which significantly affect office operations.

Government Bankcard Policy

In addition to encouraging greater use of government backcards, we recommended that the policy be revised to require the Agency's approving officials to attend the complete training program so that these officials would be knowledgeable about the policies and controls to prevent misuse.

The Office of Acquisition Management revised the document accordingly to require all bankcard approving officials be trained by December 1997 and, subsequently, set up a schedule of classes.

Suspension and Debarment Activities

EPA's policy is to do business only with contractors and assistance recipients who are honest and responsible. EPA enforces this policy by suspending or debarring contractors, assistance recipients, or individuals within those organizations, from further EPA contracts or assistance if there has been a conviction of, or civil judgment for, specific offenses, including the commission of any offense indicating a lack of business integrity or business honesty that seriously and directly affects the present responsibility of an entity or individual.

An entity or individual may also be debarred for any other cause of so serious or compelling a nature that it affects its present responsibility. Thus, an entity or individual need not have committed fraud or been convicted of an offense to warrant being debarred. Debarments are to be for a period commensurate with the seriousness of the cause, but generally do not exceed 3 years.

The EPA Suspension and Debarment (S&D) Division in the Office of Grants and Debarment operates the S&D program at EPA. The OIG assists the EPA S&D program by providing information from audits, investigations, and engineering studies; and obtaining documents and evidence used in determining whether there is a cause for suspension or debarment. During this period, cases with direct OIG involvement led to one debarment, 4 suspensions, and 2 compliance agreements, a total of 7 actions.

The seven actions are summarized below:

OIG Management Initiatives

Reinventing the Office of Inspector General

To meet Government Performance and Results Act requirements, a team of Office of Audit (OA), Office of Investigations (OI), and Office of Management (OM) staff is developing an OIG Strategic Plan that will guide our future audit and investigative activities.

All three offices are preparing or enhancing performance measures, . which will be used to assess success in achieving our performance goals. OA, OI, and OM are also working on customer service plans that will identify who our customers are, how often we will survey them, what we will ask, and how we will use responses to improve operations. OI, as a separate initiative, will meet with high-level Agency managers to get feedback on investigative reports.

These offices continue to streamline OIG Manual Chapters, bulletins, and guidance, to eliminate one-half of internal regulations, as required by Executive Order. Also, they are participating in developing a new OIG management information system that will consolidate and enhance the usefulness of information on the several systems we've been using. Our system plan is being developed by a GSA contractor and will include input from both Headquarters and field office staff. The plan, which specifies our system need; computer equipment, software, telecommunications requirement; and cost estimates and schedules, should be completed in August 1996.

OA and OI are reviewing workload to determine long-range staffing needs (office locations, staff grade levels, and numbers). As part of that project, OA is reassessing its approach to single audit activities, contract audits and organization, and state revolving funds audits. OA and OI results will form the basis for the OIG position management plan that will allocate resources among offices and locations. OM is reorganizing to further streamline its operations. It will have two divisions and two staffs reporting to the AIG. Staff skills will be enhanced as they acquire skills in additional aspects of organizational support activities.

OA and OI are also working together to implement a contract audits strategy, developed by a joint workgroup, to identify contractors with common indicators for high risk and vulnerability.

OA is completing the ongoing work of several Quality Action Teams addressing (1) revised report writing guidance, (2) auditor career ladder promotion criteria, and (3) decentralized reporting, and is continuing work on an automated audit process and a writing proficiency program.

OI is developing and documenting physical fitness standards and an investigator training profile. The standards and training, including physical techniques and firearms training, will serve in part to support deputization for investigators.

The Brown Bag Institute of Learning

As part of our effort to do more in-house training, we continued a lunchtime training program called the Brown Bag Institute of Learning. This program, hosted by various OIG managers, features videotapes, case studies, discussions, and presentations by experts on subjects pertinent to OIG work.

During this reporting period, we presented Advanced Interviewing in November 1995, with Laura Olsen as instructor. She reviewed basic interviewing concepts for investigators and auditors, and concluded with an in-depth session on advanced interviewing principles.

Computer Fraud training was held in December 1995, with instructor Carlton Fitzpatrick. He focused on the unique characteristics of computer-related investigations and audits and on the perspectives of planning and demonstrating financial investigations and audits.

Both instructors are from the Federal Law Enforcement Training Center.

Committee on Integrity and Management Improvement

The Committee on Integrity and Management Improvement (CIMI) was established in 1984 by EPA Order 1130.1 to coordinate the Agency's effort to minimize the opportunities for fraud, waste, and mismanagement in EPA programs and activities. CIMI strives to continually increase employee awareness and understanding of various Agency policies and procedures. The Committee is composed of senior EPA program and regional officials and is chaired by the Inspector General.

Professional Societies and Associations

EPA encourages employee participation in professional societies and associations that relate to the employee's organization and the Agency's mission because it can enhance individual and organizational performance and morale. CIMI issued an awareness bulletin to highlight EPA policy and to alert employees that conflict of interest questions can arise.

The bulletin emphasized that an employee (1) may not participate "personally and substantially" in any matter which affects the financial interests of an organization in which he/she serves as an officer, director, or employee; (2) should consult his/her Deputy Ethics Official, even if not an officer or director, before participating in any EPA matter involving the organization; and (3) may not attempt to influence another Federal Government organization on behalf of an outside organization. Similarly, an employee involved in communications with an organization in which he/she is a member should have a formal designation indicating that the employee is not representing the organization or participating in any EPA decisions concerning the organization.

The bulletin also indicated that employees should perform work concerning organizations and societies on their own time. However, with supervisory approval, an employee holding a leadership position may be allowed reasonable amounts of time to prepare for meetings. Finally, EPA generally will pay for the travel of employees officially representing the Agency at organization functions because a professional society or association may pay only if the matter falls within the circumstances described in EPA Ethics Advisory 92-26.

Hotline Activities

Th OIG Hotline opened 10 new cases and completed and closed 15 cases during the reporting period. Of the cases closed, 4 resulted in environmental, prosecutive, or administrative corrective action, while 11 did not require action. Cases that did not have immediate validity due to insufficient information may be used to identify trends or patterns of potentially vulnerable areas for future review.

The following are examples of corrective action taken as a result of information provided to the OIG hotline:

Personnel Security

The Personnel Security Program is one of the Agency's first-line defenses against fraud. The program uses background investigations and National Agency Checks and Inquiries to review the integrity of EPA employees and contractors.

During this semiannual reporting period, the Personnel Security Staff reviewed and adjudicated 384 investigations. The following administrative actions were taken as a result of investigative findings:

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