Environmental Cleanup:

Inadequate Army Oversight of Rocky Mountain Arsenal Shared Costs

NSIAD/AIMD-97-33: Published: Jan 23, 1997. Publicly Released: Jan 31, 1997.

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Pursuant to a congressional request, GAO reviewed cleanup costs claimed by Shell Oil Company and shared by Shell and the U.S. Army at Rocky Mountain Arsenal, Colorado, focusing on: (1) selected aspects of the processes that the Army uses to review cost claims under its settlement agreement with Shell; and (2) the adequacy of these processes.

GAO found that: (1) the process the Army uses to review claims under its cost sharing for cleanup at the arsenal has not been sufficient to ensure that costs claimed by Shell are appropriate; (2) specifically, the review process does not always ensure that sufficient documentation is available to review claimed costs and formal agreements exist to define which costs should be shared; (3) the review process generally does not look at the detailed documentation supporting cost claims; (4) GAO's work showed in most cases further information was available, but in some cases it was not; (5) also, the review process does not have effective checks and balances, such as separation of key duties and responsibilities and independent reviews; (6) for example, staff associated on a daily basis with the shared cost system also conduct the annual assessment of the shared costs; and (7) the combination of limited documentation and inadequate controls places the government at the risk of paying for unwarranted charges.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: The Army established a standing operating procedure for the review and approval of Shell's cost claims in December 1996.

    Recommendation: The Secretary of the Army should establish specific procedures for the examination of Shell's cost claims and documentation, including costs of its contractors and subcontractors.

    Agency Affected: Department of Defense: Department of the Army

  2. Status: Closed - Implemented

    Comments: The standing operating procedure on cost allocability was completed on January 31, 1997 and the standing operating procedure on capital assets/real estate was completed February 26, 1997.

    Recommendation: The Secretary of the Army should establish standard procedures for the approval and documentation of supplementary agreements regarding the allocability of costs and treatment of capital assets and real estate.

    Agency Affected: Department of Defense: Department of the Army

  3. Status: Closed - Implemented

    Comments: DOD described the current procedures used, separation of duties, and how the Army will continue to look for organizational or procedural ways to improve independent oversight of the Army-Shell shared costs. Under a new procedure, internal review, U.S. Army Industrial Operations Command, Rock Island, performs quarterly reviews (3 done thus far)and separately, the Army Audit Agency, at the request of the Acting Secretary of the Army, is scheduled to perform a review.

    Recommendation: The Secretary of the Army should require that such key duties and responsibilities as recording and reviewing transactions be performed by different individuals.

    Agency Affected: Department of Defense: Department of the Army

 

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