EPA's Contract Management:

Audit Backlogs and Audit Follow-up Problems Undermine EPA's Contract Management

T-RCED-91-5: Published: Dec 11, 1990. Publicly Released: Dec 11, 1990.

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GAO discussed its review of the Environmental Protection Agency's (EPA) contract audit coverage and follow-up of audit findings, focusing on its audits of six large contractors. GAO noted that EPA: (1) heavily relied on contractor support to accomplish its mission, with contract obligations exceeding $1 billion, about one-fifth of its total budget; (2) spent the most contract dollars on its Superfund program, with estimated obligations exceeding $600 million; and (3) spent nearly 90 percent of its contract dollars on cost-reimbursable contracts with few cost-control incentives for contractors. GAO also noted that: (1) EPA had a serious backlog of incurred cost and financial audits; (2) contract closeouts were untimely partly due to audit backlogs; (3) auditing agencies' low priority on incurred cost audits, the EPA Inspector General's (IG) audit coordination and management problems, resource limitations, and funding delays contributed to audit and closeout delays; (4) EPA needed timely audits to effectively manage contracts and to deter and detect waste, fraud, and abuse; and (5) EPA failed to develop a reliable audit follow-up system to track corrective action progress and identify weaknesses for management attention.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: The EPA Contract Audit Task Force is developing a strategy to improve audit coverage, which includes better coordination with other federal agencies. OMB has also set up a contract audit task force. The OMB task force has developed data on the size of the audit backlog, projected audit workload, and quality of audit coverage. The OMB final report will include recommendations.

    Recommendation: The Administrator, EPA, should work with the other federal agencies, including the Office of Management and Budget (OMB), to develop ways to expedite audit coverage of contractors for which EPA relies on other agencies to audit.

    Agency Affected: Environmental Protection Agency

  2. Status: Closed - Not Implemented

    Comments: EPA's IG believes that its system is accurate and GAO examples were atypical.

    Recommendation: To address more fully problems of contract auditing, the Inspector General, EPA, should correct and accurately maintain the Office's database that tracks completed audit reports.

    Agency Affected: Environmental Protection Agency: Office of the Inspector General

  3. Status: Closed - Implemented

    Comments: EPA's IG assumed cognizance for 14 contractors and has requested about 90 additional positions for contract auditing. EPA has completed a contract audit implementation plan with milestone dates.

    Recommendation: To address more fully problems of contract auditing, the Inspector General, EPA, should develop a plan for auditing contracts that EPA audits, including identifying and requesting the resources required to reduce the audit backlog within a reasonable period and keep abreast of future requirements.

    Agency Affected: Environmental Protection Agency: Office of the Inspector General

  4. Status: Closed - Implemented

    Comments: IG reported actions underway to improve contract audits in its September 1991 report, but did not disclose the size of the backlog.

    Recommendation: To address more fully problems of contract auditing, the Inspector General, EPA, should report the problem of obtaining timely audits of EPA contracts and any progress toward correcting it in the IG required semiannual reports to Congress.

    Agency Affected: Environmental Protection Agency: Office of the Inspector General

  5. Status: Closed - Implemented

    Comments: EPA concurred and is currently developing closeout procedures for headquarters contracts and will expand this to other contracting locations by late 1991. An EPA TQM group developed procedures for closing out expired contracts. These procedures are under final review and will be included in unit 2 of the EPA Acquisitions Handbook in May 1992.

    Recommendation: The Administrator, EPA, should develop written procedures for closing out expired contracts, including better defining closeout responsibilities and establishing time frames for meeting them.

    Agency Affected: Environmental Protection Agency

 

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