Environmental Protection Agency's Construction Grant Program:

Stronger Financial Controls Needed

CED-78-24: Published: Apr 3, 1978. Publicly Released: Apr 3, 1978.

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Federal Water Pollution Control Act Amendments authorized grants for constructing wastewater treatment facilities to prevent untreated or inadequately treated sewage and other waste discharges into waterways. Grant recipients or grantees (state, municipality, or intermunicipal or interstate agency) can receive up to 75 percent of the funds from the federal government. Because of the magnitude of federal funds being spent for constructing waste treatment facilities and the potential for improprieties in a program this large, the financial procedures and fiscal controls exercised by the Environmental Protection Agency (EPA) and grantees in the administration of the construction grant program were reviewed.

Most grantees included in the review were not maintaining required accounting records and, as a result, many requested and obtained improper reimbursements from EPA. Both large and small grantees had this problem. Grantees in some regions have delegated the task of preparing EPA progress payment requests to consulting engineers. Some grantees need to better account for project funds or expenditures and to identify costs which are considered unnecessary, unreasonable, or unallowable for federal participation. Present grantee procurement practices for obtaining consulting engineer and construction contractor services for the projects do not assure grantees that the lowest practicable fees and prices were obtained. Some of the EPA regional offices were computing progress payments to grantees on costs that included amounts withheld by the grantee from construction contractor billings, a practice contrary to regulations.

Recommendation for Executive Action

  1. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: The Administrator of EPA should: assure that grantees establish and maintain adequate accounting systems for waste treatment projects by providing written instructions and onsite guidance, provide guidance to grantees which would facilitate preparation of requests for EPA progress payments, advise and emphasize to the grantees their responsibility to review and assure themselves of the accuracy of consulting engineer and contractor billings, and establish standard conditions for contracts so that the method and amount of payment will be consistent. The Administrator should also: place greater emphasis on the use of smaller construction bid packages and separate and combined bidding techniques, determine whether any significant amounts of interest were earned by grantees on Federal funds retained from construction contractors, and reemphasize to regional offices the importance of the progress payment review process.

    Agency Affected:


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