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.

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