Federal Reports

Why We Did This Report

We initiated an audit to determine whether the EPA is awarding water funding for congressionally directed spending and community project funding, commonly known as “earmarks,” in accordance with federal and EPA requirements. While conducting work on this audit, which remains ongoing, we are issuing this report to inform the Agency that the OIG has concerns about a lack of post-award monitoring documentation for the drawing down of these grant funds.
 

Summary of Findings

The EPA did not always ensure that its personnel documented why grant recipients did not draw down earmark funds in their monitoring reports. The EPA’s Policy on Compliance, Review and Monitoring requires regional office personnel to conduct annual grant monitoring, which may include, as appropriate, whether expended and remaining funds are reasonable.

This letter to Congress reports on NCUA OIG's assessment of the NCUA's 2025 compliance under the Payment Integrity Information Act of 2019 (PIIA).

Since 1943, the Regents of the University of California have managed Lawrence Berkeley National Laboratory (LBNL) for the Department of Energy’s Office of Science. LBNL’s mission is to expand the frontiers of knowledge and deliver solutions for science and humankind. In support of this mission, LBNL acquires consultants to provide independent expert advisory and/or assistance services of a technical or professional nature on a fee or per diem basis. LBNL uses subcontracts to commit resources and formalize its relationships with consultants.

We initiated this audit to determine whether LBNL managed its professional and consultant services agreements in compliance with applicable laws, regulations, and contract requirements.

We found that LBNL did not manage its professional and consultant services agreements in compliance with applicable laws, regulations, and contract requirements. Specifically, we found that LBNL: (1) entered into professional and consultant services agreements that did not meet the Federal Acquisition Regulation definition; (2) did not always obtain required conflicts-of-interest disclosures; (3) entered into consultant agreements with former Laboratory employees in contradiction to its policy; (4) retained consultants for longer than 5 years; (5) determined price reasonableness exclusively on the General Services Administration’s labor rates tool; (6) paid invoices from consultants that often lacked sufficient detail to support the services rendered; and (7) may have paid unallowable travel costs. Finally, LBNL did not ensure segregation of duties within the procurement and oversight of professional and consultant services agreements.

We attributed these issues to weaknesses in LBNL’s internal policies and procedures, failure to adhere to internal policies and procedures, and misalignment of internal policy to Department policies. These weaknesses limit LBNL’s ability to provide reasonable assurance that professional and consultant services agreements comply with laws and regulations and that only allowable costs are incurred and claimed.

To address the issues identified in this report, we have made 10 recommendations that, if fully implemented, should help ensure that professional and consultant services agreements are managed in accordance with applicable laws, regulations, and contract requirements.    

This audit was performed by CohnReznick LLP (CohnReznick) on behalf of the Department of Energy Office of Inspector General and examined Honeywell Federal Manufacturing & Technologies, LLC’s (HFMT) costs incurred and claimed for fiscal years 2018 through 2020 under management and operating contract No. DE-NA0002839.

The audit’s objective was to determine if costs charged to Department contract No. DE-NA0002839 for fiscal years 2018 through 2020 were allowable, allocable, and reasonable in accordance with applicable laws, regulations, and contract terms.

CohnReznick performed the audit in accordance with generally accepted government auditing standards.

CohnReznick did not identify any questioned costs for direct and indirect labor, direct travel, and indirect costs included within HFMT’s Statements of Costs Incurred and Claimed submissions for fiscal years 2018 through 2020. Costs outside of these cost elements were outside of the audit’s scope.

No recommendations are being made with this report as it was determined that HFMT’s costs for direct and indirect labor, direct travel, and indirect costs within its Statements of Costs Incurred and Claimed submissions for fiscal years 2018 through 2020 were acceptable.

HFMT concurred with the audit results as reported.  

Our Objective(s)

To assess the Federal Railroad Administration's (FRA) (1) internal controls related to recording and monitoring of its accountable personal property (APP) records and (2) the accuracy and completeness of FRA's APP records. 

Why This Audit?

We have previously identified issues in the Department of Transportation's (DOT) Operating Administration property management, including incomplete or inaccurate inventory information. Specifically, our prior work found that FRA had not capitalized any of its eligible equipment worth up to $53 million. Effective APP management is crucial to facilitating accurate and complete Federal financial reports. 

What We Found

FRA's policies and procedures for recording and monitoring accountable personal property are outdated and ineffective. 

• FRA Order 4601.1E, Personal Property Management, which established policies and procedures for APP management, had not been updated since it was published in 1993 as of the end of fiscal year 2023. 
• The Order does not comply with the Federal Personal Property Management Act of 2018 because it does not meet its requirements for APP inventories. It also does not provide clear and complete guidance for accurate property management using the FRA Asset and Space Management (FASM) system. 

FRA's records for APP are incomplete and inaccurate.

• FRA does not record all APP timely and accurately. Of the 1,002 assets associated with FRA's Automated Track Inspection Program, FRA did not record 250 of these assets in FASM within a year of the system's inception and did not always correctly record asset location. 
• FRA's FASM contains inaccurate records for 21.82 percent of the 13,190 items in our APP universe, and 2.68 percent of the assets in the universe did not have a recorded acquisition date. FASM also does not contain acquisition documentation for 99.6 percent of the 13,190 APP items in our universe with a total value of over $50 million. 
• FRA's FASM does not meet Federal Financial Management System Requirements for a property management system. Specifically, the system cannot generate an audit trail, and it does not allow the calculation of the data necessary to support FRA's financial accounts. 
• FRA does not always remove its disposed-of APP assets from active asset tracking. Of 681 assets for which FRA provided disposal documentation, 69 percent were not marked as disposed in FASM. 

Recommendations

We made 8 recommendations to improve FRA's management of APP.

We found that the photovoltaic systems (PV) and water tanks installed in participant’s homes had deficiencies.  Such deficiencies included inverters and batteries with signs of rust; water intrusion that could lead to electrical shorts; electrical conduits that were degrading due to direct exposure to the sun; electrical conduits with water; and water tanks that were leaking, overflowing, or both.  Based on statistical projections, at least 57 percent of installations had at least one deficiency.  In addition, we noted that almost 33 percent of inverters and battery storage systems were not installed in accordance with the installer agreements and manufacturers’ specifications.  The contractors who installed the batteries and inverters exposed them to the elements and direct sunlight, contrary to the terms of the agreements and manufacturer specifications.  In addition, we determined that PRDOH’s installation oversight was inadequate.  PRDOH disregarded its own contract terms and the equipment manufacturers’ guidelines, which required the equipment to be protected from direct sunlight and the elements.  Although quality control inspections were performed, the inspections did not identify that the installations were improperly completed.  PRDOH’s actions could lead to manufacturers voiding equipment warranties, equipment lasting less than the required timeframe, and malfunction of improperly installed equipment.  Further, PRDOH spent more than $19 million on installation services that do not comply with the agreements and manufacturers’ specifications.

We also found that PRDOH did not provide adequate support to justify its contract amendments with installers to perform additional subtasks.  PRDOH provided a memorandum to support its contract amendment, which cited that 99 percent of repair cases needed corrections to electrical components to install the PV system.  However, PRDOH could provide support for only 2 percent of the repair cases, which significantly contradicts the 99 percent figure.  This condition occurred because PRDOH’s original scope of work and contract was vague and did not specifically list the preliminary electrical work and three subtasks that PRDOH’s installers completed as part of the installations.  By making these contract amendments, rather than clearly including the work in the original scope of work and contracts, PRDOH lost bargaining power and likely spent more than was necessary. As a result, PRDOH did not assist as many disaster recovery program participants as it could have without the costly $31 million contract amendments. Finally, we also found that the methodology PRDOH used when calculating household income for eligibility purposes of the CEWRI program led to inconsistent eligibility determinations among program participants with similar income amounts.  This occurred because PRDOH incorrectly interpreted and applied the IRS 1040 methodology when determining the participant’s household income.  As a result, PRDOH could not ensure that it adequately or appropriately distributed disaster recovery funds among low- and moderate-income program participants to whom the program is meant to benefit.

We recommend that the Director of the Office of Disaster Recovery instruct PRDOH to (1) remediate all outside installations that are directly exposed to sunlight and the elements or repay HUD more than $19 million from non-Federal funds, (2) submit supporting documentation so HUD can evaluate the basis of the contract amendments and determine the eligibility of more than $31 million in disaster recovery funds, (3) structure future contracts to ensure the scope of work is clearly defined so that all parties understand the agreement, and (4) re-evaluate the methodology used to determine income eligibility to ensure a consistent application that improves the outcomes of the program.