GOVERNMENT
EPA to overhaul contract management program The Environmental Protection Agency is taking several steps to revamp its massive and mismanaged contract program, Christian R. Holmes, an assistant EPA administrator, has announced. "This overhaul will change the way EPA operates internally and does business with private companies that provide a range of services to the agency/' he says. The changes are in response to EPA inspector general audits of the program; dogged Congressional oversight, especially by Rep. John D. Dingell (D.-Mich.), chairman of the House Energy & Commerce Committee's oversight subcommittee; and recommendations of a standing committee of senior EPA officials established by EPA Administrator William K. Reilly. Holmes is chairman of the standing committee, which reviewed the performance of 4000 contract officers who manage 744 contracts for the agency. The potential value of the existing contract program through 1998 is $13.2
billion. And its reach is awesome, penetrating every EPA program and activity. Long-standing criticism of the program fingers mismanagement, fraud, abuse, and overreliance on contractors for work EPA staffers should be doing. In a March hearing before Dingell's subcommittee, EPA inspector general John C. Martin announced that "contract mismanagement at EPA has reached crisis proportions. The potential for gross abuse, waste, and mismanagement is unacceptably high." Since then, EPA officials formed the standing committee, which "found problems that, frankly, are not pleasant to report," Holmes says. The source of EPA's contracting problems is a cultural mind-set "that views our environmental protection mission as more important than how we manage contracts," the committee finds. Changing that mindset will be daunting. Although the agency's contract pro-
EPA has taken some steps to revamp contract program... 4Ï
Canceled three contracts, valued at $9 million, held by Asci to provide technical support to Environmental Protection Agency's Duluth, Minn., lab but which were improperly awarded. 4 Canceled $10 million contract with Computer Sciences Corp. that involved handling confidential business data at EPA's National Contract Payments Center. Forty-four EPA staffers will now handle sensitive work once performed by 47 CSC employees. * Scaled back by several hundred million dollars the agency's largest
information management contract by canceling the fourth and fifth years of a five-year, $347 million information management contract. EPA deemed that this contract with CSC made the agency overly dependent on one contractor. Instituted policy of refusing to accept indirect overhead costs considered to be frivolous. In the past, charges for such things as gold watches and parties have been allowable technically under federal accounting guidelines; these will no longer be accepted by EPA.
.. . and has plans to implement several others * Use agency's suspension and debarment program to discipline poor contract performers. Currently, only companies violating laws are suspended or excluded from EPA contracts. Establish deputy assistant administrator for contract management, and appoint and assign senior procurement officials to every EPA office and region. These new senior officials will be responsible, and held accountable, for effective contract management.
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JULY 20,1992 C&EN
Require formal, independent estimates of contract costs from other governmental agencies such as the General Services Administration before work assignments are issued to contractors. Establish comprehensive training program to ensure that EPA employees have tools and skills needed to manage contracts properly. * Undertake national review to ensure that governmental and contractor-related functions are administered appropriately and separately.
gram has increased 237% in total dollars since 1981, the size of EPA staff—a significant portion of which is devoted to contract management—has grown only 25%. Holmes says EPA is aggressively funding the inspector general's office, and by the end of fiscal 1993, one out of every 40 EPA employees will work in that office. According to Holmes, the agency has taken immediate steps to implement the recommendations of the inspector general and the standing committee. Among these are canceling the problematic contracts of Computer Sciences Corp. (CSC) and Asci, amounting in total to hundreds of millions of dollars, and refusing to accept contractors' charges for indirect costs the agency judges to be frivolous and inappropriate. Longer term changes will include increased funding for contract management, designation of high-level officials who will be accountable for contract management, and comprehensive procurement training programs for all EPA employees. In addition, to improve controls on costs and performance, all contracts, grants, suspension, and debarment functions will be consolidated under a new deputy assistant administrator for contract management. When EPA recently released the recommendations of the standing committee, Dingell wondered why it had taken the agency so long "to realize that its multibillion-dollar contracting program was in a shambles." He promptly held a hearing earlier this month to discover how "this management fiasco occurred," and to assess EPA's plan for extricating itself from the morass. One issue broached at the hearing was when is it appropriate for EPA to hire contractors for a particular task and when is it better to assign EPA employees to do that work. In several audits, the inspector general found that EPA relied too heavily on contractors to do the agency's work. CSC, for example, was hired to run some of the agency's mail rooms, libraries, and payroll systems. The inspector general found these functions inappropriate. EPA agreed, and the last two years of a five-year contract with CSC were phased out. Despite these corrective measures, Dingell warned that Congressional oversight will continue. "This hemorrhaging of taxpayers' money must and will stop." Lois Ember
