In a letter Monday to EPA Administrator Christine Todd Whitman, Bond wrote that: "It is not enough to identify only the grants management problems which fall into the agency's lap. EPA will not find abuses by its nonprofit grantees if it does not look for them. This GAO report brings grants management to the forefront as an opportunity for better EPA management and environmental stewardship."

   The letter accompanied release of the report, in which the GAO maintains that EPA views its grant oversight activities as a customer-service mechanism for grantees. Bond, Chairman of the VA/HUD Subcommittee on Appropriations, said he is particularly troubled by the finding that some EPA grant managers did not believe it was their responsibility to determine whether grantees were spending funds on improper costs.

   "Every dollar EPA allows a grantee to waste or misspend is a dollar EPA prevents from protecting the environment," Bond told Whitman. "Grantees are not the agency's customer. Federal taxpayers, our families, communities and the environment itself are EPA's customers.  I hope you will assure those managers that is it very much their responsibility to protect EPA resources from all forms of nonprofit grantee abuse."

   Often nonprofit organizations do not possess the experience, staffing, technical expertise or resources to ensure grant funds are protected adequately. In fact, EPA grantees have been caught using agency grant funds for improper purposes, or so-called "unallowable costs," including illegal lobbying and legal expenses.

   In 1996, Congress heard testimony from the EPA Inspector General (IG) that agency grant resources were vulnerable to fraud, waste and abuse. The IG noted that EPA had drastically increased the amount of money sent to nonprofit grantees and had awarded over $1 billion during the previous four years - an average of 1,000 nonprofit grantees per year.

   At the same time, the IG found that EPA did not ensure adequate protection for those funds, saying that: "In effect, EPA merely awarded the assistance agreements and paid the recipients' claims without knowing whether the costs were legitimate or the work being paid for was performed."

   The IG's report and Congressional oversight forced then Administrator Carol Browner to declare EPA oversight of grants as a material management weakness under the "Federal Managers' Financial Integrity Act" process. The EPA prepared a corrective action plan and implemented several measures, including additional training and a new grants management policy.

   Bond said he has been "encouraged by EPA's efforts to clean up its mess," but remains troubled by GAO's report that the changes have not completely corrected weaknesses in the agency's oversight management.

   Other key findings in the GAO report "Environmental Protection: EPA's Oversight of Nonprofit Grantees' Costs Is Limited":

   EPA oversight activities under its new policy are not likely to identify improper nonprofit grantee spending on unallowable costs.  

   EPA's policy is not designed to identify unallowable cost spending.

   EPA grant managers lack the training to identify whether grantees are spending funds on unallowable costs.

   EPA grant managers rarely select nonprofit grantees for the in-depth review necessary to determine how they are spending grant funds.  

   KEYWORDS:

   ENVIRONMENT, GOVERNMENT

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