Shoddy Contracting Practices Lead to Overbilling at EPA

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A limited review by the inspector general found the agency had paid of unallowable costs.

The Environmental Protection Agency is overpaying contractors due to poor contract management controls, according to an audit released Monday by the agency’s office of inspector general.

The audit—conducted from March 2018 to February 2019—examined 11 of 64 total invoices made through a single task order on a $100 million IT contract awarded in 2011 to SRA International following a response to an anonymous hotline complaint about invoices and payments. According to the audit’s “limited review,” all 11 invoices EPA IG tested within the task order “did not comply with contract requirements,” leading to an overbilling of more than $5,100 paid to the contractor.

“Our limited review noted $5,158.29 for an unallowable fixed fee billed and paid by the EPA,” the audit states. “However, without adequate review of all invoices submitted under [the task order], the EPA does not know whether there are further unallowable costs that it has paid for under the task order.”

The IG cites various reasons issues occurred, including staffing problems, high turnover, poor contract file management disorganization and inadequate oversight.

In response to the audit, the EPA’s Office of Acquisition Solutions promised to “investigate and determine whether overbilling by the contractor occurred and whether EPA overpaid the contractor.” In addition, EPA officials agreed to require the contractor to refund the overbilled amount—$5,158.29—identified in the sample invoice from the task order. In all, EPA agreed to comply with all seven recommendations put forth by the EPA IG, most of which involve improving contract management, internal controls and oversight.

The audit is the latest in a series of acquisition and contractor-related audits performed by the EPA IG in recent years. Last August, a prior audit found EPA had placed $1.2 billion in taxpayer funds “at risk” by not taking advantage of payment discounts, not avoiding interest penalties or critical oversight and not having a plan to implement e-invoicing.