Inspector General Advises EPA on Grant Funding

From 2005 to 2007, the U.S. Environmental Protection Agency took actions to implement timeframes for Border Program projects, reduce the scope of projects, and reduce unliquidated obligations of projects.

The EPA Office of Inspector General said, however, that the agency needs to make additional changes to the process it uses to manage the funds Congress appropriates for water infrastructure improvements along the U.S.-Mexico Border.

In Fiscal Years 2005 and 2006, EPA awarded $35.1 million to the North American Development Bank to construct Border Program projects that could not be built until they were planned and designed, which takes about 2 years. Since 1998, the bank has accumulated an unliquidated balance of $233 million, because EPA awarded grants to construct projects before design was complete. EPA managers told the Inspector General's office that they provided grant funds in advance to ensure funds were available to build projects once planning was completed. EPA staff also said they felt pressured to obligate the money to avoid a reduction in program funding.

If this process continues, between $34 million and $57 million of the funds Congress appropriated for the program in Fiscal Years 2007 and 2008 will not be needed until Fiscal Year 2010 or beyond.

The Inspector General's Office also noted that EPA Region 6 Border Program grant work plans did not include specific projects, measures, milestones, or costs associated with projects. The work plan for EPA Region 9's Fiscal Year 2006 grant included total cost of projects, but did not include sufficient detail about how much the grant funded for the projects. EPA requires that all grant work plans contain objectives, specific tasks, a schedule or milestones, project measures, and detailed budgets. When EPA awards grants with work plans that do not fulfill all requirements, there is an overall reduction in accountability for the projects and funding.

The Office of Inspector General recommended that EPA:

•Require project planning and design be completed before awarding grant funds for construction,

•Develop a plan to fund other projects with the unobligated funds, and

•Prepare work plans that contain required project information.

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