[Audit Report on Environmental Protection Agency Grants,
Department of Public Works, Government of the Virgin Islands]
[From the U.S. Government Printing Office, www.gpo.gov]

Report No. 00-I-696

Title: Audit Report on Environmental Protection Agency Grants,
       Department of Public Works, Government of the Virgin Islands

  
  Date: September 29, 2000


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  U.S. Department of the Interior
  Office of Inspector General
  
  
  EXECUTIVE SUMMARY
  Environmental Protection Agency Grants,
  Department of Public Works,
  Government of the Virgin Islands
  Report No. 00-I-696
  September 2000
  
  
  BACKGROUND
  
  The Virgin Islands Department of Public Works responsibilities include (1) repairing,
  maintaining, and operating the sewage disposal system and (2) enforcing and administering
  all regulations and laws related to the use of the sewage disposal system.  During the period
  of September 1984 through September 1999, the U.S. Environmental Protection Agency
  (EPA) awarded 10 grants totaling about $27.6 million to Public Works for the construction
  and rehabilitation of wastewater treatment plants; the rehabilitation of pump stations and
  sewer lines; the purchase and installation of emergency generators at pump stations; and the
  execution of used oil management, solid waste management, and pollution prevention
  programs.  Six of the grants, totaling $22.2 million, were administered by Public Works, and
  four of the grants, totaling $5.4 million, were administered by the U.S. Army Corps of
  Engineers through a memorandum of agreement between the Corps and the Government of
  the Virgin Islands.  Based on grant data provided by Public Works and the Corps, we
  determined that as of September 30, 1999, EPA had provided $10.6 million for
  reimbursement against the 10 grants, leaving available grant balances totaling about
  $17 million.
  
  OBJECTIVE
  
  The objective of the audit was to determine whether (1) Public Works complied with grant
  terms and applicable laws and regulations; (2) charges made against grant funds were
  reasonable, allowable, and allocable pursuant to the grant agreement provisions; (3) funds
  received through electronic transfers were appropriately deposited to and accounted for in
  the financial management system; (4) and drawdowns were made in accordance with the
  Cash Management Improvement Act of 1990.  
  
  RESULTS IN BRIEF
  
  Public Works needs to improve its administration of Federal grants awarded by EPA.  The
  Public Works Environmental Engineering Division needs a Director to provide overall
  management of the program grants, staff who are knowledgeable of the specific purposes of
  the grants, procedures to document the time charged to the grants, better coordination with
  the Public Works Grants Management Unit to timely complete financial status reports and
  requests for reimbursement, and improved coordination with the Corps to obtain supporting
  documents for costs incurred on Corps administered projects.  Furthermore, as of
  September 30, 1999, Public Works had not used grant funds of about $16.6 million that were
  available for the construction of two wastewater treatment plants and funds of $120,000 that
  were available for a used oil management program, and it had not requested reimbursement
  for administrative expenditures totaling $63,819.  We also determined that of the
  $10.6 million that had been reimbursed by EPA, costs of $9.3 million were eligible for
  reimbursement and costs of $1.3 million billed by the Corps were unsupported.  In addition,
  we noted that the Corps may have incurred expenditures of $715,914 in excess of amounts
  reimbursed by EPA under two of the grant projects. 
  
  RECOMMENDATIONS
  
  We made 12 recommendations to the Governor of the Virgin Islands to improve grant
  program administration.
  
  AUDITEE COMMENTS AND OIG EVALUATION
  
  Based on the response from the Governor of the Virgin Islands, we considered two
  recommendations resolved and implemented, four recommendations resolved but not
  implemented, and six recommendations unresolved.
    V-IN-VIS-009-99-M
  
  
  
  
  
  
  
  September 29, 2000
  
  AUDIT REPORT
  
  Honorable Charles W. Turnbull
  Governor of the U.S. Virgin Islands
  No. 21 Kongens Gade
  Charlotte Amalie, Virgin Islands 00802
  
  Subject:  Audit Report on Environmental Protection Agency Grants, Department of  Public
  Works, Government of the Virgin Islands (No. 00-I-696)
  
  Dear Governor Turnbull:
  
  This report presents the results of our review of Environmental Protection Agency  (EPA)
  grants for construction of wastewater treatment facilities and related activities administered
  by the Department of Public Works, Government of the Virgin Islands.  The objective of the
  audit was to determine whether (1) Public Works complied with grant terms and applicable
  laws and regulations; (2) charges made against grant funds were reasonable, allowable, and
  allocable pursuant to the grant agreement provisions; (3) funds received through electronic
  transfers were appropriately deposited to and accounted for in the financial management
  system; (4) and drawdowns were made in accordance with the Cash Management
  Improvement Act of 1990.  
  
  BACKGROUND
  
  The Virgin Islands Code (3 V.I.C. ï¿½ 138) states that the Department of Public Works is
  responsible for, among other duties, (1) repairing, maintaining, and operating the sewage
  disposal system and (2) enforcing and administering all regulations and laws related to the
  use of the sewage disposal system.  These duties were performed primarily by the
  Department of Public Works Environmental Engineering Division.
  
  The Environmental Engineering Division was authorized about $457,000 from the
  Government's General Fund for 12 positions for fiscal year 1998 and about $208,000 for 7
  positions for fiscal year 1999.  As of September 30, 1999, four positions were filled (two
  environmental engineers, a waste oil coordinator, and a project manager), three positions
  were vacant (a director, an assistant director, and a solid waste coordinator), and five
  previously authorized positions had been deleted from the budget (an assistant director, two
  environmental planners, a waste oil coordinator, and a laboratory analyst). 
  
  In March 1984, the United States (through EPA) filed a complaint in the U.S. District Court
  of the Virgin Islands against the Government of the Virgin Islands for violating certain
  provisions of the Clean Water Act (33 U.S.C. ï¿½ 1251) at (then) eight wastewater treatment
  plants.  In September 1985, the United States and the Government of the Virgin Islands
  reached an agreement that required the Government of the Virgin Islands to (1) implement
  improvements in the daily operation of its wastewater treatment plants, (2) construct the
  Mangrove Lagoon wastewater treatment plant, (3) address the violations in the United States
  complaint, (4) pay a civil penalty of $375,000, and (5) pay $2 million into a corrective action
  trust fund.  In March 1991, the United States filed a motion to hold the Government of the
  Virgin Islands in civil contempt, primarily for not constructing the Mangrove Lagoon
  wastewater treatment plant.  In December 1994, the United States and the Government of the
  Virgin Islands entered into an amended consent decree to come into and remain in
  compliance with applicable Federal and territorial laws governing wastewater discharges for
  11 existing wastewater treatment plants and 2 plants that were required to be constructed as
  a result of the amended consent decree.  As of September 30, 1999, the Mangrove Lagoon
  wastewater treatment plant had not been constructed, and the Cruz Bay wastewater treatment
  plant was expected to be completed in June 2000.
  
  During the period of September 1984 through September 1999, EPA awarded 10 grants
  totaling about $27.6 million (3 of the 10 grants had local matching requirements totaling
  about $355,000) to Public Works for the construction and rehabilitation of wastewater
  treatment plants; the rehabilitation of pump stations and sewer lines; the purchase and
  installation of emergency generators at pump stations; and the execution of used oil
  management, solid waste management, and pollution prevention programs.  Six of the grants,
  totaling $22.2 million, were administered by Public Works, and four of the grants, totaling
  $5.4 million, were administered by the U.S. Army Corps of Engineers through a
  memorandum of agreement between the Corps and the Government of the Virgin Islands. 
  Based on grant data provided by Public Works and the Corps, we determined that as of
  September 30, 1999, EPA had provided $10.6 million for reimbursement against the 10
  grants, leaving available grant balances totaling about $17 million (see Appendix 2).  About
  $16.6 million of the $17 million remaining balance was available for the construction of two
  wastewater treatment plants (Mangrove Lagoon, St. Thomas, and Cruz Bay, St. John).  The
  remaining $400,000 was available to cover additional grant charges that may be incurred,
  but requests for reimbursement had not been submitted by Public Works as of March 31,
  2000.
                                 
  SCOPE OF AUDIT
  
  The scope of the audit included a review of the award agreements for the 10 EPA grants;
  documentation in support of expenditures claimed against the grants; and documentation in
  support of grant funds approved for reimbursement during fiscal years 1997, 1998, and 1999
  and other periods as appropriate.  The audit was conducted from June through December
  1999 at the Departments of Public Works, Property and Procurement, and Finance.  
  
  The scope of our review was limited because Public Works and the Corps received U.S.
  Treasury checks rather than electronic transfers of Federal funds from EPA to satisfy 
  requests for reimbursement. We did not perform audit tests to determine whether grant
  drawdowns were made in accordance with the Cash Management Improvement Act of 1990
  because Public Works received EPA grant funds through checks rather than electronic
  transfers on a reimbursable rather than an advance basis.  Therefore, the provisions of the Act
  were not applicable to the EPA grants.  Regarding the four grants administered by the Corps,
  the scope of our review was also limited because Public Works did not have grant award
  documents, supporting invoices for expenditures claimed against the grants, or financial
  status reports, and the Corps provided us only grant award documents and documentation
  to support some of the construction-related expenditures requested for reimbursement.  As
  a result, we were not able to review documentation to support expenditures requested for
  reimbursement for administration, architectural engineering, project inspection, and other
  miscellaneous costs.  Additionally, documentation for construction-related costs was not
  fully available for our review.  Further, we were not able to substantiate that financial status
  reports were filed with EPA for any of the four grants.
  
  Our audit was made, as applicable, in accordance with the "Government Auditing
  Standards," issued by the Comptroller General of the United States.  Accordingly, we
  included such tests of records and other auditing procedures that were considered necessary
  under the circumstances.
  
  We included an evaluation of internal controls to the extent we considered necessary to
  accomplish the audit objective.  The internal control weaknesses identified were related to
  the establishment of a grants management system within the Department of Public Works
  to monitor the financial and compliance aspects of the EPA grants.  The control weaknesses
  are discussed in the Results of Audit  section of this report.  Our recommendations, if
  implemented, should improve the internal controls in these areas.
  
  PRIOR AUDIT COVERAGE 
  
  During the past 5 years, neither the General Accounting Office nor the Office of Inspector
  General has issued any audit reports on EPA grants awarded to the Government of the Virgin
  Islands.
  
                         RESULTS OF AUDIT
  
  The Department of Public Works was not effective in administering Federal grants awarded
  by EPA.  Specifically, Public Works did not (1) effectively use funds for grants that it
  administered, (2) maintain grant award notification documents and validate drawdown
  requests for grants that the Corps administered, (3) file financial status reports and requests
  for reimbursement in a timely manner, (4) establish procedures for processing grant
  drawdowns through electronic fund transfers, (5) maintain property control records, and
  (6) provide sufficient oversight of costs incurred by the Corps.  The Code of Federal
  Regulations (40 CFR 31) establishes uniform administrative rules for Federal grants awarded
  by EPA, and U.S. Office of Management and Budget Circular A-87, "Cost Principles for
  State, Local, and Indian Tribal Governments," establishes the requirements for the
  allowability of grant costs.  In addition, the memorandum of agreement between the
  Government of the Virgin Islands and the Corps contains provisions for the construction of
  wastewater treatment projects funded by EPA.  The EPA grants were not administered
  effectively because Public Works Environmental Engineering Division did not have a
  Director to provide oversight of and direction for grants management, staff were not
  cognizant of the specific purposes of available Federal grant funds, Public Works did not
  have procedures to document the time worked by staff on Federal grant projects for
  reimbursement purposes, and staff did not coordinate with the Public Works Grants
  Management Unit to timely complete financial status reports and requests for reimbursement
  and to maintain property records.  Further, the Corps did not provide Public Works with
  supporting documents for costs incurred on projects it administered because those documents
  were provided directly to EPA or maintained by the Corps at its off-island offices.  As a
  result, as of September 30, 1999, Public Works had not used grant funds of about
  $16.6 million that were available for the construction of two wastewater treatment plants and
  funds of $120,000 that were available for a used oil management program, and it had not
  requested reimbursement for administrative expenditures totaling $63,819 (see Appendix 1). 
  We also determined that the Corps may have incurred excess expenditures of $715,914 under
  two  of the grant projects.  Further, Public Works requested additional funds of  $130,000
  from EPA to correct deficiencies in work administered by the Corps.  Of the $10.6 million
  that had been reimbursed by EPA as of September 30, 1999, we determined that $5.2 million
  represented eligible costs for projects administered by Public Works and $4.1 million
  represented eligible costs for projects administered by the Corps.  Also, we classified costs
  of about $1.3 million for projects administered by the Corps as unsupported (see
  Appendix 1).
  
  Grants Administered by Public Works
  
  Public Works administered six grants totaling $22.2 million for which funds had not been
  used effectively.  That is, over a period of 15 years, Public Works had not been able to
  complete construction of two wastewater treatment plants, while during this same period,
  estimated construction costs for one of the plants had tripled.  As of September 30, 1999,
  $5.2 million had been used by Public Works for eligible costs, and $17 million was still
  available for expenditure on environmental projects that were identified by Public Works and
  EPA as critically needed.
  
  Mangrove Lagoon Wastewater Treatment Plant.  During the period of  September 1984
  to September 1999, Public Works received a grant award and three amendments totaling
  $13.8 million ($13.6 million Federal share and $0.2 million local share) for the design and
  construction of a wastewater treatment plant at the Mangrove Lagoon/Turpentine Run
  service area on St. Thomas.  The approved budget for project costs totaled $13.8 million for
  administration, architectural engineering, project inspection, construction, project
  management, and contingencies.  During the period of February 1985 to December 1987
  Public Works submitted eight requests for reimbursement totaling $1 million of architectural
  engineering fees for the design of the wastewater treatment plant.  Although the architectural
  firm that prepared the initial design was paid the $1 million, EPA did not accept the design
  plans and did not approve additional funds for the design portion of the project.  During the
  period of January 1988 to April 1996, no progress was made on the design of the wastewater
  treatment plant because the Government did not allocate any funds to pay for additional
  design fees.  In April 1996, Public Works contracted with another architectural engineering
  firm for the redesign of the wastewater treatment plant at a cost of $1.2 million to be paid
  from local funds.  As of September 30, 1999, the design of the wastewater treatment plant
  was completed and approved by EPA, but construction had not commenced.  Accordingly,
  of the $13.8 million approved for this project, only $1 million had been expended, leaving
  an available balance of $12.8 million ($12.6 million Federal share and $0.2 million local
  share).  Of the $12.8 million balance, $319,552 was budgeted for administrative services to
  be performed by Public Works employees.  In addition, the estimated costs to construct the
  wastewater treatment plant increased from the initial grant amount of $8.9 million in
  September 1984 to about $30 million as of September 30, 1999.  The additional $16 million
  will be provided from bonds issued by the Virgin Islands Public Finance Authority in May
  1998.  According to the amended grant award, construction of the wastewater treatment plant
  is required to be completed by March 2002.  Based on our review of grant files at Public
  Works, we did not find any financial status reports or progress reports for this grant.
  
  Cruz Bay Wastewater Treatment Plant.  During the period of September 1989 to
  September 1996, Public Works received a grant award and four amendments totaling
  $7.9 million for the construction of a wastewater treatment plant at Cruz Bay, St. John.  The
  approved budget for project costs totaled $8.1 million for administration, architectural
  engineering, project inspection, construction, project management, and contingencies. 
  Because the approved budget totaled about $200,000 more than the grant award, the excess
  costs were to be provided from local funds.  As of September 30, 1999, $3.8 million had
  been expended for eligible costs related to architectural engineering, project inspection, and
  construction and project management costs, and the wastewater treatment plant was
  considered to be 49 percent complete.  Therefore, $4.1 million was available for expenditure,
  of which $129,872 was for administrative services to be performed by Public Works
  employees.  The notification of grant award, as amended, required  the project to be
  completed by June 25, 1998 based on the amended consent decree.  The construction
  contract indicated a completion date of August 15, 1999, but actual completion was not
  anticipated until about June 2000, which was 2 years beyond the date established in the
  consent decree.  Public Works did not request an extension of the grant award from EPA, and
  the construction contractor did not request an extension of its contract through March 2000. 
  Based on our review of grant files at Public Works, we did not find any financial status
  reports or progress reports for this grant.
  
  Crown Bay Sewer Extension.  On September 30, 1994, EPA awarded a grant totaling
  $423,851 for the construction of the Crown Bay, St. Thomas, sewer extension project.  The
  approved budget for project costs totaled $423,851 for administration, architectural
  engineering, project inspection, construction, project management, and contingencies.  The
  grant period was from October 1, 1994 to June 15, 1997.  The project was completed in May
  1998, and Public Works claimed construction costs of $255,424 through four requests for
  reimbursement during the period of March 1997 to May 1998.  However, invoices
  supporting the construction costs totaled only $248,881, for a difference of $6,543.  Our
  analysis of the requests for reimbursement showed that although the invoice for the fourth
  payment request, dated May 11, 1998, was changed from $65,425 to $58,882 (a difference
  of $6,543), the request for reimbursement was not changed.  The reimbursement amount of
  $65,425 was entered into the Government's financial management system in September
  1998, and the invoice amount of $58,882 was entered in July 1998.  Therefore, we concluded
  that Public Works requested $6,543 in excess of expenditures incurred and did not return the
  excess funds to EPA.  In September 1999, the $6,543 was entered into the financial
  management system and charged to grants administration, but we did not find any
  documentation at Public Works to support this amount.  Of the $168,427 ($423,851 less
  $235,424) not claimed against the grant funds, we identified $63,819 that may represent
  project-related personnel costs for administration, architectural engineering, and project
  inspection services.  However, Public Works did not have a methodology to accumulate,
  account for, and allocate employees' time to different projects.  Although the sewer
  extension project was completed in May 1998, we did not find, based on our review of grant
  files at Public Works, any financial status reports, including a final financial status report,
  or progress reports for this grant.
  
  Pollution Prevention Program.  During the period of September 1994 to May 1999, EPA
  awarded a grant and six amendments totaling $27,500 for a pollution prevention program at
  Public Works.  The amendments extended the original project completion date from
  September 30, 1995 to May 30, 1999 and waived the local match of $5,000 that was included
  in the original grant award.  The approved budget for project costs totaled $27,500 for
  contractual and other costs.  During the period of August 1996 to September 1998, Public
  Works submitted five invoices totaling $23,329 to the Department of Finance for payment. 
  However, a request for reimbursement totaling $23,329 was not prepared until April 1999,
  and it was approved by EPA for $22,000.  The grant balance of $5,500 was not required to
  complete the project.  The original grant award document required that quarterly progress
  reports be prepared and that a final financial status report be prepared within 90 days after
  the end of the project.  Based on our review of documents at Public Works, we found two
  progress reports (June 29, 1998 and February 17, 1999) and two financial status reports
  (February 18, 1999 and April 14, 1999)  that did not present accurate financial information.
  
  Used Oil Management Program.  During the period of September 1995 to July 1996, EPA
  awarded a grant and one amendment totaling $240,000 ($120,000 Federal share and
  $120,000 local share) to assist Public Works with its used oil management program. The
  approved budget for project costs totaled $240,900 for personnel, equipment, supplies,
  construction, and  other expenses.  Because the approved budget totaled $900 more than the
  grant award, the excess costs were to be provided from local funds.  The grant period was
  from October 1, 1995 to September 30, 1996.  During the period of February 1996 to August
  1999, Public Works incurred costs of $398,505 for the used oil management program.  We
  found that during calendar years 1997 and 1998, the Project Manager and the Waste Oil
  Coordinator resigned from their positions and that the current Waste Oil Coordinator was
  unaware that the project period had expired.  In June 1998, EPA informed Public Works that
  the grant period had expired and that only expenditures incurred during the grant period
  would be approved for reimbursement.  During the grant period (October 1, 1995 to
  September 30, 1996), Public Works incurred $94,765 for equipment, supplies, and other
  costs, of which $47,383 (50 percent) would be eligible for reimbursement.  However, as of
  September 30, 1999, Public Works had not made any requests for reimbursement.  In
  addition, based on our review of the costs incurred against the used oil management program,
  we found that personnel costs were not included because Public Works did not have a
  methodology to accumulate, account for, and allocate employees' time to different projects. 
  Accordingly, Public Works did not have a methodology to request the $27,000 (50 percent
  of the $54,000) in allowable personnel expenditures against the grant.  The grant award
  required that quarterly progress reports and a final financial status report be prepared.  Based
  on our review of grant files at Public Works, we did not find any progress reports or financial
  status reports for this grant. 
  
   Solid Waste Management Program.  During the period of September 1997 to August
  1998, EPA awarded a grant and one amendment totaling $25,868 ($22,000 Federal share and
  $3,868 local share) for administration of the solid waste management program at Public
  Works.  The approved budget for project costs totaled $25,868 for personnel and fringe
  benefits, supplies, contractual costs, and construction costs.  The grant period was from
  October 1, 1997 to September 30, 1999.  During the period of June 1998 to January 1999,
  Public Works incurred eligible expenditures totaling $17,024 against the grant for supplies,
  contractual services, and construction costs.  However, a request for reimbursement was not
  prepared until April 1999, even though the original grant award document stated that Public
  Works was authorized to receive advance payments.  As of September 30, 1999 (the end of
  the grant period), there was an unobligated balance of $8,884 ($7,521 Federal share and
  $1,323 local share), but an extension to incur expenditures beyond September 30, 1999 had
  not been requested by Public Works.  In addition, expenditures for personnel costs totaling
  $3,290 were not claimed because Public Works did not have a methodology to accumulate,
  account for, and allocate employees' time to different projects.  The original grant award
  agreement required that a final financial status report be prepared 90 days after the end of the
  grant period and that quarterly progress reports be prepared which outlined the activities
  completed under the grant agreement.  Based on our review of documents at Public Works,
  we found one interim financial status report dated April 21, 1999 (although only a final
  financial status report was required) and two progress reports dated March 30, 1999 and
  February 26, 1998.
  
  Grants Administered by the Corps of Engineers
  
  The Corps administered four grants totaling $5.4 million for four projects through a
  memorandum of agreement with Public Works and a memorandum of understanding with
  EPA.  As of September 30, 1999, three of the four projects had been completed by the Corps
  and closed out by EPA, and one project was substantially completed.  We were unable to
  review all claimed costs against the grants because (1) Public Works had not maintained
  grant award documents, documentation to support all expenditures claimed against the
  grants, or financial status reports for the projects and (2) the Corps provided us only grant
  award documents and supporting documentation for some of the construction-related
  expenditures.  Accordingly, we classified costs of about $1.3 million claimed for
  construction-related costs and for administration, architectural engineering, project
  inspection, and other expenses as unsupported.  We also found that the Corps may have
  incurred expenditures totaling about $715,914 in excess of the amounts reimbursed by EPA
  for two of the projects.  Finally, we noted that Public Works requested an additional
  $130,000 from EPA to repair work administered by the Corps.
  
  Memoranda of Agreement and Understanding.  In accordance with Section 406 of the
  Water Resources Development Act of 1990 (Public Law 101-640), the Governor of the
  Virgin Islands requested, in January 1991, that the Corps provide design and construction
  assistance for grants awarded by EPA.  The Water Resources Development Act states that
  "the Secretary of the Army is authorized to receive Federal financial assistance with respect
  to construction projects in the Virgin Islands upon request of the Governor of the Virgin
  Islands."  Accordingly, in August 1991, the Government of the Virgin Islands and the
  Department of the Army (through the Corps) entered into a memorandum of agreement.  The
  agreement stated that the Corps would provide design and construction assistance for
  projects funded by EPA but that the Government of the Virgin Islands would be responsible
  for the operation and maintenance of the completed projects.  The agreement also stated that
  reimbursements by EPA would be made directly to the Corps and that the Corps would
  provide an accounting of grant funds to the Government of the Virgin Islands.  In addition,
  the agreement stated that the Government of the Virgin Islands was responsible for paying
  the Corps for all project costs not reimbursed by EPA.  As a result of the memorandum of
  agreement, in August 1992, EPA and the Department of the Army (through the Corps)
  entered into a memorandum of understanding pursuant to the Economy Act of 1932
  (31 U.S.C. ï¿½ 1535) and the Water Resources Development Act of 1990 (Public
  Law 101-640) for grants awarded to the Government of the Virgin Islands.  
  
  Regarding payment requests for work performed by the Corps, the memorandum of
  understanding stated that payment requests would be submitted by the Corps directly to
  EPA, with a copy submitted to Public Works, and that EPA would not make payment for a
  period of 10 days to allow Public Works sufficient time to review the payment request. 
  However, Public Works Grants Manager told us that the Corps provided Public Works only
  with a schedule of expenditures and a status schedule of the projects and that this information
  was not sufficient for Public Works to determine the reasonableness and the allowability of
  costs claimed against the grants by the Corps.  In addition, employees of Public Works
  Environmental Engineering Division told us that they were unaware of the provisions of the
  memoranda of agreement and understanding.  
  
  At the March 14, 2000 exit conference on the preliminary draft of this report, Public Works
  officials stated that EPA required the services of the Corps as a condition for Public Works
  to receive the EPA grant funds.  In addition, these officials stated that they were not included
  in the review of payment requests submitted by the Corps to EPA, as required by the
  memorandum of understanding.
  
  Emergency Generator Units at St. Croix Pump Stations.  During the period of September
  1991 to February 1997, EPA awarded a grant and three amendments totaling $570,830 for
  the construction and installation of 9 generators and the refurbishment of 2 generators at
  11 pump stations on St. Croix.  The approved budget for project costs totaled $570,830 for
  administration, architectural engineering, project inspection, and construction.  The project
  period was from October 1991 to February 1997, and EPA closed out the grant in February
  1997.  During the period of September 1992 to January 1996, the Corps submitted
  18 requests for reimbursement totaling $1,202,498 to EPA and was reimbursed the grant
  amount of  $570,830, leaving an unpaid balance of $631,668.  Summary records of
  expenditures provided to us by the Corps totaled $1.2 million, but we were unable to
  determine which costs were reimbursed by EPA.  Further, although the memorandum of
  agreement stated that the Government of the Virgin Islands was responsible for paying the
  Corps for all project costs not reimbursed by EPA, we found only one invoice from the
  Corps to Public Works, totaling $37,569, which represented the amount not reimbursed by
  EPA on the final request for reimbursement.  Public Works did not pay this amount, and in
  turn, the Corps did not reimburse Public Works for advance design costs totaling $37,104
  that were incurred by Public Works on this and two other projects (St. Croix pump station
  rehabilitation and St. Croix wastewater treatment plant rehabilitation).
  
  Emergency Generator Units at St. Thomas and St. John Pump Stations.  During the
  period of September 1993 to September 1998, EPA awarded a grant and an amendment
  totaling $1,060,621 for the purchase of 10 generator units to maintain emergency power at
  13 pump station sites on St. Thomas and St. John.  The approved budget for project costs
  totaled $1.06 million for administration, architectural engineering, project inspection, and
  construction.  The grant period was from October 1993 to February 1996.  EPA closed out
  the grant in September 1998 and retroactively approved costs through December 1997. 
  During the period of October 1993 to December 1997, the Corps submitted 10 requests for
  reimbursement totaling $1,144,867 to EPA and was reimbursed the grant amount of
  $1,060,621, leaving an unpaid balance of $84,246.  The Corps provided us with construction-
  related documents that substantiated costs incurred of $893,880.  Therefore, we classified
  as unsupported the balance of  costs of $250,987 claimed for administration, architectural
  engineering, and project inspection.  Based on our review of files at Public Works, we did
  not find any documentation to indicate that the Corps billed Public Works for the $84,246
  not reimbursed by EPA. 
  
  St. Croix Pump Station Rehabilitation.  During the period of September 1992 to July
  1997, EPA awarded a grant and four amendments totaling $2,093,246 for the removal,
  replacement, and installation of complete sets of motor/drive/pump assemblies at four pump
  stations on St. Croix  (Lyndon B. Johnson, Figtree, Lagoon, and Anguilla).  The approved
  budget for project costs totaled $2.1 million for administration, architectural engineering,
  project inspection,  construction, miscellaneous costs, and contingencies.  The project period
  was from October 1992 to May 1999.  As of January 31, 1999, the project was classified as
  99 percent complete by the Corps.  During the period of October 1993 to January 1999, the
  Corps submitted 14 requests for reimbursement totaling $2,083,543 to EPA, all of which
  were reimbursed.  Based on our review, we substantiated construction-related expenditures 
  of $1,386,057 and classified the balance of $697,486 as unsupported.  The unsupported costs
  consisted of $498,312 for administration, architectural engineering, project inspection, and
  other expenses and $199,174 for construction-related costs.  EPA's Grants Management
  Specialist told us that the Corps had submitted additional expenditures for reimbursement
  totaling about $200,000 but that only $9,703 was available for expenditure on this grant as
  of September 30, 1999.
  
  Beginning in June 1999 (about 5 months after substantial completion of the project), the 
  Lyndon B. Johnson and the Figtree pump stations malfunctioned when underground pipes
  broke and caused millions of gallons of raw sewage to spill into the harbor and streets of
  Christiansted, St. Croix.  Public Works Project Manager told us that the pump stations were
  incomplete and unusable, although the Corps classified the project as substantially complete. 
  As a result of this incident and based on a request from Public Works, EPA provided funds
  totaling $130,000 from fines paid by the Government of the Virgin Islands into the corrective
  action trust fund to repair the Lyndon B. Johnson pump station and part of the Figtree pump
  station.  Because the Figtree pump station repairs were not completed, sewage continued to
  overflow.
  
  St. Croix Wastewater Treatment Plant Rehabilitation.  During the period of October
  1992 to July 1998, EPA awarded a grant and three amendments totaling $1,690,808 for the
  replacement of the mechanical bar screen, grit collector, and clarifier sludge collector at the
  primary wastewater treatment plant on St. Croix.  The approved budget for project costs
  totaled $1.69 million for administration, architectural engineering, project inspection,
  construction, and miscellaneous costs.  The grant period was from October 1992 to August
  1998.  The Corps completed the project in September 1997, and EPA closed out the grant
  in July 1998.  During the period of October 1993 to September 1997, the Corps submitted
  eight requests for reimbursement totaling $1,605,233 to EPA.  However, based on
  information provided by EPA, we determined that the Corps was reimbursed $1,690,808. 
  Based on documentation provided by the Corps, we substantiated construction-related costs
  totaling $1,370,407.  We classified as unsupported the balance of costs of $320,401 for
  administration, architectural engineering, project inspection, and other expenses. 
  
  Records Management
  
  Public Works did not maintain adequate documentation of grant awards, grant award
  amendments, and property records.  Regarding grant award documents, 40 CFR 31.42
  requires grantees to maintain all grant-related documents for 3 years after the final
  expenditure report has been submitted.  Regarding property records, 40 CFR 31.32 states:
  
  (1) Property records must be maintained that include a description of the property, a serial
  number or other identification number, the source of the property, who holds title, the
  acquisition date, and cost of the property, percentage of Federal participation in the cost of
  the property, the location, use and condition of the property, and any ultimate disposition
  data including the date of disposal and sale price of the property.
  
  (2) A physical inventory of the property must be taken and the results reconciled with the
  property records at least once every two years.
  
  Grant Award Documents.  Public Works did not have on file 6 of the 21 grant award
  documents (original and amended) for the six projects administered by Public Works or any
  of the 15 grant award documents (original and amended) for  the four projects administered
  by the Corps.  We found that without copies of the original and the amended grant
  documents, Public Works officials were not aware of the project periods, the allocation (by
  cost element) of approved grant award funds, the progress report and financial status report
  filing requirements, and other special conditions outlined in the grant awards and
  amendments.
  
  Property Records.  Public Works did not maintain property records or conduct physical
  inventories in accordance with the Code.  Public Works provided us with an undated list of
  25 generators on St. Thomas and St. John, which contained only the location and the basic
  characteristics (model number, voltage, and engine type) of each generator.  An inventory
  list was not provided for generators on St. Croix.  In October 1999, we visited 17 pump
  stations on St. Thomas and 5 pump stations on St. John and located 22 generators.
  Of the 22 generators located, only 4 generators had Government of the Virgin Islands
  property tags.  Accordingly, because property records were not maintained, periodic physical
  inventories were not conducted, and government tags were not placed on all of the
  generators, Public Works did not have adequate assurance that the generators were
  safeguarded against loss, damage, or theft.
  
  Electronic Fund Transfers
  
  Public Works received U.S. Treasury checks (rather than electronic transfers of Federal
  funds) from EPA to satisfy requests for reimbursement of grant costs.  The Debt Collection
  Improvement Act of 1996 requires that Federal payments be made by electronic funds
  transferred after January 2, 1999.  To comply with the Act, EPA requires grantees to
  complete and return an Automated Clearing House Vendor Payment System form and an
  assistance agreement form.  However, as of September 30, 1999, Public Works had not
  completed and returned the forms to EPA.
                                 
  Environmental Engineering Division Staffing
  
  The Environmental Engineering Division did not have a director, an assistant director, or a
  solid waste coordinator.  We found that because these key positions were vacant, the
  environmental engineers, the waste oil coordinator, and the project manager who worked in
  the Division were not provided appropriate management oversight and direction.  These
  employees were not cognizant of the specific purposes of available Federal grant funds, did
  not establish  procedures to document their time spent on Federal grants so that Public Works
  could be reimbursed, and did not coordinate with Public Works Grants Management Unit
  to timely complete financial status reports and requests for reimbursement.  We believe that
  in order to provide an adequate level of management oversight, Public Works should fill the
  positions of director, assistant director, and solid waste coordinator with individuals who
  have the requisite education and experience.
  
  Recommendations
  
  We recommend that the Governor of the Virgin Islands require the Department of Public
  Works to:
  
  1.  Provide EPA with project schedules for completion of the Mangrove Lagoon wastewater
  treatment plant by March 2002 and the Cruz Bay wastewater treatment plant by June 2000
  to ensure that the Government of the Virgin Islands complies with the consent decree.  
  
  2.  Request, through EPA, a grant amendment to extend the construction deadline for the
  Cruz Bay wastewater treatment plant from July 1998 to June 2000.  In addition, the
  Department of Property and Procurement should be requested to process an extension of the
  Cruz Bay wastewater treatment plant contract through June 2000.
  
  3.  Establish a methodology consistent with the requirements of Office of Management and
  Budget Circular A-87 to accumulate, account for, and allocate employees' time to different
  jobs to ensure that Public Works has the documentation necessary to support requests for
  reimbursement of grant-related personal services costs.
  
  4.  Either return to EPA (through the U.S. Treasury) the $6,543 in excess reimbursement
  received on the Crown Bay sewer extension grant or prepare proper supporting
  documentation to claim the $6,543 as an administrative expenditure.
  
  5.  Review the grant award agreements and supporting documentation for the Crown Bay
  sewer extension and solid waste management program to determine whether any of the
  administrative costs of $63,819 can be claimed against the grant and review the grant award
  agreements and supporting documentation for the Mangrove Lagoon ($319,552) and Cruz
  Bay ($129,872) wastewater treatment plant projects and the used oil management program
  ($27,500) to determine whether records will be sufficient to allow the budgeted
  administrative costs totaling $476,924 to be incurred and claimed against those grants.
  
  6.  Request that the Corps provide Public Works with supporting documentation for
  administration, architectural engineering, project inspection, and other costs totaling
  $1,268,874 that were classified as unsupported.
  
  7.  Prepare and submit to EPA, as required by the grant awards, final financial status reports
  for the Crown Bay sewer extension and pollution prevention program grants and quarterly
  progress reports for the pollution prevention, used oil management, and solid waste
  management program grants.  Also, a request for reimbursement for expenditures incurred
  against the used oil management program grant should be prepared and submitted to EPA
  for the period of October 1, 1995 to September 30, 1996.
  
  8.  Establish procedures at the Department of Public Works to properly file and safeguard
  grant-related documents, including notifications of grant awards, grant award amendments,
  memoranda of agreement and understanding, financial status and project progress reports,
  and documents that support the quantity and the cost of administrative support services
  provided by Public Works employees.
  
  9.  Ensure that Department of Public Works personnel are  familiar with and comply with
  the types and classifications of allowable grant expenditures and the filing requirements for
  financial status and progress reports.
  
  10.  Establish procedures to ensure that property control records for equipment purchased
  with Federal funds are maintained and that physical inventories of the property are conducted
  in accordance with the requirements contained in 40 CFR 31.32.
  
  11.  Complete and return the Automated Clearing House Vendor Payment System form and
  assistance agreement form to the Environmental Protection Agency in accordance with the
  Debt Collection Improvement Act of 1996 so that requests for grant reimbursements can be
  processed through electronic funds transfers.
  
  12.  Seek qualified candidates to fill the vacant positions of director, assistant director, and
  solid waste coordinator in the Environmental Engineering Division.
  
  Governor of the Virgin Islands Response and Office of Inspector General
  Reply
  
  The June 12, 2000 response (Appendix 3) to the draft report from the Governor expressed
  nonconcurrence with Recommendations 1, 3, 4, 7, 8, 9, and 10; partial concurrence with
  Recommendation 2;  and concurrence with Recommendations 5, 6, 11, and 12.  Based on the
  response, we consider Recommendations 4 and 6 resolved and implemented;
  Recommendations 1, 3, 5, and 11 resolved but not implemented; and Recommendations 2,
  7, 8, 9, 10, and 12 unresolved (see Appendix 4).
  
  Recommendation 1.  Nonconcurrence.
  
  Governor of the Virgin Islands Response.  The response stated that "a general project
  schedule for completion has already been submitted" to the EPA for the Mangrove Lagoon
  project and that "as [a] contract is implemented for the construction phase of the project, a
  revised and detailed schedule of completion will be developed."  The response also stated,
  with regard to the Cruz Bay project, that the "Environmental Engineer and program Manager
  for the project, has been instructed to develop and submit the completion schedule for this
  project, with a deadline of July 15, 2000."
  
  Office of Inspector General Reply.  The response did not include a copy of the "general
  project schedule" for the Mangrove Lagoon project, and a completion schedule had not been
  developed as of the date of the Governor's response for the Cruz Bay project.  Therefore, we
  request copies of these schedules.
  
  Recommendation 2.  Partial concurrence.
  
  Governor of the Virgin Islands Response.  The response stated that the Program Manager
  had been directed to request an extension of the EPA grant for the Cruz Bay project but that
  the construction project could not be extended at this time because "consideration is being
  given to whether the contractor should be paying liquidated damages for failure to complete
  the contract on time, or whether there are mitigating circumstances that might warrant a time
  extension."
  
  Office of Inspector General Reply.  Based on the response, Public Works is taking actions
  that meet the intent of the recommendation.  However, we request a target date for the
  decision as to whether the contractor will be held liable for liquidated damages or an
  extension of the construction contract will be executed.
  
  Recommendation 3.  Nonconcurrence.
  
  Governor of the Virgin Islands Response.  The response stated that the need for a
  methodology to accumulate, account for, and allocate employees' time to different projects
  "was identified prior to the audit" and that "a Time and Attendance Report form was
  developed by the Grants Management Office" and "was implemented by a Memorandum
  from the Commissioner dated December 7, 1999."
  
  Office of Inspector General Reply.  In response to information we provided about the lack
  of an adequate process to account for and distribute time charges to grants, the Grants
  Manager developed a Time and Attendance Report form and submitted it to the auditors for
  review and comment.  Additionally, although the Commissioner issued a memorandum dated
  December 7, 1999 to Public Works staff to implement use of the form, in a followup
  memorandum dated May 8, 2000 the Commissioner stated, "To the present, a number of
  employees working on federal aid programs have not completed the form and returned it to
  the Grants Management Office, as instructed."  Therefore, an oversight process still needs
  to be developed to ensure that the forms are properly completed.
  
  Recommendation 4.  Nonconcurrence.
  
  Governor of the Virgin Islands Response.  The response stated, "This error [excess
  reimbursement] was discovered and corrected more than three months prior to the conclusion
  of the audit.  We, therefore, believe that while the item could have been discussed in the
  findings, there was no need for a recommendation."
  
  Office of Inspector General Reply.  The excess reimbursement of $6,543 referred to in the
  recommendation was discovered by our auditors and brought to the attention of Public
  Works officials during the audit.  However, prior to the response to the draft report, we were
  not provided with any documentation to support that the amount had been refunded to EPA. 
  Therefore, this amount was included in the finding and the related recommendation. 
  
  Recommendation 5.  Concurrence.
  
  Governor of the Virgin Islands Response.  The response stated that "problems associated
  with documenting and claiming administrative costs . . . were identified prior to the audit"
  and that "to correct the problem going forward, the Grants Management Office has
  developed a Time and Attendance form to record payroll time by projects."  The response
  also stated that "work has begun by the Grants Manager and staff to research records, prepare
  schedules; and obtain reports and certification from program managers; in an effort to draw
  down the administrative costs in question."  The response provided August 31, 2000 as the
  date for implementation of the recommendation.
  
  Office of Inspector General Reply.  As indicated in the Office of Inspector General Reply
  comments for Recommendation 3, the Time and Attendance form was developed by the
  Grants Manager in response to our finding, with input from our auditors.
  
  Recommendation 6.  Concurrence.
  
  Governor of the Virgin Islands Response.  The response stated that the Commissioner
  wrote a letter dated May 19, 2000 to the Corps of Engineers requesting documentation for
  the unsupported costs of about $1.3 million referenced in the recommendation.  The response
  also stated that Public Works "requested the EPA not to make payment through the Corps,
  for work assignment #4 for rehabilitation of pump stations on St. Croix."
  
  Office of Inspector General Reply.  We request that Public Works notify our office when
  the requested supporting documents are provided by the Corps of Engineers.
  
  Recommendation 7.  Nonconcurrence.
  
  Governor of the Virgin Islands Response.  The response stated that final financial status
  reports for the Crown Bay sewer extension program "cannot be submitted at this time
  because the Corps, who were appointed by the EPA to inspect the project, has still to
  complete that task."  The response also stated, with regard to the pollution prevention
  program grant, that "a final progress report and three reports from the consultants on this
  project were submitted to EPA on February 17, 1999. . . .  The GMO [Grants Management
  Office] is in the process of preparing a claim for administrative costs against the balance in
  this grant.  Once this is done, a final financial status report will be submitted [by August 31,
  2000]."  The response stated, with regard to the used oil management program grant, that a
  request for reimbursement of expenditures "was made 11/29/1999, and reimbursement was
  received for expenditures incurred within the grant period.  [Public Works] also requested
  and received from the EPA an extension of the grant and budget period to November 30,
  1999."
  
  Office of Inspector General Reply.  At the time of the audit, the Grants Management Office
  was not aware of the status of the various EPA grants mentioned in the recommendation, and
  as a result, financial status reports and progress reports had not been submitted in a timely
  manner.  Our auditors provided the Grants Management Office with information on the
  status of the projects.  Our comments on the three projects discussed in the response are as
  follows:
  
  - Work on the Crown Bay sewer extension project was apparently completed in 1998, and
  the last disbursement of funds by EPA under the grant was made in July 1998.  If the Corps
  of Engineers was conducting a final inspection of the project in June 2000, there was a
  significant delay on the part of Public Works to request the final inspection.
  
  - The February 17, 1999 letter to EPA referenced in the response was a request to extend the
  period for the pollution prevention grant to May 31, 1999 "to facilitate payment of the
  contractor."  The final progress report and three contractor reports also referenced in the
  response were work products prepared by the contractor as part of the project.  These
  documents were not the grant financial status reports and progress reports (as specified in
  Federal grant administration regulations) that are routinely required for grant programs. 
  Additionally, although the original grant period ended on July 31, 1998, Public Works did
  not request an extension until February 17, 1999, or 6   months later.  A March 2, 2000
  letter from an EPA official to Public Works stated: "The grant officially ended on 7/31/98
  and we need to close it out right away.  We do not have your final report or final financial
  status report on file so I need you to send these to me ASAP."  (Emphasis in original.)  We
  believe, from internal Public Works correspondence submitted with the response, that Public
  Works officials confused the contractor's work products and reports with the standard grant
  financial status reports and progress reports.
  
  - Although the period for the used oil management program grant ended on September 30,
  1996, Public Works did not request an extension of the grant period until November 29,
  1999, and this extension was requested as a result of our audit.  On April 28, 2000, after
  completion of the audit, EPA granted an extension until November 30, 1998 to allow Public
  Works to obtain reimbursement for grant costs incurred to that date.  However, the
  documents provided with the response do not show that Public Works was actually
  reimbursed for those costs.  Accordingly, Public Works still needs to file the financial status
  reports and progress reports for the grants.  Additionally, with regard to requesting
  reimbursement for costs of the used oil management program grant, no documentation was
  provided to show that reimbursement of program costs was actually requested.
  
  Recommendation 8.  Nonconcurrence.
  
  Governor of the Virgin Islands Response.  The response stated, "While we agree on the
  need to properly file and safeguard grant related documents, the procedures for doing so
  already exist in OMB Circular A-87.  The fact that grant related records at [Public Works]
  are not properly organized has more to do with the lack of human and other resources to be
  applied to this area."  The response also stated, "This activity [the hiring of additional
  personnel] is the responsibility of the Director of Human Resources/Comptroller, and subject
  to existing financial constraints, it is expected that additional resources can be applied to this
  area by August 31, 2000."
  
  Office of Inspector General Reply.  Office of Management and Budget Circular A-87,
  "Cost Principles for State, Local, and Indian Tribal Governments," defines what types of
  costs are allowable or unallowable under grant programs.  The "Administrative Requirements
  for Grants to State and Local Governments," which includes generic record-keeping
  requirements, is contained in the Code of Federal Regulations.  The record-keeping
  requirements contained in the Code are meant to be broad standards, not detailed policies and
  procedures that include information such as the specific documents to be filed, how and
  where they are to be filed, and by whom they are to be filed and maintained.  Such detailed
  policies and procedures should be developed by Public Works in accordance with its own
  organizational structure and specific needs.
  
  Recommendation 9.  Nonconcurrence.
  
  Governor of the Virgin Islands Response.  The response stated that "existing financial
  personnel have been trained in Grants Management."  The response also stated, "Corrective
  action in this area would have to do with increasing the resources assigned to the
  management of federally funded programs within [Public Works].  Responsibility for this
  activity rests with the Director of Human Resources and Comptroller, with an estimated
  effective date of August 15, 2000."
  
  Office of Inspector General Reply.  Based on our observations and the condition of grant
  records, we believe that Public Works financial and grants management personnel should be
  scheduled for additional grants management training.  In that regard, Public Works may
  contact the Virgin Islands Office of Personnel Management to determine whether such
  training can be provided through the Virgin Islands Training Initiative, which is funded by
  the Office of Insular Affairs, U.S. Department of the Interior.
  
  Recommendation 10.  Nonconcurrence.
  
  Governor of the Virgin Islands Response.  The response stated that "procedures already
  exist through-out the V.I. Government for recording and maintaining control of equipment
  purchased with federal funds."  The response also stated that Public Works "has purchased
  and installed a computerized property management software system and is in the process of
  implementing the same for all equipment including that which is federally funded."  The
  response further stated that emergency power generators assigned to Public Works on St.
  Croix are listed in records of the Department of Property and Procurement and that Public
  Works officials "have been instructed to maintain hard copy records, and a listing by
  granting agency, program, and island, of all equipment purchased with federal funds. . .  . 
  This information is to be used to initiate the computerized system."
  
  Office of Inspector General Reply.  We believe that detailed policies and procedures that
  are specific to the needs of Public Works should be developed which define the actions to
  be taken to maintain adequate property control, the timing and/or frequency of such actions,
  and the individuals responsible for completing such actions.  Regarding the list of generators
  on St. Croix, although an undated list of generators on St. Thomas and St. John was provided
  to us during the audit, the St. Croix list was not provided to us at that time.  We request that
  Public Works provide us with the target dates for implementation of the computerized
  property management system and the completion of data input to the system.
  
  Recommendation 11.  Concurrence.
  
  Governor of the Virgin Islands Response.  The response stated that Public Works had
  contacted EPA regarding establishing an account to allow the drawdown of grant funds
  through electronic transfers and that the target date for completion is August 15, 2000.
  
  Recommendation 12.  Concurrence.
  
  Governor of the Virgin Islands Response.  The response stated that Public Works had
  hired a Technical Assistant "to assist in the development of organizational changes in the
  areas of solid waste and waste water management" and that Public Works "will make every
  effort to get the [vacant] positions reinstated."  The response also stated, "As a means of
  pursuing this reinstatement, the department is working on implementing the logistics of a
  tipping fee and a sanitation fee which can be used to fund the positions in question."
  
  Office of Inspector General Reply.  Target dates for filling the positions of director,
  assistant director, and solid waste coordinator in the Environmental Engineering Division
  are needed.
  
  Please provide a response to this report by October 30, 2000.  The response should be
  addressed to our Insular Areas Office, Federal Building - Room 207, Charlotte Amalie,
  Virgin Islands 00802.  The response should provide the information requested in
  Appendix 5.
  
  Section 5(a) of the Inspector General Act (5 U.S.C. app. 3) requires the Office of Inspector
  General to list this report in its semiannual report to the U.S. Congress.  In addition, the
  Office of Inspector General provides audit reports to the Congress.
  
  Sincerely,
  
  
  Earl E. Devaney
  Inspector General                                                      APPENDIX 1
  
  
                CLASSIFICATION OF MONETARY AMOUNTS
  
  
  
                           Finding Area
  
  
  
  Mangrove Lagoon and Cruz Bay
       Wastewater Treatment Plants
  
  Administrative Expenditures
  
  Projects Administered by the Corps
  
       Totals
  
                                                  Funds To Be Put 
                                               To Better Use*  
  
                                                           
                                                           
                                                           
                                           $16,600,000     
                                                           
                                               63,819      
                                                           
                                                           
                                                           
                                          $16,663,819      
                                                                                      Questioned
                           Costs*
                              
                        (Unsupported
                           Costs)
                              
                              
                              
                              
                              
                         $1,268,874
                              
                         $1,268,874
                                                             
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
  
  
  
  
        
  
  
  
  
  ___________
  * The amounts represent Federal funds.
                                                        APPENDIX 2
  
  
                SUMMARY OF EPA GRANTS AWARDED TO 
                   DEPARTMENT OF PUBLIC WORKS,
                GOVERNMENT OF THE VIRGIN ISLANDS,
                     AS OF SEPTEMBER 30, 1999
  
  
                                Grant       EPA              Available  
            Grant Project                       Award*    Reimbursements               Balance   
  
  Mangrove Lagoon Plant        $13,622,220  $1,052,710       $12,569,510
  Cruz Bay Plant                 7,933,667   3,860,244         4,073,423
  Crown Bay Sewer                  423,851     255,424           168,427
  Pollution Prevention              27,500      22,000             5,500
  Used Oil                                        120,000           0                     120,000
  Solid Waste                       22,000      14,479             7,521
  Generators St. Croix**           570,830     570,830                 0
  Generators St. Thomas**        1,060,621   1,060,621                 0
  Pump Station St. Croix**       2,093,246   2,083,543             9,703
  St. Croix Plant**              1,690,808   1,690,808                      0
  
       Total                   $27,564,743 $10,610,659       $16,954,084
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  _____________
  *Grant award amounts represent only the Federal share.
  ** Project administered by the U.S. Army Corps of Engineers.
                                                        APPENDIX 3
                                                               
  
               GOVERNOR'S RESPONSE TO DRAFT REPORT
  
                                                        APPENDIX 4
                                                    Page 1 of 2
  
              STATUS OF AUDIT REPORT RECOMMENDATIONS
  
  
  Finding/Recommendation
             Reference            
  
  1
  
  
  
  
  2
  
  
  
  
  
  3
  
  
  
  
  
  
  4
  
  5
  
  
  
  
  
  6
  
  
  
  
  
  7
  
  
        Status      
  
  Resolved; 
  not
  implemented.
  
  
  Management
  concurs;
  additional
  information
  needed.
  
  Resolved; 
  not
  implemented.
  
  
  
  
  Implemented.
  
  Resolved; 
  not
  implemented.
  
  
  
  Implemented.
  
  
  
  
  
  Unresolved.
  
                       Action Required                   
  
  Provide a copy of the general project
  schedule for the Mangrove Lagoon
  project and the completion schedule for
  the Cruz Bay project.
  
  Provide the target date for a decision as
  to whether the contractor for the Cruz
  Bay project will be held liable for
  liquidated damages or an extension of
  the contract will be executed.
  
  Provide documentation to support that all
  Public Works employees working on
  Federally funded programs are using the
  Time and Attendance Report form on a
  regular basis to allocate their hours
  among programs.
  
  No further action is required.
  
  Provide documentation to support that
  efforts have been made to determine
  whether administrative costs incurred by
  Public Works can be claimed against the
  various EPA grant programs.
  
  No further action is required.  However,
  a copy of the notification as to when the
  Corps of Engineers submits the requested
  documentation should be provided to our
  office.
  
  Provide a plan that includes the target
  dates and the titles of the officials
  responsible for preparing and submitting
  to EPA the delinquent financial status
  and progress reports and for requesting
  reimbursement of costs of the used oil
  management program.
  
                                                        APPENDIX 4
                                                    Page 2 of 2
  
  
  
  Finding/Recommendation
             Reference            
  
  8
  
  
  
  
  
  
  
  
  9
  
  
   
  
  
  
  
  10
  
  
  
  
  
  11
  
  
  
  
  
  12
  
  
        Status      
  
  Unresolved.
  
  
  
  
  
  
  
  
  Unresolved.
  
  
  
  
  
  
  
  Management
  concurs;
  additional
  information
  needed.
  
  Resolved; 
  not
  implemented.
  
  
  
  Management
  concurs;
  additional
  information
  needed.
  
  
                       Action Required                   
  
  Provide a plan that includes the target
  date and the title of the official
  responsible for developing internal
  policies and procedures for the
  management of grant-related documents
  in accordance with the grant
  administrative requirements contained in
  the Code of Federal Regulations.
  
  Provide a plan that includes the target
  date and the title of the official
  responsible for providing Public Works
  financial and grants management
  personnel with updated training on grant
  administrative requirements and cost
  principles.
  
  Provide the target date for implementing
  the computerized property management
  system, including input of data on
  Federally funded equipment for which
  Public Works is accountable.
  
  Provide documentation to support that
  procedures have been established to
  allow Public Works to draw down EPA
  grant funds through electronic fund
  transfers.
  
  Provide the target date for filling the
  positions of director, assistant director,
  and solid waste coordinator of the
  Environmental Engineering Division.