ministration and Resources Management [OARM] is responsible for administering contracts and outside assistance agreements at the labs. ORD's annual budget is approximately $450 million, over twothirds of which is allocated to so-called extramural resources such as contracts, cooperative agreements, interagency agreements, and grants. The findings of the IG's three full-scale laboratory audits, as well as a series of survey reviews of several other laboratories, indicate that systemic management weaknesses exist throughout ORD's laboratory program and that the laboratories have become over-reliant on outside assistance to accomplish mission-related goals.

The subcommittee explored significant contract management and conflict of interest problems and a disturbing pattern of conduct on the part of EPA managers willing to circumvent established procurement rules and procedures in order to retain long-term incumbent contractors. As a result of these problems, the labs cannot ensure that open competition took place or that taxpayers' money was spent in the most efficient manner possible. In addition, EPA improperly allowed contractors to perform inherently governmental functions, to work outside the scope of the contract, and to perform prohibited personal services.

For example, at the Duluth and Athens labs, EPA obstructed open competition in contracting by artificially splitting contracts apart or allowing underestimated contract amounts to be used so that the labs could avoid the $3 million competitive threshold. Instead, the labs utilized the 8(a) noncompetitive small business setaside program in order to retain incumbent contractors. At the Duluth lab, noncompetitive contracts were awarded to a company owned by a former EPA laboratory employee; the company also employed the laboratory director's ex-wife-creating, at a minimum, an apparent conflict of interest.

EPA labs also improperly used cooperative agreements and interagency agreements to augment agency staff and to circumvent more cumbersome procurement rules. Unlike contracts where EPA purchases services for the direct benefit of the Federal Government, cooperative agreements are used to facilitate partnerships between EPA and the recipient-oftentimes a university-to achieve a public purpose. However, the laboratories consistently used research and development funds for cooperative agreements designed to directly benefit laboratory employees. The labs also utilized interagency agreements to circumvent Federal employee travel restrictions, among other things.

For example, under a cooperative agreement with the University of Georgia, the Athens laboratory improperly allowed a university employee to handle secretarial duties for the laboratory director, and also proposed a project under the cooperative agreement to develop an operating plan for the laboratory's day care center, an unallowable use of research and development funds. The lab also awarded a noncompetitive cooperative agreement to fund the pursuit of a Ph.D. degree by an Athens lab employee; even though the employee had previously applied for and been denied EPA longterm training assistance to attend the Ph.D. program, he managed to manipulate use of a cooperative agreement and an intergovernmental personnel act agreement to attend Montana State Univer

sity-all at the taxpayers' expense. The Athens lab also circumvented Federal employee travel restrictions by arranging for EPA and NASA to enter into two pairs of interagency agreements which appear to exchange travel funds on related projects so that each agency's personnel could travel more extensively.

The contract management and extramural resources problems identified by the IG at the ORD laboratories stem in large part from the labs' inability to obtain and devote sufficient resources to accomplish their basic mission. This resource problem is also evident in other Agency laboratories, such as EPA's two Office of Radiation Program laboratories in Alabama and Nevada. The U.S. General Accounting Office found that these labs are significantly underfunded and understaffed, and the ability of the labs to meet their statutory mission has been impaired. In fact, the radiation labs have had to resort to performing work and soliciting funding from other government agencies, such as the Departments of Energy and Defense, just in order to continue operations.

Finally, the hearing examined issues relating to EPA's Cincinnati lab and its involvement in a group of cooperative research and development agreements [CRADAS] to develop and sell "EPA certified" quality assurance materials to regulated industry. The IG raised concerns that the Cincinnati lab would profit from the sale of these "EPA certified" materials and that by allowing the CRADA companies the use of "EPA certified" label on their products, other quality assurance material manufacturers would be put at a competitive marketing disadvantage.

In subsequent correspondence with the subcommittee, the IG acknowledged that no survey or market analysis had been done to determine whether the CRADAS in fact resulted in a competitive disadvantage. EPA's Office of Research and Development has advised the subcommittee that the Cincinnati lab will arrange for an independent survey of the user community and reference material suppliers to determine the number of products available in the marketplace by category, to determine comparative costs and EPA's market share and to compare the quality of non-CRADA and CRADA products. A separate report will also be produced by the end of fiscal year 1994 to evaluate the CRADA operations. EPA will use these two reports to evaluate the CRADA program.

b. Benefits. Although the precise cost of the contracting abuses and mismanagement in the EPA laboratory program cannot be quantified, the IG indicated that these problems are systemic; therefore, significant funds are wasted or subject to abuse. Potentially millions of dollars could be saved if EPA implements the IG's recommendations, which are designed to minimize or halt such abuses. ORD has acknowledged that serious problems exist, and has begun to implement corrective actions. Nevertheless, it is evident that direct and sustained senior management attention at EPA is necessary to address these problems and implement the management controls necessary to ensure that the labs run efficiently and that taxpayers' money is spent wisely.

c. Hearings.-The subcommittee held a hearing on June 25, 1993, entitled "Management Problems and Contracting Activities at EPA Laboratories."

6. DOD's Chemical Stockpile Emergency Preparedness Program [CSEPP].

a. Summary. As part of its continuing review of several environment, safety, and health related issues surrounding the Department of Defense [DOD] chemical weapons destruction program, in July 1993 the subcommittee examined DOD's chemical stockpile emergency preparedness [CSEP] program. The CSEP program was designed to assist communities located near the Nation's various stockpiles of chemical weapons with environment and health-related emergency preparedness in the event of an accident involving the munitions. The hearing focused on the findings of a U.S. General Accounting Office [GAO] review, conducted at the subcommittee's request. The GAO review found that, although the program has been in place for 5 years and over $180 million in Federal dollars has been spent, communities which host the stockpile facilities generally are not equipped to deal with emergencies in the event of a chemical weapons incident.

The CSEP program was established in 1988 in response to a congressional statute requiring "maximum" protection of the environment, the general public, and personnel involved in destroying the U.S. chemical munitions stockpile. The Army asked the Federal Emergency Management Agency [FEMA] to coordinate emergency preparedness activities in the local communities surrounding the storage depots. Together these two agencies administer a program that affects 10 States and 36 counties. Although the risk of an offsite chemical agent release is extremely low-1 in 100 million, according to the Army-the consequences of such a release could be catastrophic. For these reasons, it is important to aid local communities in improving their emergency preparedness capabilities. There are three phases to any emergency response situation: Planning and preparation before any event; time-critical response; and recovery and restoration of areas affected by the disaster.

GAO and the subcommittee found that, after 5 years and Federal expenditures of $187 million, CSEP program results are extremely discouraging. Overall, local communities' emergency preparedness capabilities are insufficient to handle a chemical emergency. For example, these areas still lack basic equipment necessary to respond quickly to an emergency, such as protective clothing and masks for emergency response personnel, sirens to alert the communities, and tone alert radios to give evacuation directions to nearby residents. In addition, many communities feel that local medical capabilities are insufficient to handle chemical agent casualties.

Remarkably, the Army is unable to state with accuracy where and how the $187 million in Federal tax dollars was spent. GAO was told by FEMA personnel that the information was not centralized and was difficult to compile, and that FEMA believed once funds are distributed to a State agency, they cannot control how CSEP funds are spent. This inability to track funds is especially disturbing considering the fact that 41 FEMA staff are funded through the CSEP program. Early indications are that States and communities were encouraged by DOD and FEMA to acquire topof-the-line computers and new emergency operations centers, rather than basic emergency preparedness equipment. The subcommit

tee has asked GAO to continue its investigation into how and on what the CSEP program spent taxpayer funds.

GAO found that the CSEP program had been effective in planning and preparation activities, such as getting local communities to establish emergency response zones and carry out emergency preparedness exercises to simulate what would happen in an actual emergency. GAO noted, however, that the program has been plagued by delays and weaknesses which are in large part a result of disjointed management of the program by the Army and FEMA. For example, the program is run by a joint standing committee comprised of Army, FEMA, State, and local members, and a few other additional Federal entities. Funding flows from the Army to FEMA, to FEMA regions to the States, and finally, to the counties. GAO found that the many layers built into the CSEP program can be a bureaucratic nightmare for local communities and hinders effective program implementation.

The Army and FEMA have also failed to meet their own deadlines. For example, the CSEP program has issued only 7 of the 13 technical standards that communities must meet when acquiring equipment or planning readiness activities. Without Federal standards, equipment acquisition and readiness efforts by States and local counties cannot take place, hindering communities' ability to fully evaluate protective action options (whether to evacuate or shelter people in place); acquire protective gear; and assure local medical capabilities. In addition, many of these critical decisions are currently on hold pending yet another study by the Army of the actual risk of an offsite release of a chemical agent. By revisiting its earlier decisions in this regard, the Army has alienated many communities who feel that the Army may be putting emergency preparedness on the back burner.

b. Benefits. The CSEP program was initially estimated to cost a total of $114 million. Yet revised estimates place the cost of the program at a staggering $696 million by the year 2003, the date when the Army currently expects to have the weapons destroyed. To date, the Army and FEMA have spent over 5 years and $187 million on the CSEP program with little real improvement in communities' ability to handle a chemical emergency associated with the weapons stockpile. If the Army implements the GAO recommendations and takes this opportunity to correct these serious program deficiencies, potentially hundreds of millions of dollars could be saved, and remaining funds needed for the program could be utilized more efficiently.

c. Hearings.—The subcommittee held a hearing on July 16, 1993, entitled "Department of Defense's Chemical Stockpile Emergency Preparedness [CSEP] Program."

7. Adequacy of the U.S. Nuclear Regulatory Commission's Agreement States Program.

a. Summary. The U.S. Nuclear Regulatory Commission [NRC] currently has formal agreements with 29 States (so-called agreement States) delegating authority for the regulation of medical uses of radioactive material, industrial radiography, and nuclear activities other than nuclear powerplants and activities at Federal facilities. NRC regulates approximately 7,000 of these

nonpowerplant licensees, while the 29 agreement States regulate more than 15,000. At the subcommittee's request, the U.S. General Accounting Office [GAO] conducted a review of the effectiveness of both the NRC's own programs to regulate these nonpowerplant activities and those of the agreement States. The subcommittee also conducted its own investigation into the procedures and practices utilized by the NRC in its delegation of authority to agreement States. Specifically, the subcommittee examined NRC review procedures, data reporting requirements, other measures for assessing States' performance, and enforcement actions involving agreement States.

While the majority of State programs are usually found to be adequate, some programs have significant shortcomings. (For example, at one point in time, Idaho's program had no qualified inspection or licensing personnel. Not all State programs suffer from such deficiencies. Illinois' State program, for instance, is considered a model which other State programs should emulate.) NRC failed to take any meaningful action in any of the cases when substantial deficiencies exist. The subcommittee's own analysis of NRC data for the past 10 years show that, despite these problems, NRC has never formally found a State program to be inadequate to protect public health and safety, or incompatible with the NRC's own program-a condition required by law. Indeed, NRC has never initiated any action to suspend or terminate a defective State program. Moreover, the Commission does not have adequate reporting requirements in place which, if properly monitored, could be used as a basis for assessing the adequacy and performance of individual State programs.

b. Benefits. While no specific monetary saving can be calculated, significant program improvements will result from this review. As a result of the subcommittee's hearing, NRC removed the Director of the Office of State Programs and replaced this individual with another manager. NRC has also initiated a complete review of the procedures and policies by which it delegates authority to, and reviews, State regulatory programs. Finally, the chairman of the NRC has verbally committed to address issues raised by the subcommittee at its oversight hearing. The complete review and reorganization is expected to take 1 year. The subcommittee will next examine how well NRC itself regulates materials licensees.

c. Hearings. The subcommittee held a hearing on August 2, 1993, entitled "Nuclear Regulatory Commission's Agreement States Program."

8. The Federal Energy Regulatory Commission's Electricity Regulation Program.

a. Summary. For the past 3 years the Subcommittee on Environment, Energy, and Natural Resources has been examining the efficiency and effectiveness of the various regulatory programs administered by the Federal Energy Regulatory Commission [FERC]. The subcommittee was concerned that the Commission, which regulates approximately 5 percent of the gross national product of the United States, had serious deficiencies in its administration of regulatory activities affecting the energy industry.