AUDIT AUDIT OF TASK AGREEMENT NOS. P13AC00279, P13AC01094, AND P14AC00445 BETWEEN THE NATIONAL PARK SERVICE AND THE STUDENT CONSERVATION ASSOCIATION UNDER COOPERATIVE AGREEMENT NO. P09AC00402 Report No.: 2015-ER-061 February 2017 OFFICE OF INSPECTOR GENERAL U.S.DEPARTMENT OFTHE INTERIOR FEB 03 2017 Memorandum To: Keith Zotti Financial Assistance Awarding Officer, National Park Service From: Chris Stubbs ~ L!h;,/'h_ Director of Financial and C~~tr~ts Subject: Final Audit Report - Audit ofTask Agreement Nos. P13AC00279, P13AC01094, and P14AC00445 Between the National Park Service and the Student Conservation Association Under Cooperative Agreement No. P09AC00402 Report No. 2015-ER-061 This memorandum transmits the final audit results ofthe Office oflnspector General's audit ofthe Student Conservation Association's (SCA) final costs under a National Park Service (NPS) cooperative agreement and its three task agreements. We confinned $740,681 in questioned costs, as well as instances ofnoncompliance with contractual and regulatory requirements. We offered 13 recommendations to help NPS resolve the questioned costs and improve its operations with SCA. Based on NPS' response to our draft report, we considered four ofour recommendations to be resolved and closed them with no further action required. We will refer the remaining nine recommendations to the Office of Policy, Management and Budget to track their implementation and resolution. The legislation creating the Office of Inspector General requires that we report to Congress semiannually on all audit, evaluation, and inspection reports issued; actions taken to implement our recommendations; and recommendations that have not been implemented. Ifyou have any questions regarding this report, please call me at 202-208-5745. Office of Audits, Inspections. and Evaluations IWashington. DC Table of Contents Results in Brief ....................................................................................................... 1 Introduction ............................................................................................................. 2 Objective ............................................................................................................. 2 Background ......................................................................................................... 2 Findings................................................................................................................... 4 Questioned Costs ................................................................................................. 4 Agreement 1 ($36,604 in Questioned Costs) ................................................... 4 Agreement 2 ($542,181 in Questioned Costs) ................................................. 7 Agreement 3 ($414,195 in Questioned Costs) ............................................... 12 Insufficient Support for In-Kind Matches Claimed Under Agreements 2 and 3 ....................................................................................................................... 16 Inappropriate Use of Program Management, Training, and Technology Cost Pools .............................................................................................................. 17 Noncompliance With Contractual and Regulatory Requirements .................... 18 SCA’s Internal Controls Were Inadequate .................................................... 18 SCA’s Reporting Was Late and Inaccurate ................................................... 18 SCA’s Identification of Teams Was Inconsistent.......................................... 19 Management of Volunteers May Keep SCA From Using Their Hours as Match ............................................................................................................. 20 Conclusion and Recommendations ....................................................................... 22 Conclusion ......................................................................................................... 22 Recommendations Summary............................................................................. 22 Appendix 1: Scope and Methodology................................................................... 28 Appendix 2: Bureau Response to Draft Report .................................................... 29 Appendix 3: Status of Recommendations ............................................................. 46 Results in Brief The Office of Inspector General (OIG) audited the Student Conservation Association’s (SCA) final costs under a National Park Service (NPS) cooperative agreement (P09AC00402, formerly H2495090023) and its three task agreements (P13AC00279, P13AC01094, and P14AC00445). NPS issued the agreements for the program coordination, debris cleanup, and support work that the SCA Resiliency Corps performed for NPS’ National Parks of New York Harbor. We originally identified a total of $992,980 in questioned costs, as well as noncompliance with contractual and regulatory requirements. We found that SCA did not provide sufficient support for the in-kind matches it claimed under two of the agreements. We also identified inappropriate use of program management, training, and technology cost pools. In addition, SCA’s internal controls were inadequate, its required reporting was late and inaccurate, and it identified its teams inconsistently. Finally, SCA’s management of its volunteers may keep it from being able to use volunteer hours as match. We issued this report to NPS in draft form, offering 13 recommendations to help NPS resolve the questioned costs and improve its operations with respect to SCA. We closed four recommendations based on NPS’ response, but are referring the other nine to PMB for implementation and resolution. NPS also provided updated cost data in its response, so we revised this report accordingly. We confirmed $740,681 of the original questioned costs. 1 Introduction Objective The objective of our audit was to determine whether the costs claimed by the Student Conservation Association (SCA) under a cooperative agreement and three task agreements with the National Park Service (NPS) were— • allowable under applicable Federal laws and regulations, cooperative agreement provisions, and NPS guidelines; • allocable to the agreements, and incurred in accordance with the terms and conditions; and • reasonable and supported by SCA’s records. Our audit scope and methodology are included as Appendix 1. Background On October 29, 2012, Hurricane Sandy ravaged the eastern seaboard of the United States, with the States of New York and New Jersey receiving the full force of the storm. The storm affected all 15 NPS sites in the New York/New Jersey metropolitan area, including all 3 units of the Gateway National Recreation Area as well as the Statue of Liberty and Ellis Island, the Governors Island National Monument, and the Manhattan sites that make up the National Parks of New York Harbor. In response to this disaster, Congress passed the Disaster Relief Appropriations Act of 2013, appropriating $829.2 million ($786.7 million post sequester) for the U.S. Department of the Interior (DOI) to rebuild and repair its assets and strategically invest in future coastal resilience. NPS received $377.3 million of these moneys and used them in part to fund the three task agreements in our audit. NPS issued the task agreements under a 2009 master cooperative agreement (P09AC00402; formerly H2495090023). The cooperative agreement was a publicly competed, overarching award between NPS and SCA, a New York-based nonprofit organization made up of employees, interns, and volunteers (collectively referred to as “members”) whose mission is to give young people opportunities to participate in local environmental and conservation projects. The cooperative agreement, which is 1 of 18 national agreements between NPS and various nongovernmental organizations, is designed to facilitate educational and work opportunities for young people so that they can gain a better understanding of and appreciation for NPS’ natural and cultural resources. The purpose of the awards was to assist in the coordination and cleanup of NPS sites in the wake of Hurricane Sandy. NPS selected SCA for the three task agreements, used for the same project: 2 • Agreement 1 (P13AC00279) was used to launch the project with program planning, development, and recruitment. This $90,050 agreement had a completion date of December 31, 2013. • Agreement 2 (P13AC01094) was used to further recruit and then place volunteers in order to begin the project. This $921,101 agreement had a completion date of December 31, 2013. • Agreement 3 (P14AC00445) was used for the next phase of the project from June 12, 2014 to September 31, 2014, with a later modification to the agreement that extended both the project and the agreement. This $638,945 agreement had a completion date of December 31, 2014. SCA drew down a total of $1,649,916 for these three agreements. (A $180 unobligated balance was left on Agreement 1.) 3 Findings We issued a draft report to NPS management identifying a total of $992,980 in questioned costs, as well as instances of noncompliance with contractual and regulatory requirements. NPS provided updated cost data as part of its response to our draft report and its recommendations, so we revised this report accordingly. We have also revised Figures 1, 3, and 4—the tables associated with these data— and included the final figures in this section after the original ones. Altogether, we confirmed $740,681 of the original questioned costs. See the “Recommendations Summary” section (pp. 24 through 29) for our summaries and analysis of NPS’ responses to our recommendations. The full response is also included in this report as Appendix 2. Questioned Costs In accomplishing our first objective, we originally questioned a total of $992,980 in costs associated with the three task agreements.1 We determined that SCA claimed labor, transportation, field expenses, and program management costs without providing sufficient supporting documentation. In accordance with the C.F.R., these unsupported costs are all unallowable.2 We also noted unallowable preaward costs. Agreement 1 ($36,604 in Questioned Costs) Of the $89,870 ($90,050 – $180) in costs claimed under this agreement, we identified $20,158 in unsupported costs (see the draft version of Figure 1 on the next page). We also found that SCA had not matched all of the costs it was required to. The U.S.C. allows NPS to pay only up to 75 percent of the total project cost (16 U.S.C. § 1729(a)(1)); SCA must contribute the remaining amount as a match, but the company was short $16,446 in its matched costs (see draft Figure 2 on p. 6). 1 We based our determination of the questioned costs on our review and evaluation of SCA’s costs. We reviewed the agreements’ detail, supporting documentation, and the C.F.R. to determine our questioned costs. We identified costs as unsupported when sufficient documentation related to the costs was not available for review. 2 See 2 C.F.R. § 215.27, “Allowable costs”; 2 C.F.R. § 215.21(b)(7), “Standards for financial management systems”; and 2 C.F.R. Part 220, Appendix A, C.4(4), “Documentation.” 4