Statement of Melissa Heist Assistant Inspector General for Audit, EPA OIG, Before the Committee on

focus on developing infrastructure to treat wastewater and deliver safe drinking water along the U.S.-Mexico border, have shown similar problems. Since our audits the Agency has taken some corrective actions, but at the time of our work, these programs had unliquidated balances totaling over $300 million that had accumulated over a 10-year period. By not deobligating these funds, EPA delayed much needed water improvements. EPA and its grantees will be challenged to spend the SRF Recovery Act funding in a timely manner, as required by the Act. Most Recovery Act funds will be awarded through assistance agreements or contracts. EPA assistance agreements and contracts personnel will have to manage the stimulus-funded projects in addition to their normal workloads. Although EPA may set aside anywhere from 1 to 3.5 percent of Recovery Act funds for management and oversight purposes, EPA will be challenged to have sufficient, trained staff to award and monitor assistance agreements and contracts. If EPA does not assign sufficient staff to oversight, the Agency increases the risk of fraud, waste, and abuse of Federal funds. It will also increase the risk that EPA will award funds to entities that do not have adequate administrative and programmatic capabilities to efficiently and effectively carry out the work. EPA will also need to focus considerable attention on ensuring that Recovery Act funds produce their desired results and minimizing cost ...