Audit Criticizes EPA’s Dependency on El Segundo Firm : Government: The agency’s reliance on Computer Sciences Corp. makes it vulnerable to fraud, waste and abuse, internal report says.

The Environmental Protection Agency unduly relies on an outside contractor for a wide variety of management-support services, making the agency increasingly vulnerable to fraud, waste, abuse and illegal practices, an internal EPA audit said Friday.

The agency’s inspector general said in a report that his investigators have identified more than $13 million in questionable payments to the contractor, Computer Sciences Corp. of El Segundo, Calif.

A senior EPA administrator said that the agency agreed with many of the audit’s conclusions but that the EPA already is moving to reduce its reliance on the firm for many of the services normally performed at other government agencies by federal employees.

A CSC spokesman here said that the company would reserve comment until after it has studied the audit.

The report also drew sharp criticism from Rep. John D. Dingell (D-Mich.), chairman of the House Committee on Energy and Commerce.

“This goes beyond the fox guarding the henhouse; in this case, the fox is running the henhouse,” said Dingell, whose subcommittee on oversight and investigations conducted hearings on the issue more than a year ago.

Among the questionable CSC charges turned up by the EPA inspector general were $2 million last year for company personnel to perform tasks in classifications for which they were not qualified, $66,000 to train company workers in basic computer skills and the cost of sending one company employee to seven educational sessions and workshops in a span of about two years.

But because of “poor contract documentation,” the inspector general’s office was unable to quantify any other questionable costs, the report said.

The audit also turned up “weaknesses” in EPA oversight of the El Segundo firm, resulting in potential conflict-of-interest situations that, for instance, allowed the company to participate in the processing of its own contract invoices.

“CSC sets its own work requirements, creates its own contracts, executes those contracts and then reviews its own bills,” Dingell said. “This is the most absurd situation I have ever seen in government contracting.”

The firm receives about $60 million annually from EPA contracts and has been an agency contractor for about two decades. It has 26,000 employees worldwide and last year had revenues of $1.7 billon.

Among the technical services the firm provided to EPA are computer system and software development; document processing, production of publications and graphics; office automation and records management.

But because of insufficient oversight, the audit said, “EPA’s vulnerability to fraudulent, wasteful, abusive and illegal practices from CSC contract operations has increased to unacceptable levels. . . .”

In an interview Friday, Christian R. Holmes, acting assistant EPA administrator for management and finance, did not take issue with the audit.

“We must certainly tighten up on management controls and (we) have got to change our attitudes toward our contractors,” Holmes said.

Since joining the EPA in August, Holmes has been visiting EPA sites nationwide. “I’ve been giving EPA people a very simple, basic message: No matter how important the mission is, we cannot cut management corners,” Holmes said. “I’ve also told them to reduce our reliance upon, and relationship with, contractors.”

EPA long has been criticized by Congress and the General Accounting Office for a perceived overreliance on outside contractors for many essential functions. But the inspector general’s report found that such reliance has increased in recent years.