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~,tEO f?.~fT UNRED STATES ENVIRONMENTAL PROTECTION AGENCY 3 WASHINGTON, D.C. 20460 ~ . - MAR 4I993 CFfICE OF RssEARCH,Mo-KLow,EKT Honorable Thomas J. Bliley, Jr. Ranking Minority Member Subcommittee on Oversight and Investigations Committee on Energy and Commerce U.S. House of Representatives Washington, D.C. 20515 Dear Mr. Bliley: Thank you for your letter of December 22, 1992, to former EPA Administrator William K. Reilly, requesting additional information on EPA's activities with respect to environmental tobacco smoke (ETS). Your questions relate to the technical aspects and contracting procedures associated with the ETS Risk Assessment. I am providing a response which answers all of your questions, except questions 6 and 7. Questions 6 and 7 request information regarding contractor business information that has been determined by EPA to be entitled to confidentiality. In accordance with 40 CFR 2.209(b), EPA is prohibited from furnishing confidential information to Congressmen in their individual capacity. A written request of a committee chairman is required. Upon the receipt of a written request from a committee chairman, we will gladly submit the information you request. Gary J,.oley Acting Assista Administi`itor for Research and Development Enclosure ISSUE 43 APPENDIX C M - . . - . _.-,rL..-

E21CLO8URE A RE8PON8E8 TO COI+iGRE88?tAN BLILEY'8 DECEIiBER 22, 1992 LETTER Question 1: Why was the decision made to perform the work on the Risk Assessment by a contractor rather than by EPA personnel? Please furnish any analysis supporting the decision to contract out this work rather than using EPA personnel. Response: Dr. Steven Bayard, an ORD staff scientist and ETS Project Manager, made the decision to use a contractor rather than EPA personnel to perform the work on the Risk Assessment. Dr.Bayard, with the concurrence of his supervisor Charles Ris, determined that in order to complete the Risk Assessment in a reasonable time, technical assistance from a contractor was needed. No written analysis supporting this decision exists. Question 2: Was any consideration given by EPA to using the resources of the National Cancer Institute, or the National Institutes of Health, or some other Federal agency, rather than relying on the services of a private contractor to perform the work on the contract? Please furnish any documents reflecting consideration of the use of other Federal agencies to perform the work performed on the contract. Response: ORD staff did not ask the National Cancer Institute (NCI) or other elements of the National Institutes of Health (NIH) to produce the Risk Assessment since the Federal responsibility for the report lies with the EPA. Assessment work consists mostly of review and analysis of the existing database on compounds. This is fundamentally different from the more basic research conducted at the NIH. However, NCI and NIH scientists were among the external peer reviewers of both the internal and external review drafts of the Risk Assessment. Question 3: Was the contract a separate contract, or was it an extension of some other,pre-existing contract? If it was an extension of a pre-existing contract, please identify that contract and state the basis for the decision to extend that contract, rather than going through the procedures to award a new, separate contract. Please furnish any documentation reflecting EPA's decision. Response: The work assignments (Exhibit A) for the risk assessment work were accomplished as tasks under the following existing contracts: EPA contract numbers 68-D8-0115, 68-DO- 0102, and 68-02-4601. Contract number 68-D8-0115 was with Battelle Columbus Inc. and the latter two contracts were with ICF Inc. The three separate contracts resulted from full and open competition using EPA competitive contract procedures. They did not involve extension of existing contracts.

3 Question 4: Was the contract a sole source or a competitive contract? Please furnish any documentation reflecting the decision made by EPA to use a sole source or competitive contract. Response: The three contracts (68-02-4601, 68-D0-0102, and 68-D8-0115) were competitively awarded. Question 5: If contract was awarded through a competitive process, please describe how this availability of the contract was advertised. Please furnish the documentary evidence for the advertisement of the contract. Response: The three contracting actions were advertised as Requests for Proposals (RFP) in the Commerce Business Daily. The RFP for contract 68-02-4601 was mailed to 187 potential offerors and two offerors (firms) submitted proposals. The RFP for contract 68-DO-0102 was mailed to 318 potential firms and two submitted proposals. The RFP for contract 68-D8-0115 was mailed to 119 potential firms and two submitted proposals. These contract actions were advertised in accordance with FAR procedures (See Exhibit B). Question 6: If the contract was advertised, please identify the prospective contractors that responded to the advertisements. Please furnish copies of the responses and proposals furnished by each of the prospective contractors that responded. Response: In accordance with 40 CFR 2.209(b), we can not give you the actual proposals because of the confidential business information contained within. A written request from a committee chairman is required. However, the three abstracts of the proposals are contained in Exhibit C. ICF and the Institute of Gas Technology submitted proposals which resulted in the competitive award of contract 68-02-4601 to ICF (see abstract DU87-C130). Orkand Corporation and ICF submitted proposals which resulted in the competitive award of contract 68-DO-0102 to ICF (see abstract D000055N1). Battelle and Failure Analysis submitted proposals which resulted in the competitive award of contract 68-D8-0115 to Battelle (see abstract D8-00-575L1). Question 7: Please describe the qualifications of each of the prospective contractors identified in response to Question 6 above.

4 Response: The qualifications of each of the prospective contractors are discussed in the competitive range and source selection documents. CBI information has been redacted from these documents. These documents are enclosed as Exhibit D. Question 8: Please describe the steps taken by EPA to determine the financial self-interest and bias present in each of the contractors identified in response to Question 6 above. Please provide the documents reflecting these steps taken by EPA. Response: EPA regulations require that all offerors responding to EPA RFPs certify that they are not aware of any organizational conflict of interest bearing on their proposal. Those offerors unable to certify this claim are asked to disclose relevant information. This includes a description of the circumstances giving rise to a potential conflict of interest and a proposed plan to mitigate or control for its existence during the term of the contract. All offerors identified in response to Question 6 above certified that they were not aware of any organizational conflict of interest bearing on their proposals. The EPA Technical Evaluation Panel and the Contracting Officer determine, from the information submitted by the offeror, whether a potential conflict can be controlled without interrupting otherwise normal contractor performance. They also determine if an offeror should be disqualified from further consideration. The Technical Evaluation Panel and the Contracting Officer normally investigate instances of potential conflict of interest during the proposal evaluation stage. When a potential conflict of interest exists, the offeror is given an opportunity to respond to this concern during the interrogatory stage (if the offeror is in the competitive range). Offeror responses to conflict of interest interrogatories are analyzed by the Technical Evaluation Panel and the Contracting Officer and determined to be acceptable or unacceptable. Once the contracts are awarded, the contractors are required to submit to the Contracting officer any potential conflict of interest situation that might arise in the performance of the contract work. The Contracting Officer then decides on an appropriate course of action to protect the interest of EPA. Question !: If the process for awarding the contract was competitive, why was ICF awarded the contract? Please furnish all EPA documents that describe the basis by which EPA decided to award the contract to ICF instead of some other contractor. Response: The EPA competitive range and source selection procedures detail the basis for award of competitive contracts.

5 As stated in the response to Question 7 above, the determination of competitive range and source selection documents are enclosed as Exhibit D. Question 10: In our September 8, 1992 letter to Inspector General John C. Martin, Congressman Dingell and I suggested that having SPI draft EPA's official workplace smoking policy guide was "an example of the EPA's employing contractors to perform inherently governmental functions" prohibited by Federal Acquisition Regulations. Sgg 48 C.F.R. Section 37.102(b). Another contract involving the Indoor Air Division and ICF and raising similar concerns has since been brought to my attention. EPA Contract #68D20131 -- worth $4,073,643.00 -- authorizes ICF, among other things, to "provide comprehensive analyses * * * of all legislation introduced and under consideration" potentially affecting the Indoor Air Division, to "(i)dentify specific consequences of bill enactment for "the Division and to *(p)rovide * * * reports needed to respond to Congressional inquiries and request(s) for official testimonies" in connection with proposed legislation. The Indoor Air Division also has entered into nearly identical contract with Environment Health b Engineering, Inc. EPA Contract #68D20066. Are not these types of activities "inherently governmental" in nature and, therefore, prohibited by Federal Acquisition Regulations and OMB Circular No. A-76? In any event, why is not the Indoor Air Division itself in a better position than any outside consultant to assess the impact of enacted and proposed legislation on its own operations? Respons.: The types of activities referenced in the Statement of Work of Section K, "ANALYSES OF LEGISLATIVE INITIATIVES FOR CHARACTERIZATION AND CONTROL OF INDOOR AIR POLLUTION" of EPA Contract {68D20131 are not viewed as contracting for "inherently governmental functions." As you correctly point out, contracting for "inherently governmental functions" is prohibited by FAR 37.102(b) and OMB Circular A-76. EPA contracting policies prohibit the preparation of Agency responses to Congressional inquiries and requests for testimony in connection with proposed legislation. However, it is permissible for a contractor to research and retrieve factual data for the Agency because it is EPA's ultimate responsibility to develop and issue the requested Agency responses. By reserving the actual preparation and development of the Agency's responses to be performed by Agency personnel, the Agency's ability to develop and consider options other than those provided by the contractor would not be restricted by the work performed by the contractor. The Agency's 1990 contracting policies, which were in effect at the time of the award of the two EPA contracts cited in question 10, are in general conformance with recent guidance

6 issued by the Office of Federal Procurement Policy on September 23, 1992. The Office of Federal Procurement Policy explanatory text concerning its Policy Letter 92-1, "Inherently Governmental Functions" makes it clear that although contractors may not actually draft Congressional testimony or responses to Congressional correspondence, "contractor reports, conclusions, summaries, analyses, and other work products may be quoted or otherwise referenced in Congressional testimony and correspondence." Paragraph 7(b)(2) of the Office of Federal Procurement Policy Letter 92-1 provides guidance indicating that potential problems of "inherently governmental functions" might arise where "the contractor's involvement in Agency functions is or would be so extensive or the contractor's work product is so far advanced toward completion, that the Agency's ability to develop and consider options other than those provided by the contractor is restricted." The Agency program and procurement offices responsible for the issuance of work assignments under the above mentioned contracts must comply with the Agency's 1990 contracting policies which require careful examination for "partiality, favoritism, and for the veracity of any assumptions, options, and opinion stated in the contractor's work product to ensure that the Agency's issuance fully represents the Agency position." Although Section K of the Statement of Work requires the contractor to analyze pending legislation and to identify its consequences, EPA's Indoor Air Division would receive this contractor's work-products as analyses and compilations only. The contractor would be required to fully develop and disclose the bases of its analyses so that EPA's Indoor Air Division could properly exercise its discretion to assure that the Agency's position is independently determined and not subject to any extraneous bias attributed to the contractor. However, no work assignments have been issued under this section of the statement of work. If work assignments are issued under this section of the statement of work, we will apply the proper management oversight consistent with FAR Part 37.2. As you point out, the Indoor Air Division is in fact responsible and in the best position to determine the impact of legislation on its own operations. However, the Indoor Air Division does use contract support in an appropriate manner. Contract support is appropriately used to develop information and conduct analysis which serves as an input, along with other information and analysis, to the decision making process. As stated above, the actual development and preparation of the Agency response are functions reserved for the Agency.

7 Question 11: Are there any other EPA contracts or subcontracts with ICF related to ETS or indoor air quality? If so, please identify each such proposed contract or subcontract, and furnish documents describing the nature of each contract. Responses We have reviewed our files and with the exception of the aforementioned contracts, do not have any other EPA contract or subcontract with ICF related to ETS or indoor air quality. Question 12: Is ICF under consideration for any other EPA contract or subcontract related to ETS? If so, please identify each such proposed contract or subcontract, and furnish documents describing the nature of each contract, whether it is a sole source or competitive contract, and the stage of each such contract in the contracting process. Response: At the present time, we do not have any contracts or subcontracts related to ETS for which ICF is currently under consideration. This does not rule out the possibility that ICF may respond to future solicitations in this area.