Environmental Cleanup: Inadequate Army Oversight of Rocky Mountain Arsenal Shared Costs

Published by the Government Accountability Office on 1997-01-23.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                       United States General Accounting Office

GAO                    Report to Congressional Requesters

January 1997
                       Inadequate Army
                       Oversight of Rocky
                       Mountain Arsenal
                       Shared Costs

             United States
GAO          General Accounting Office
             Washington, D.C. 20548

             National Security and
             International Affairs Division


             January 23, 1997

             The Honorable Ben Nighthorse Campbell
             United States Senate

             The Honorable Dan Schaefer
             The Honorable John D. Dingell
             House of Representatives

             As you requested, we examined cleanup costs claimed by Shell Oil
             Company and shared by Shell and the U.S. Army at Rocky Mountain
             Arsenal, Colorado. Specifically, we assessed selected aspects of the
             processes that the Army uses to review cost claims under its settlement
             agreement with Shell. This report discusses the adequacy of these

             The Army’s current mission at Rocky Mountain Arsenal is to clean up the
Background   contaminated soils, structures, and groundwater there. The arsenal,
             established in 1942, occupies 17,000 acres northeast of Denver, Colorado,
             and is contaminated from years of chemical and weapons activities. The
             Army manufactured chemical weapons, such as napalm bombs and
             mustard gas, and conventional munitions until the 1960s and destroyed
             weapons at the arsenal through the 1980s. In addition, it leased a portion
             of the arsenal to Shell from 1952 to 1987 to produce herbicides and

             In 1983, the United States sued Shell Oil Company for its share of the
             cleanup costs. In February 1989, after extended litigation, the Army and
             Shell signed the Rocky Mountain Arsenal Settlement Agreement and the
             related Rocky Mountain Arsenal Federal Facility Agreement.1 The
             agreements apportion cleanup costs to be paid by each party and costs to
             be shared by both, direct that environmental legislation be complied with,
             and provide a procedure for resolving disputes. An additional document,
             the Army/Shell Rocky Mountain Arsenal Financial Manual, provides an
             overview of financial, accounting, and auditing policies for costs related to
             the cleanup. Descriptions of the agreements and cost categories and
             guidance are contained in appendixes I and II.

             Other signatories were the Departments of Interior, Justice, and Health and Human Services, and the
             Environmental Protection Agency.

             Page 1                                         GAO/NSIAD/AIMD-97-33 Environmental Cleanup

                                      Shell uses contractors for cleanup activities. Two primary contracts
                                      provide for studies and cleanup activities and cover about 86 percent of
                                      Shell’s shared costs. A third contract provides for public affairs support.
                                      Each quarter, Shell provides the Army a claim for its allocable, or shared,
                                      costs. After review, the Army generates a quarterly statement, from which
                                      the Army determines how much each party owes. Under the agreements,
                                      the shared cost to be borne by each party is a percentage of the total
                                      shared costs (see table 1).

Table 1: Shared Costs to Be Paid by
the Army and Shell Oil Company                                                                               Percent of     Percent of
                                                                                                             total to be    total to be
                                      Cumulative total of allocable costs (Army and Shell                       paid by        paid by
                                      combined)                                                                   Army            Shell
                                      Up to $500,000,000                                                               50             50
                                      $500,000,000 to $700,000,000                                                     65             35
                                      Over $700,000,000                                                                80             20

                                      As we previously reported, when the Army negotiated the settlement
                                      agreement, it estimated the shared cleanup cost would be less than
                                      $700 million, which would not have breached the demarcation between
                                      the 65/35 percent split and the 80/20 percent split.2 The Department of
                                      Defense (DOD) currently estimates the cost for arsenal cleanup at
                                      $2.1 billion.3

                                      As of December 1995, the Army’s quarterly statement showed shared costs
                                      of $656 million. Army officials stated that shared costs reached
                                      $700 million in November 1996, and thus, the Army would begin paying
                                      80 percent of the shared costs. According to Army officials, as of
                                      December 1995, the Army had incurred $308 million in costs not shared by
                                      Shell. Shell officials told us Shell’s nonallocable costs amounted to
                                      $95 million for studies, cleanup activities, and program management costs,
                                      including litigation.

                                      The process the Army uses to review claims under its cost sharing for
Results in Brief                      cleanup at the arsenal has not been sufficient to ensure that costs claimed
                                      by Shell are appropriate. Specifically, the review process does not always
                                      ensure that (1) sufficient documentation is available to review claimed

                                       Environmental Cleanup: Progress in Resolving Long-standing Issues at the Rocky Mountain Arsenal
                                      (GAO/NSIAD-96-32, Mar. 29, 1996).
                                       Defense Environmental Restoration Program Annual Report to Congress, dated May 15, 1996, for
                                      fiscal year 1995.

                                      Page 2                                        GAO/NSIAD/AIMD-97-33 Environmental Cleanup

                           costs and (2) formal agreements exist to define which costs should be
                           shared. The review process generally does not look at the detailed
                           documentation supporting cost claims. Our work showed in most cases
                           further information was available, but in some cases, it was not.

                           Also, the review process does not have effective checks and
                           balances—such as separation of key duties and responsibilities and
                           independent reviews. For example, staff associated on a daily basis with
                           the shared cost system also conduct the annual assessment of the shared
                           costs. The combination of limited documentation and inadequate controls
                           places the government at the risk of paying for unwarranted charges.

                           The Army’s process to review cost sharing claims under its settlement
The Army’s Process to      agreement with Shell is insufficient to ensure that costs are documented
Control Cost Sharing       and appropriate. Weaknesses in the process involve (1) documentation to
Has Weaknesses             support claims, (2) agreements to define which costs should be shared,
                           (3) separation of duties for recording and reviewing shared costs, and
                           (4) documentation of decisions on the treatment of capital assets and
                           disposition of real estate. Federal standards require that, among other
                           elements, internal control systems provide reasonable assurance that
                           assets are safeguarded and that revenues and expenditures are recorded
                           and accounted for properly.4

Insufficient Review of     The Arsenal Financial Manual allows costs to be disputed on several
Documentation for Shared   grounds. Specifically, costs can be disputed if: the work was not supported
Cost Claims                by a task plan, the work was not performed or the costs were not incurred,
                           duplicate charges were made, or the costs were arbitrary and capricious in
                           comparison with normal commercial practices. However, the Army’s
                           review of the costs to be shared with Shell has been minimal. Our work
                           showed that additional documentation is available in most cases and could
                           have been reviewed by the Army. In some cases, however, more
                           documentation would have been needed to perform detailed reviews.

                           We examined 153 randomly selected summary vouchers covering
                           $31 million of Shell’s allocable costs incurred from January 1988 to
                           February 1995. As part of this examination, we reviewed documentation
                           that Shell had provided the Army in support of its quarterly cost claim. We
                           also reviewed secondary documentation maintained by the primary

                            The Federal Managers’ Financial Integrity Act of 1982 (31 U.S.C. 3512) requires that agencies’ systems
                           must comply with internal control standards prescribed by the Comptroller General. Standards for
                           Internal Controls in the Federal Government were issued in 1983 by us as required by the act.

                           Page 3                                           GAO/NSIAD/AIMD-97-33 Environmental Cleanup

    contractor. Based on these examinations and additional data later
    provided by Shell, we stated in our draft report that 31 entries for items
    totaling $3.1 million lacked the documentation needed for the Army to
    review the appropriateness of the cost claims. In some cases, the claims
    were partially documented, and in others, there was no documentation

    In commenting on the draft report, Shell stated that in every instance,
    adequate information was either already in our possession or provided to
    us in meetings during March and April 1996. Shell further stated that full
    support was attached to invoices for each of three examples cited in our
    report. We again met with representatives of Shell and its principal
    contractor, Morrison Knudsen, in November 1996, but most of the
    documentation was not yet available and we agreed to examine additional
    documentation that was provided to us in December 1996. As a result of
    the most recent data, we revised the examples described below. The
    difficulty in obtaining documentation for the three examples illustrates our
    point that the Army needs to have procedures for documentation and the
    examination of claims.

    Taking the additional information into consideration, the following are
    examples from our sample of selected summary vouchers where
    insufficient documentation was available to make an adequate review of
    shared costs.

•   For a $666,035 line item at first described as “other direct costs,” support
    for only $30,125 had been provided to us at the time of our draft report.
    Shell provided detailed support by December 1996 for an additional
    $479,015. The detailed support indicated that the costs were for contractor
    studies and left $156,895 in need of further documentation.
•   $301,977 for brine disposal by a subcontractor did not have, at the time of
    our draft report, information on the quantity to be paid for, such as
    number and size of railroad tank cars. The separate agreements cited in
    Shell’s comments permitted payments up to a limit, but data on actual
    amounts were still needed. Such data were provided for $266,723, but
    were still lacking for the remaining $35,254.
•   $187,275 of $326,566 for operations of an incinerator appeared to be for
    incentive awards but was not specified sufficiently, such as the number or
    type, to show the basis for the expenditure. The claim did not actually
    include awards, and support for $166,183 was provided in December 1996,
    although a clear link to invoices was not always shown. The remaining
    $21,092 lacked sufficient detail.

    Page 4                              GAO/NSIAD/AIMD-97-33 Environmental Cleanup

                            Overall, the Army does not have detailed procedures for examining Shell’s
                            shared costs. In the absence of such procedures, the Army’s examination
                            consists of comparing Shell’s monthly costs with the previous month’s
                            costs to look for significant variances.

                            We found that the Army has not fully exercised its authority to review the
                            costs of Shell’s contractors and subcontractors. For example, the Army
                            shared about $48 million in costs that Shell claimed for technical studies,
                            but has not examined the relevant contracts. Army officials said that they
                            operate with Shell in an atmosphere of trust. They also stated that they
                            believe that they have no right to interfere in Shell’s relationship with its
                            contractors and that standard government contract controls do not apply
                            to Shell’s commercial contracts. Notwithstanding these points, the Army is
                            permitted to review Shell’s costs under the arsenal agreements and should
                            do so to ensure that costs being claimed are appropriate.

Lack of Agreement to        The arsenal agreements require that shared costs be supported by an
Authorize Tasks and Costs   approved task plan or other written agreement. The arsenal’s Program
to Be Shared                Manager’s Office and Shell officials have made numerous agreements
                            implementing the guidance in the settlement agreement. However, not all
                            agreements were written, and written agreements sometimes lacked
                            approval signatures, estimates of costs to be incurred, clear descriptions
                            of the tasks to be done, or statements that costs can be shared. Of the
                            153 summary vouchers we reviewed, 48 lacked specific written support,
                            such as a signed agreement, a statement stipulating that the item was
                            allocable or reimbursable, or authorization for the task. In some cases
                            where signed agreements were lacking, Shell and the Army used their
                            commercial and government practices as a standard in determining
                            reasonableness of costs.

                            Community relations activities is one area where cost sharing agreements
                            have not been finalized and documentation was limited, thus making it
                            difficult to adequately review claims. A written agreement was drafted and
                            dated June 1990 (retroactive to January 1988), but was never signed.
                            Although the unsigned agreement called for the Army to assume the lead
                            responsibility in this area, Shell retained a contractor to provide public
                            relations support. Shell and Army officials stated that for guidance on
                            community relations activities, they refer to the requirements of the
                            Comprehensive Environmental Response Compensation and Liability Act.

                            Page 5                              GAO/NSIAD/AIMD-97-33 Environmental Cleanup

                             Our random sample included $481,000 in charges for public affairs
                             activities, and the Army had approved them based on two Shell statements
                             of allocable costs that gave totals for broad categories. Incurred from
                             August 1991 through December 1992, the largest categories were for
                             public affairs activities regarding the successful operation of an
                             incinerator ($245,047), public education/involvement ($120,927), and
                             agency support ($73,864). Each category in the statements included a brief
                             summary but no breakout of amounts for specific activities. Breakouts
                             were often available on request, but detailed expense data were
                             incomplete. For example, Shell provided additional data to us showing
                             that public education/involvement included subcategories such as an
                             arsenal brochure ($19,066), a Fish and Wildlife Service Spring Event
                             ($14,480), and Bald Eagle Day ($15,567). Further, the detailed data for
                             Bald Eagle Day showed $4,679 for unspecified labor costs; $4,622 for
                             promotional “eagle pencils;” $3,026 for advertising; $1,278 for bus service;
                             and other categories of less than $1,000 each for such items as
                             photographs, videotape, copying, and box lunches.

                             We did not review the appropriateness of individual cost claims. However,
                             the above examples further demonstrate that the Army has not ensured it
                             has sufficient information to review shared costs. The arsenal’s Director of
                             Public Affairs stated that he would require supporting documentation on
                             such claims in the future.

Undocumented Treatment       Federal standards require that internal control systems provide reasonable
of Capital Assets and Real   assurance that expenditures are documented, recorded, and accounted for
Estate                       properly. We found that the Army has not adequately documented its
                             decisions concerning some capital assets and real estate.

                             For example, as part of interim response activities, Shell had to vacate an
                             office building it owned and occupied on the arsenal. The Army provided
                             land on the arsenal for Shell to build a replacement building. The Army
                             also reimbursed Shell for the full $670,000 cost of construction. Several
                             provisions in the arsenal agreements could allow construction to take
                             place on the arsenal. Depending on the circumstances that caused the
                             building to be vacated and a replacement built, the construction might
                             have been an Army-only cost, a Shell-only cost, or a shared cost. In this
                             case, the building was treated as an Army-only cost, but the reasons for
                             this treatment were not documented.

                             Page 6                              GAO/NSIAD/AIMD-97-33 Environmental Cleanup

                                       In another instance, the Army did not document the basis for a transaction
                                       with Shell. Shell purchased property located just outside the arsenal’s
                                       north boundary for about $4 million. The Army needed access to the land
                                       to conduct offsite groundwater treatment activities. The groundwater
                                       treatment was a shared cost. Shell purchased the land because it was able
                                       to do so more quickly than the Army would have been able to, according
                                       to Army and Shell officials. For its use of the property, the Army paid Shell
                                       about $2 million through transaction adjustments—half the purchase
                                       price. The land is well situated for commercial and industrial development
                                       as it is near an interstate highway and the new Denver International
                                       Airport (see fig. 1). Shell will retain the land when cleanup is complete.

Figure 1: Rocky Mountain Arsenal and
Surrounding Area
                                          120th Av                                                    E 128th Ave

                                                                                           Tower Rd
                                          Northglenn                       76                                                   Denver
                                                     44                                                                         Airport
                                         104 Av
                                                                                96th Av

                                                                           Rocky          88th Av
                                                                                                                Pena Blvd.

                                          265                              70


                                                Property to be retained by Shell Oil Company

                                       Another instance involved capital assets purchased by Shell and charged
                                       as an allocable cost. The Army could receive a proportionate credit for
                                       such assets as vehicles, office equipment, and furniture, when they are
                                       disposed of or sold. However, the identification and disposition of the
                                       allocable assets was not documented. In discussing this issue, Army and

                                       Page 7                                             GAO/NSIAD/AIMD-97-33 Environmental Cleanup

                               Shell officials did not provide detailed documentation, but described the
                               disposition of a large set of assets relating to an incinerator. They stated
                               that the Army had received a credit for items sold and that other items
                               were being stored.

Inadequate Separation of       Because the same Army staff members record, review, and audit Shell’s
Duties and Independent         allocable costs, the Army does not have adequate control over the shared
Reviews                        cost process. Federal internal control standards require that key duties
                               and responsibilities such as recording and reviewing transactions be
                               separated systematically among individuals to protect the government
                               against error, waste, and wrongful acts.

                               Moreover, the Army and Shell staff who conduct the day-to-day operation
                               of the shared cost system also review the shared costs annually. In 1988
                               and 1989, the Army Audit Agency reviewed Shell’s costs and found
                               numerous problems, including insufficient documentation and costs
                               claimed without a task plan. Although the annual reviews by operating
                               staff continue, there have been no other independent verifications or
                               follow-on audits of Shell’s shared costs.

                               The Army will be paying 80 percent of millions of dollars in shared costs
Recommendations                for the cleanup of Rocky Mountain Arsenal. Strengthening its review
                               process for shared cost claims is key to ensuring appropriate sharing of
                               costs. Thus, we recommend that the Secretary of the Army

                           •   establish specific procedures for the examination of Shell’s cost claims
                               and documentation, including costs of its contractors and subcontractors;
                           •   establish standard procedures for the approval and documentation of
                               supplementary agreements regarding the allocability of costs and
                               treatment of capital assets and real estate; and
                           •   require that such key duties and responsibilities as recording and
                               reviewing transactions be performed by different individuals.

                               Both DOD and Shell provided written comments on a draft of this report
DOD’s and the Shell            (see apps. III and IV). DOD concurred with our recommendations regarding
Oil Company’s                  procedures for documentation of costs and agreements, but noted that
Comments and Our               adequate documentation exists for most shared cost claims. In its
                               comments, Shell did not agree that documentation it made available was
Evaluation                     insufficient to review the appropriateness of the cost claims.

                               Page 8                               GAO/NSIAD/AIMD-97-33 Environmental Cleanup

              In its comments concerning our two recommendations for procedures to
              ensure documentation of costs and agreements, DOD stated that most
              claims were documented. However, we identified cases where
              documentation for summary vouchers and cost sharing agreements for the
              tasks involved was lacking. We continue to believe that these conditions
              represent weaknesses in the Army’s review process.

              With regard to Shell documentation, we do not recommend action on
              individual items, but focus on the Army’s review process. We agree that
              Shell provided records, but the amounts did not always support the
              summary vouchers we examined. We believe that our comments regarding
              the weaknesses in the review process are correct, but revised our report to
              reflect the additional information provided by Shell and its contractor. Our
              initial review raised questions about support for 55 of 153 items. After
              discussing the 55 with Shell and its contractor and examining additional
              contractor documents during March and April 1996, we reduced the
              number of items with questions to the 31 cited in our draft report,
              including the 3 examples. Following Shell’s written comments, we met
              again in November and December regarding the examples. A substantially
              greater amount is now supported, but gaps remain in each example, as
              described in this report.

              Finally, DOD partially concurred with our recommendation for separation
              of duties, stating that it complies with requirements under procedures now
              in place. We recognize that internal controls are adapted to the risks being
              faced and the resources available. DOD has attempted to address such
              control issues by designating one person in a two-person group to be a
              staff accountant to review data and the other to make sure data are
              generally complete. We believe controls could be further strengthened by
              having others—who do not conduct the day-to-day operation—be
              responsible for the annual review of shared costs. This is a particular issue
              where only one external review has been made of transactions, and that
              was just after the settlement agreement was put in place 8 years ago.

              We interviewed officials at, and reviewed documentation provided by the
Scope and     arsenal Program Manager; Shell Oil Company, Denver, Colorado, and
Methodology   Houston, Texas; the Defense Contract Audit Agency, Boise, Idaho;
              Morrison Knudsen and Holme Roberts Owen, Denver, Colorado; and the
              state of Colorado.

              Page 9                              GAO/NSIAD/AIMD-97-33 Environmental Cleanup

We obtained and reviewed Army and Shell shared cost documentation, but
we did not verify the total reported costs. We reviewed 153 randomly
selected items from Shell’s journal entries for allocable and reimbursable
costs incurred from January 1988 to February 1995. We also reviewed all
monthly invoices for allocable costs from the Shell contractors Morrison
Knudsen and Holme Roberts Owen incurred for the fourth quarter, ending
November 1988, through the third quarter 1995. We examined supporting
documents provided by Shell and its contractors. We did not review the
appropriateness of individual cost claims. Although we examined
additional documentation provided by shell and its contractor for 3
examples in our report, we did not pursue additional documentation for
the remaining 28 of the 31 sample items cited in the report.

We conducted our review from April 1995 to December 1996 in
accordance with generally accepted government auditing standards.

Unless you publicly announce its contents earlier, we plan no further
distribution of this report until 30 days from its issue date. At that time, we
will send copies to appropriate congressional committees. We will also
make copies available to others on request.

If you or your staff have any questions concerning this report, please
contact me on (202) 512-8412. Major contributors to this report are listed
in appendix V.

David R. Warren, Director
Defense Management Issues

Page 10                              GAO/NSIAD/AIMD-97-33 Environmental Cleanup
Page 11   GAO/NSIAD/AIMD-97-33 Environmental Cleanup

Letter                                                                                             1

Appendix I                                                                                        14
                        The Rocky Mountain Arsenal Settlement Agreement                           14
Description of          The Rocky Mountain Arsenal Federal Facility Agreement                     14
Agreements Between      The Army/Shell Rocky Mountain Arsenal Financial Manual                    14
the Army and Shell
Regarding Rocky
Mountain Arsenal
Appendix II                                                                                       15
                        Allocable Costs                                                           15
Description of Cost     Shell-Only Costs                                                          15
Categories and          Army-Only Costs                                                           15
Appendix III                                                                                      17

Department of
Defense Comments
Appendix IV                                                                                       20

Shell Oil Company
Appendix V                                                                                        22

Major Contributors to
This Report
Table                   Table 1: Shared Costs to Be Paid by the Army and Shell Oil                 2

Figure                  Figure 1: Rocky Mountain Arsenal and Surrounding Area                      7


                        CERCLA     Comprehensive Environmental Response, Compensation,
                                       and Liability Act
                        DOD        Department of Defense

                        Page 12                            GAO/NSIAD/AIMD-97-33 Environmental Cleanup
Page 13   GAO/NSIAD/AIMD-97-33 Environmental Cleanup
Appendix I

Description of Agreements Between the
Army and Shell Regarding Rocky Mountain
                       The Army and Shell formalized their agreements and guidance regarding
                       activities and costs for environmental cleanup at the Rocky Mountain
                       Arsenal in the Rocky Mountain Arsenal Settlement Agreement, the Federal
                       Facility Agreement, and the Financial Manual.

                       The Settlement Agreement establishes a mechanism for apportioning
The Rocky Mountain     cleanup responsibilities and costs between the Army and Shell. The
Arsenal Settlement     agreement defines allocable costs and includes lists of Shell-only and
Agreement              Army-only costs. Under this agreement, Shell may hire contractors
                       “subject to the approval of the Army.”

                       The Federal Facility Agreement ensures compliance with environmental
The Rocky Mountain     legislation, including the Comprehensive Environmental Response,
Arsenal Federal        Compensation, and Liability Act (CERCLA) of 1980 (42 U.S.C. 9601), and
Facility Agreement     establishes a procedure that allows the various participants to cooperate
                       in environmental cleanup at the arsenal. It “provides the process for the
                       planning, selection, design, implementation, operation, and maintenance
                       of response actions taken pursuant to CERCLA as the result of the release or
                       threatened release of hazardous substances, pollutants or contaminants at
                       or from the arsenal, including the public participation process.”

                       The Financial Manual describes the financial, accounting, and auditing
The Army/Shell Rocky   procedures to be used for shared costs incurred in connection with
Mountain Arsenal       arsenal cleanup. It describes primary and secondary documentation for
Financial Manual       allocable costs and includes examples of some documentation. It provides
                       procedures under which cost-related disputes between the Army and Shell
                       are to be settled, but it does not include procedures for examining and
                       accepting shared costs. The Manual stipulates that the procedures
                       described in it will be conducted in accordance with generally accepted
                       accounting principles consistently applied.

                       Page 14                             GAO/NSIAD/AIMD-97-33 Environmental Cleanup
Appendix II

Description of Cost Categories and

                       The following material summarizes cost definitions found in the Rocky
                       Mountain Arsenal Settlement Agreement, which provides guidance
                       regarding allocable, reimbursable, Shell-only, and Army-only costs. The
                       Army and Shell supplement this guidance with agreements on the specific
                       tasks to be included in each category.

                       The Settlement Agreement defines allocable costs as
Allocable Costs
                   •   all response costs, excluding Army-only and Shell-only costs;
                   •   all response costs for activities outside the arsenal boundaries;
                   •   associated costs for involvement of the Environmental Protection Agency,
                       the Agency for Toxic Substances and Disease Registry, and the
                       Department of the Interior;
                   •   all natural resource damage assessment costs; and
                   •   other costs agreed on in writing by the Army and Shell as allocable costs.

                       Exhibit D of the Settlement Agreement describes Shell-only costs as those
Shell-Only Costs       pertaining to the following actions:

                   •   demolition, removal, and disposal of all buildings and structures owned by
                       Shell or its predecessor company (includes a list of the structures);
                   •   demolition, removal, and disposal of all equipment in Shell-owned
                       structures and in buildings leased by Shell immediately before the
                       effective date of the Settlement Agreement;
                   •   assessment activities associated with the two above activities;
                   •   Shell staff at the Central Repository and the Joint Administrative Record
                       and Document Facility;
                   •   Shell activities associated with dispute resolution, judicial review, and the
                       Technical Review Committee; and
                   •   Shell’s program management, including labor, materials, supplies, and
                       overhead for Shell’s Denver Project Site Team, litigation support, legal
                       fees, and auditing expenses.

                       Exhibit C of the Settlement Agreement describes Army-only costs as those
Army-Only Costs        pertaining to the following actions:

                   •   assessment, demolition, removal, and disposal of all buildings, structures,
                       and equipment not listed as Shell-only in Exhibit D;
                   •   assessment, identification, removal, and disposal of unexploded ordnance;

                       Page 15                             GAO/NSIAD/AIMD-97-33 Environmental Cleanup
    Appendix II
    Description of Cost Categories and

•   assessment, decontamination, removal, treatment, and/or disposal of all
    soil, excluding soil that includes a Shell compound, in specified areas;
•   Army staff, and all facilities and equipment, for the Central Repository and
    the Joint Administrative Record and Document Facility;
•   Army activities associated with dispute resolution, judicial review, and the
    Technical Review Committee;
•   Army program management, including labor, materials, supplies, and
    overhead for the Army’s arsenal Program Manager’s Office and its
    divisions, litigation support, legal fees, and auditing expenses; and
•   other specific miscellaneous actions, such as emergency action responses
    to a release of pollutants or contaminants.

    Page 16                              GAO/NSIAD/AIMD-97-33 Environmental Cleanup
Appendix III

Department of Defense Comments

               Page 17    GAO/NSIAD/AIMD-97-33 Environmental Cleanup
Appendix III
Department of Defense Comments

Page 18                          GAO/NSIAD/AIMD-97-33 Environmental Cleanup
Appendix III
Department of Defense Comments

Page 19                          GAO/NSIAD/AIMD-97-33 Environmental Cleanup
Appendix IV

Shell Oil Company Comments

              Page 20        GAO/NSIAD/AIMD-97-33 Environmental Cleanup
Appendix IV
Shell Oil Company Comments

Page 21                      GAO/NSIAD/AIMD-97-33 Environmental Cleanup
Appendix V

Major Contributors to This Report

                        Brad Hathaway, Associate Director
National Security and   Uldis Adamsons, Assistant Director
International Affairs
                        Lisa Jacobson, Director
Accounting and
Management Division
                        Lowell Hegg, Assistant Director, AIMD
Denver Field Office     Suzanne Macfarlane, Evaluator-in-Charge, NSIAD
                        John Furutani, Evaluator, AIMD
                        Lori Hendrickson, Evaluator, AIMD
                        C. Robin Hodge, Evaluator, AIMD
                        Tony Leonard, Evaluator, AIMD
                        Wendy Matthews, Evaluator, AIMD

                        Margaret Armen, Senior Attorney
Office of General

(709127)                Page 22                           GAO/NSIAD/AIMD-97-33 Environmental Cleanup
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General Accounting Office      Postage & Fees Paid
Washington, D.C. 20548-0001           GAO
                                 Permit No. G100
Official Business
Penalty for Private Use $300

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