Need for More Effective Management of Warranties

In administering its construction grants program, the Environmental Protection Agency (EPA) does not evaluate the adequacy of the warranty provisions of contracts awarded by grantees for equipment and supplies used in constructing wastewater treatment systems, nor does it evaluate how well grantees exercise their warranty rights. GAO reviewed 13 grantee projects and identified a number of issues.

EPA has no regulations or guidelines for warranty administration by the grantees or its monitoring by EPA. Major warranty repairs are handled informally between the grantee, a consulting engineer, the general contractor, and his subcontractors/equipment manufacturers. Many grantees have not established procedures to bill contractors for the repair of equipment under warranty. Grantees believe that contractors and/or equipment manufacturers take longer than necessary to repair defective equipment. In cases where grantee personnel assisted the maunfacturers in making repairs, the grantees did not seek reimbursement of their costs from the contractor or maunfacturer. These situations resulted when the warranty provisions appeared to be too general. Warranty benefits are lost because the warranty periods on equipment or major facility segments either partially or completely expire before being placed in operation. Grantees lack adequate records detailing which equipment is currently under warranty or the problems and repair work performed between the time of equipment installation and the end of the warranty period. Often maintenance personnel are inadequately trained to enforce warranties effectively.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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