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U.S. ENVIRONMENTAL PROTECTION AGENCY
OFFICE OF INSPECTOR GENERAL
Catalyst for Improving the Environment
Site Visit Report
American Recovery and
Reinvestment Act Site Visit of the
Wastewater Treatment
Facility Expansion,
Town of Buckeye, Arizona
Report No. 11-R-0222
May9, 2011
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Report Contributors: John Burns
Eileen Collins
Gary Smith
Michael Owen
Abbreviations
OMB Office of Management and Budget
WIF A Water Infrastructure Finance Authority of Arizona
Cover photo: Wastewater treatment facility expansion under construction at the
Town of Buckeye, Arizona. (EPA OIG photo)
Hotline
To report fraud, waste, or abuse, contact us through one of the following methods:
e-mail: OIGJHotline@epa.gov write: EPA Inspector General Hotline
phone: 1-888-546-8740 1200 Pennsylvania Avenue NW
fax: 703-347-8330 Mailcode 8431P (Room N-4330)
online: http://www.epa.gov/oig/hotline.htm Washington, DC 20460
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U.S. Environmental Protection Agency
Office of Inspector General
At a Glance
11-R-0222
May 9, 2011
Catalyst for Improving the Environment
Why We Did This Review
The U.S. Environmental
Protection Agency, Office of
Inspector General, conducts
site visits of American
Recovery and Reinvestment
Act of 2009 (Recovery Act)
clean water and drinking water
projects. We selected the
Town of Buckeye, Arizona,
for review.
Background
The town is constructing a
1.5-million-gallon-per-day
expansion of its wastewater
treatment facility. The project
I is funded by a $12,000,000
Clean Water State Revolving
Fund loan from the Water
Infrastructure Finance
Authority of Arizona. The
loan included $6,372,285 in
Recovery Act funds.
For further information,
contact our Office of
Congressional, Public Affairs
and Management at
(202)566-2391.
The full report is at:
www.epa.qov/oiq/reports/2011/
20110509-11-R-0222.pdf
American Recovery and Reinvestment Act
Site Visit of the Wastewater Treatment Facility
Expansion, Town of Buckeye, Arizona
What We Found
We conducted an unannounced site visit of the wastewater treatment facility
expansion in the Town of Buckeye, Arizona, in October 2010. As part of our site
visit, we toured the project, interviewed town representatives and contractor
personnel, and reviewed documentation related to Recovery Act requirements. We
did not identify any compliance issues with Buy American, wage rate, contract
procurement, or funding requirements. However, we found that the town was not
in compliance with reporting requirements for jobs created or retained for the
9-month period ended September 30, 2010. The town used incorrect and/or
incomplete work-hour data to calculate jobs created or retained for quarterly
reports covering the 6-month period ended June 30, 2010, and did not submit the
report for the quarter ended September 30, 2010.
What We Recommend
We recommend that the Region 9 Regional Administrator require the Water
Infrastructure Finance Authority of Arizona to direct the town to obtain, to the
maximum extent possible, complete information on jobs created or retained with
Recovery Act funding for the primary contractor and subcontractors; direct the
town to correct the number of jobs created or retained for the quarterly reports;
obtain the corrections for the reported number of jobs; maintain the corrected
documentation in administrative records; and submit corrections to the federal
government.
Region 9, the Water Infrastructure Finance Authority of Arizona, and the town
agreed with the recommendations.
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\ UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
S WASHINGTON, D.C. 20460
THE INSPECTOR GENERAL
May 9, 2011
MEMORANDUM
SUBJECT: American Recovery and Reinvestment Act Site Visit of the
Wastewater Treatment Facility Expansion, Town of Buckeye, Arizona
ll-R-0222
FROM: Arthur A. Elkins, Jr.
Inspector General
TO: Tared Blumenfeld
Regional Administrator, Region 9
This is our report on the subject site visit conducted by the Office of Inspector General of the
U.S. Environmental Protection Agency. The report summarizes the results of our site visit of the
Wastewater Treatment Facility Expansion Project in the Town of Buckeye, Arizona.
We performed this site visit as part of our responsibility under the American Recovery and
Reinvestment Act of 2009 (Recovery Act). The purpose of our site visit was to determine
whether the town is in compliance with selected requirements of the Recovery Act pertaining to
the Clean Water State Revolving Fund Program. The town received $12,000,000 through a Clean
Water State Revolving Fund loan for the project. The loan included $6,372,285 in Recovery Act
funds.
The estimated direct labor and travel costs for this report are $129,368.
Action Required
In accordance with EPA Manual 2750, you are required to provide a written response to this
report within 90 calendar days, or on August 8, 2011. You should include a corrective action
plan for agreed-upon actions, including milestone dates. Your response will be posted on the
Office of Inspector General's public website, along with our memorandum commenting on your
response. Your response should be provided as an Adobe PDF file that complies with the
accessibility requirements of Section 508 of the Rehabilitation Act of 1973, as amended. The
final response should not contain data that you do not want to be released to the public; if your
response contains such data, you should identify the data for redaction or removal. We have no
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objection to the further release of this report to the public. This report will be available at
http ://www. epa. gov/oig.
If you or your staff have any questions regarding this report, please contact Melissa Heist,
Assistant Inspector General for Audit, at (202) 566-0899 or heist.melissa@epa.gov: or Robert
Adachi, Director of Forensic Audits, at (415) 945-4537 or adachi.robert@epa.gov.
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American Recovery and Reinvestment Act Site Visit of the 11 -R-0222
Wastewater Treatment Facility Expansion, Town of Buckeye, Arizona
Table of Contents
Purpose 1
Background 1
Scope and Methodology 1
Results of Site Visit 1
Buy American Requirements 2
Wage Rate Requirements 2
Contract Procurement Requirements 2
Funding Requirements 2
Reporting Requirements 2
Recommendations 3
Agency, Recipient, and Subrecipient Responses to Draft Report 4
OIG Comment on Responses 4
Status of Recommendations and Potential Monetary Benefits 5
Appendix
A Distribution 6
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Purpose
The purpose of our unannounced site visit was to determine whether the Town of
Buckeye, Arizona, complied with selected requirements of the American
Recovery and Reinvestment Act of 2009 (Recovery Act) that pertain to the Clean
Water State Revolving Fund Program.
Background
The town is constructing a 1.5-million-gallon-per-day expansion to its wastewater
treatment facility. The project is funded by a Clean Water State Revolving Fund
Program loan of $12,000,000 from the Water Infrastructure Finance Authority of
Arizona (WIFA). The loan included $6,372,285 in Recovery Act funds.
Scope and Methodology
Due to the time-critical nature of Recovery Act requirements, we did not perform
this assignment in accordance with generally accepted government auditing
standards. Specifically, we did not perform certain steps that would allow us to
obtain information to assess the town's internal controls and previously reported
audit concerns. As a result, we do not express an opinion about the adequacy of
the town's internal controls or the town's compliance with all federal, state, or
local requirements.
We conducted an unannounced site visit of the wastewater treatment facility
project during October 4-6, 2010. During our site visit, we limited the scope of
our review to the following steps:
1. Toured the proj ect
2. Conducted interviews of town, contractor, and subcontractor personnel
3. Reviewed records maintained or provided by the town, its primary
contractor for the project, and the State of Arizona to assess compliance
with:
a. Buy American requirements under Section 1605 of the Recovery
Act
b. Wage rate requirements under Section 1606 of the Recovery Act
c. Contract procurement requirements
d. Funding requirements under Section 1604 of the Recovery Act
e. Reporting requirements under Section 1512 of the Recovery Act
Results of Site Visit
Our site visit did not identify any compliance issues with Buy American, wage
rate, contract procurement, or funding requirements. However, we found that the
town's reporting for jobs created or retained was not accurate. The results of our
site visit are summarized below.
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Buy American Requirements
We did not identify any compliance problems related to Buy American
requirements. We obtained an understanding of the procedure used for ensuring
that the material for the project complies with Buy American requirements. We
also reviewed Buy American certifications and other relevant documentation for
higher-cost manufactured items used on the project. The documentation indicated
that these materials met the requirements.
Wage Rate Requirements
We did not identify any compliance problems related to wage rate requirements.
We compared the wage rate requirements for each employee of the primary
construction contractor and its subcontractors with each employee's wages as
reported on the certified payrolls for the pay periods ending August 14, 2010, and
October 9, 2010. The review showed that the employees' wages complied with
the wage requirements.
Contract Procurement Requirements
We did not identify any compliance problems related to the contract procurement
process. The town awarded an $11.5-million design and construction contract for
the project. Arizona Revised Statute Title 34-603 establishes the procurement
requirements for design and construction services contracts. Under Arizona
Revised Statute Title 34-603, a design and construction services contract may be
awarded to the highest-qualified contractor at a negotiated price. We found that
the town awarded the construction contract at a negotiated price to the most
qualified contractor.
Funding Requirements
We did not identify any compliance problems with funding limitations of the
Recovery Act. We reviewed the town's loan documentation and inspected the
project to ensure that the town complied with Section 1604 of the Recovery Act,
which states that no Recovery Act funds can be used for any casino, other
gambling establishment, aquarium, zoo, golf course, or swimming pool. Our
review and site visit identified that the town was in compliance with Section
1604.
Reporting Requirements
The town was not in compliance with Recovery Act reporting requirements. The
Recovery Act requires quarterly reporting for the number of jobs created and
retained with Recovery Act funding. Office of Management and Budget (OMB)
guidance on Recovery Act reporting provides instructions, criteria, and a
11-R-0222
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framework for meeting the quarterly reporting requirements. The OMB guidance
specifies that the estimated total number of jobs funded by the Recovery Act is to
be reported by recipients. The guidance also specifies that information should be
collected from all subrecipients and vendors, to the maximum extent possible, to
generate the most comprehensive and complete job impact numbers available.
We found that, in its computation of the number of jobs created or retained for
quarterly reports covering the 6-month period ending June 30, 2010, the town did
not include work-hour data for (1) primary construction contractor employees not
subject to wage rate requirements, and (2) subcontractor employees. For the
report covering the quarter ending June 30, 2010, the town also incorrectly used
work-hour data for the months of March through May 2010 rather than data for
April through June 2010. We also found that the town did not submit the report
for the quarter ending September 30, 2010. As a result, the number of jobs created
or retained reported by the town for the 9-month period covering January 1
through September 30, 2010, was based on incorrect and incomplete data, and
was understated. We were unable to quantify the number of jobs underreported
because the town did not obtain complete contractor and subcontractor work-hour
information.
These reporting issues indicate that town staff involved in preparing the quarterly
reports were not fully knowledgeable of the Recovery Act reporting requirements
and/or did not ensure that the quarterly reports were prepared based on correct
and complete contractor and subcontractor work-hour data. We were unable to
confirm the cause or causes for the reporting issues because of the turnover of
town staff involved in the reporting process.
OMB's Recovery Act guidance requires that recipients of Recovery Act funds
maintain in their administrative files corrections of erroneous and missing data
submitted in prior quarterly reports. The guidance also requires recipients to
submit the corrections to the federal government at a time to be specified.
Recommendations
We recommend that the EPA Regional Administrator, Region 9, require WIFA
to:
1. Direct the Town of Buckeye to obtain, to the maximum extent
possible, complete information on jobs created or retained with
Recovery Act funding for the primary contractor and subcontractors.
2. Direct the Town of Buckeye to correct the number of jobs created or
retained for quarterly reports covering the period January 1 through
September 30, 2010, and all subsequent periods with job reporting
errors.
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3. Obtain the corrections referenced in recommendation 2 from the Town
of Buckeye and maintain the corrected documentation in
administrative records.
4. Submit the corrections referenced in recommendation 2 for the Town
of Buckeye to the federal government after a schedule has been
established by future Recovery Act guidance.
Agency, Recipient, and Subrecipient Responses to Draft Report
We issued a discussion draft to EPA Region 9, the Town of Buckeye, and WIFA
on April 11, 2011. Formal written comments were not requested. We held an exit
conference on April 21, 2011, with the region, WIFA, and town to obtain their
response to the discussion draft.
The town agreed with the findings in the discussion draft. The region and WIFA
did not agree or disagree with the findings because they did not conduct the audit.
However, the region said it had no reason to question the report, and WIFA
commented that it did not have concerns with the discussion draft.
The region, WIFA, and town agreed with the recommendations. The town also
said that it submitted corrected reports for jobs created or retained to WIFA on
April 12, 2011. WIFA confirmed that it had received the corrected reports and
said the reports were under review.
OIG Comment on Responses
The region will need to include a corrective action plan for the recommendations,
including milestone dates, in its written response to this report.
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Status of Recommendations and
Potential Monetary Benefits
RECOMMENDATIONS
Rec. Page
No. No.
Subject
Status1
Action Official
Planned
Completion
Date
POTENTIAL MONETARY
BENEFITS (in SOOOs)
Claimed Agreed-To
Amount Amount
3 Require WIFA to direct the Town of Buckeye to
obtain, to the maximum extent possible, complete
information on jobs created or retained with
Recovery Act funding for the primary contractor
and subcontractors.
3 Require WIFA to direct the Town of Buckeye to
correct the number of jobs created or retained for
quarterly reports covering the period January 1
through September 30, 2010, and all subsequent
periods with job reporting errors.
4 Require WIFA to obtain the corrections referenced
in recommendation 2 from the Town of Buckeye
and maintain the corrected documentation in its
administrative records.
4 Require WIFA to submit the corrections referenced
in recommendation 2 for the Town of Buckeye to
the federal government after a schedule has been
established by future Recovery Act guidance.
Region 9
Regional Administrator
Region 9
Regional Administrator
Region 9
Regional Administrator
Region 9
Regional Administrator
0 = recommendation is open with agreed-to corrective actions pending
C = recommendation is closed with all agreed-to actions completed
U = recommendation is undecided with resolution efforts in progress
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Appendix A
Distribution
Office of the Administrator
Regional Administrator, Region 9
Agency Followup Official (the CFO)
Agency Followup Coordinator
General Counsel
Associate Administrator for Congressional and Intergovernmental Relations
Associate Administrator for External Affairs and Environmental Education
Director, Grants and Interagency Agreements Management Division,
Office of Administration and Resources Management
Audit Followup Coordinator, Region 9
Public Affairs Officer, Region 9
Director, EPA Region 9, Water Division
Interim Director, Water Infrastructure Finance Authority of Arizona
Town Manager, Town of Buckeye, Arizona
Water Resources Director, Town of Buckeye, Arizona
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