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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
Las Marias Potable Water System
Phase MA Project, Las Marias,
Puerto Rico
Report No. 11-R-0241
May 25, 2011
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Report Contributors: Jean Bloom
Glen Chabotar
Vanessa Rodriguez
Abbreviations
DBA Davis-Bacon Act
DWSRF Drinking Water State Revolving Fund
EPA U.S. Environmental Protection Agency
OIG Office of Inspector General
PRASA Puerto Rico Aqueduct and Sewer Authority
Cover photo: Pipes at the Las Marias Potable Water System Phase IIA construction site,
Las Marias, Puerto Rico. (Photo courtesy Constructora De Aguada, Inc.)
Hotline
To report fraud, waste, or abuse, contact us through one of the following methods:
e-mail: OIG Hotline@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-0241
May 25, 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) funded clean
water and drinking water
projects. We selected the project
in Las Marias, Puerto Rico, for
review.
Background
The Puerto Rico Aqueduct and
Sewer Authority (PRASA)
received $19.5 million in
Recovery Act funds from the
Puerto Rico Infrastructure
Finance Authority under the
Drinking Water State Revolving
Program administered by the
Puerto Rico Department of
Health. The Las Marias Potable
Water System Phase IIA project
in Las Marias, Puerto Rico,
received $5,574,410 in Recovery
Act funds, consisting of a
$3,189,359 grant and a
$2,385,051 loan.
American Recovery and Reinvestment Act
Site Visit of Las Marias Potable Water System
Phase IIA Project, Las Marias, Puerto Rico
What We Found
We conducted an unannounced site visit of the Las Marias Potable Water
System Phase IIA project in Las Marias, Puerto Rico, in August 2010. We
toured the project site; interviewed personnel from PRASA and the Puerto Rico
Department of Health, as well as the prime contractor's manager and
employees; and reviewed documentation related to Recovery Act requirements.
Based on our site visit, no issues or concerns came to our attention that would
require action from the Commonwealth of Puerto Rico, PRASA, or the U.S.
Environmental Protection Agency.
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/20117
20110525-11-R-0241.pdf
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g UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
/ WASHINGTON, D.C. 20460
THE INSPECTOR GENERAL
May 25, 2011
MEMORANDUM
SUBJECT: American Recovery and Reinvestment Act
Site Visit of Las Marias Potable Water System Phase IIA Project,
Las Marias, Puerto Rico
Report No. ll-R-0241
FROM: Arthur A. Elkins, Jr. /
Inspector General
TO: Judith A. Enck
Regional Administrator, Region 2
This is our report on the subject site visit conducted by the Office of Inspector General of the
U.S. Environmental Protection Agency (EPA). The report summarizes the results of our site visit
of the Las Marias Potable Water System Phase IIA project in Las Marias, Puerto Rico, funded
under the American Recovery and Reinvestment Act of 2009 (Recovery Act).
We performed this site visit as part of our responsibility under the Recovery Act. The purpose of
our site visit was to determine whether the Puerto Rico Aqueduct and Sewer Authority complied
with selected requirements of the Recovery Act pertaining to the Drinking Water State
Revolving Fund program. The Puerto Rico Aqueduct and Sewer Authority received
$19.5 million in funding from the Puerto Rico Infrastructure Financing Authority, acting on
behalf of the Commonwealth of Puerto Rico, under the Drinking Water State Revolving Fund
program. The Las Marias project received $5,574,410 in Recovery Act funds under the Drinking
Water State Revolving Fund program.
The estimated direct labor and travel costs for this report are $59,060.
Action Required
Because this report contains no recommendations, you are not required to respond to this report.
The report will be made available at http://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) 947-4537 or adachi.robert@epa.gov.
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Purpose
The purpose of our unannounced site visit was to determine the Puerto Rico
Aqueduct and Sewer Authority's (PRASA's) compliance with selected
requirements of the American Recovery and Reinvestment Act of 2009 (Recovery
Act) that pertain to the Drinking Water State Revolving Fund (DWSRF) Program.
Background
U.S. Environmental Protection Agency awarded $19.5 million in Recovery Act
funds to the Commonwealth of Puerto Rico under the DWSRF program. The
DWSRF program is administered by the Puerto Rico Department of Health and is
assisted by the Puerto Rico Environmental Quality Board and the Puerto Rico
Infrastructure Financing Authority. Puerto Rico Infrastructure Financing
Authority entered into a financial agreement with PRASA to fund drinking water
projects. The Las Marias Potable Water System Phase IIA project was selected to
receive Recovery Act funds in the amount of $5,574, 410, consisting of a
$3,189,359 grant and a $2,385,051 loan. The loan has a 20-year maturity with an
interest rate of 2 percent annum.
Scope and Methodology
Due to the time-critical nature of the Recovery Act requirements, we did not
perform this site visit in accordance with generally accepted government auditing
standards. Specifically, we did not determine whether previous audit work was
completed in this area or assess PRASA's internal controls. As a result, we do not
express an opinion on the adequacy of PRASA's internal controls or its
compliance with all federal, state, or local requirements.
We conducted our site visit during the weeks of August 9 and August 16, 2010.
During our visit, we:
1. Toured the construction proj ect
2. Interviewed prime contractor employees and managers on site and
personnel from PRASA and the Puerto Rico Department of Health
3. Reviewed documentation maintained by PRASA and the prime contractor
on the following matters:
a. Buy American requirements under Section 1605 of the Recovery
Act
b. Wage Rate (Davis-Bacon Act (DBA) requirements under Section
1606 of the Recovery Act
c. Contract procurement
d. Limit on funds and reporting requirements under Sections 1604
and 1512 of the Recovery Act
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Results of Site Visit
Based on our site visit, no issues or concerns came to our attention that would
require action from the U.S Environmental Protection Agency, Commonwealth of
Puerto Rico, or PRAS A. The results of our procedures are summarized below.
Buy American Requirements
We did not identify any issues regarding Buy American requirements. Based on
our interviews and work performed, PRASA and the contractor are fully aware of
the Buy American requirements under Section 1605 of the Recovery Act. The
Buy American requirements were included in the contract bid and contract
documents. Based on our physical observations of materials on site, and Internet
research performed on the manufacturers, materials used for the project comply
with Buy American requirements.
Wage Rate Requirements
We did not identify any issues or concerns regarding wage requirements under
Section 1606 of the Recovery Act. Section 1606 of the Recovery Act requires all
mechanics and laborers employed on projects funded directly by—or assisted in
whole, or in part with—Recovery Act funds to be paid wages at rates no less than
the locally prevailing rate, as determined by the U.S. Department of Labor. These
wages are commonly known as DBA wages and generally include a requirement
that employers submit certified payroll reports to the Department of Labor. To
comply with DBA requirements, contractors signed weekly payrolls certifying
compliance with DBA rates and submitted copies to PRASA. We selected two
pay periods for testing: the pay period ending August 15, 2010, and the pay period
ending July 18, 2010. We reviewed certified payrolls and verified that the
contractor was at least paying its employees the minimum required DBA wage
rates.
Contract Procurement
We did not identify any issues or concerns with contract procurement or unfair
bidding practices. The construction contract was competitively awarded based on
public advertisement. Twelve bids were received and—based on the
recommendation of its bid board—PRASA awarded the contract to the lowest
responsive bidder. We contacted three of the unsuccessful bidders and confirmed
their participation in the bidding process. Overall, the bidders contacted were
satisfied with the procurement process and no issues were identified.
Limit on Funds and Reporting Requirements
We did not identify any issues of concern. Under Section 1604 of the Recovery
Act, no funds can be used for any casino, other gambling establishment,
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aquarium, zoo, golf course, or swimming pool. We reviewed the prime contract to
verify that it contained the appropriate language to comply with Section 1604 of
the Recovery Act.
We did not identify any issues regarding PRASA's ability to meet Recovery Act
financial management and reporting requirements. We interviewed PRASA
personnel to obtain an understanding of the reporting process. We also reviewed
an example of the tables that include the Section 1512 required reporting
information submitted by PRASA to the Environmental Quality Board and the
Puerto Rico Department of Health.
Recommendations
We have no recommendations.
Recipient Response and Office of Inspector General Comment
As we have no recommendations, we did not require or receive written comments to
the draft report. We held an exit conference on April 26, 2011. No comments were
provided during the exit conference.
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Status of Recommendations and
Potential Monetary Benefits
POTENTIAL MONETARY
RECOMMENDATIONS BENEFITS (in $OOOs)
Planned
Rec. Page Completion Claimed Agreed To
No. No. Subject Status1 Action Official Date Amount Amount
No recommendations.
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
11-R-0241
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Appendix A
Distribution
Office of the Administrator
Regional Administrator, Region 2
Director, Grants and Interagency Agreements Management Division,
Office of Administration and Resources Management
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
Audit Followup Coordinator, Region 2
Public Affairs Officer, Region 2
Executive Infrastructure Director, Puerto Rico Aqueduct and Sewer Authority
Director, Potable Water Division, Puerto Rico Department of Health
Director, Caribbean Environmental Protection Division, Region 2
11-R-0241
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